Transcript EU’s heat strategy and roadmap

Competition based heat markets
help delivering EU climate targets
Building heat markets, Brussels, February 27th 2015
Markus Rauramo, Executive Vice President
Heat, Electricity Sales and Solutions Division
Introduction
Linking EU climate targets with heating and cooling sectors
2030
Emissions
reduction 40 %
Today
Renewable
energy 27 %
DH share ~12% in
heating (IEA)
Energy
efficiency 27 %
CHP share ~11%
in electricity (CODE2)
Heating and cooling strategy
2
2030
District heat share
in heating 30 %*
CHP share in
electricity 20 %**
2050
District heat share
in heating 50 %*
CHP share in
electricity 25-30 %**
• Primary energy savings
• Reduce CO2 emissions
• Reduce cost of heating systems
• Utilization of local renewable fuels
• Primary energy savings 25%
* Co-study: Heat Roadmap Europe 2050
** Intelligence Energy Europe: CODE 2 project
DH and CHP operator in Baltic Rim and Russia
Heating and CHP operations in 2014
35
Total heat sales, TWh
Finland
Baltic countries
Poland
Great Britain (sold in 2014)
Russia
3.2
1.2
3.4
1.5
26.0
CHP plants accounted for
28% of total power generation and
90% of total heat production
In jointly owned companies, heat sales, TWh**
Fortum Värme in Sweden
TGC-1 in Russia
8
28
Joensuu
Järvenpää
Stockholm**
Coal 38%
ST. Petersburg**
Espoo
Tartu
Pärnu
Jelgava
Klaipeda
Tobolsk
Argayash
Tyumen
Chelyabinsk
Oil 1%
Heat pumps,
electricity 1%
Waste 3%
Peat 3%
Natural gas
29%
Biomass 25%
European heat production 8 TWh
(Heat production capacity 3,900 MW)
Note: Fortum’s total power generation 73 TWh and total heat production 35 TWh in 2014
3
Wroclaw
Świebodzice
Zabrze
Plock
Częstochowa
Bytom
CHP plant locations today
District heat supply/networks
w/o own production
Investment program in Europe
Major bio- and waste-CHP investments in several countries
Joensuu
Naantali
Pyrolysis oil
production in
CHP plant
co-owned bioCHP (ongoing)
Joensuu
Brista
Stockholm
co-owned
waste-CHP
Järvenpää
Espoo
Järvenpää
Bio-CHP
Jelgava
Klaipeda
Värtan
Częstochowa
co-owned bioCHP (ongoing)
Espoo
sewage water
heat pump
Espoo
Jelgava
geothermal
heat pump
(ongoing)
Bio-CHP
Espoo
4
Klaipeda
Czestochowa
Waste-CHP
Coal/bio-CHP
heat recovery
from hospital
(ongoing)
Defining space heat markets in urban areas
Heat markets should be driven by customers and competition
5 key reasons
o Free choice by end-customers
enhances engagement and trust
Electrical
heating
Individual
gas
boilers
District
heating
system
Existing and
new customers
(building owners)
o Equal competition rules replace
uneven regulatory burden
Individual
heat
pumps
Heat
markets
Individual
solar
thermal
o Fair competition between alternatives calls for affordability
o New technologies more likely to
emerge and to be utilized
o Drives for best resource and
system efficiency
Increased heat system flexibility required
5
Heat for next generations
Competition ensures resource efficient DH
Efficient heat production
• High electricity production
• High fuel efficiency and
availability
• Local fuel and waste heat
sources
• Energy recovery from nonrecyclable waste
Sustainable
• Resource
efficient
• Low emissions
• High share of
RES and CHP
Loyal customers
• Easy and reliable
• Simple connection
• High service quality
• Value-added price
Economically viable
Efficient DH network
• Low heat and water
losses
• High reliability
6
• Competitive price
• Profitable
• Hedging to fundaments
• Solidity to invest
• No subventions
Development of district heating
Open DH networks encouraging new heat sources
o Open district heating: Heat customers
becoming producers (i.e. data centers, hospitals,
laundries)
o Heat pumps: Utilization of heat from sewage
water systems and ground heat
o Bio-oil production: Pyrolysis oil production in a
bio-CHP plant to replace use of fossil fuels in
own and customers heating plants
o Renewable heating: Increasing bio fuels in
peak and reserve plants
o Fuel efficiency: Investments in efficient
burning technology, flue gas cleaning and fuel
conversions
o Heat storages: CHP flexibility towards more
intermittent electricity markets and heat system
optimization
7
Conclusion
Competitive heat markets help reaching EU climate targets
EU
climate
targets
European
heating
strategy
Future heat
o Comprehensive overlook on heating and cooling sector
o Specific and ambitious target setting to 2030
o Proportionate and specific steering mechanisms (PES)
o Free choice by end-customers determine heat markets
o Imposition in national policies and regulations
o New technologies and resource efficiency to boost
8
* Co-study: Heat Roadmap Europe 2050
** Intelligence Energy Europe: CODE 2 project
markets
Thank you!