Implementation of the CHP Directive - overview and outlook

1. Implementation of the CHP Directive- overview and outlook Talking competitiveness! New perspectives for CHP/DHC EHP Annual Conference Brussels 22.6.2006 Jari Kostama

2. Contents • CHP Directive - content • Implementation of the CHP Directive • Comitology • Definition of CHP electricity • Harmonized efficiency reference values • Guarantees of origins • Outlook Jari Kostama

3. CHP Directive Content 1(2) • Definition for CHP electricity • When annual overall efficiency is over 75/80 %, all electricity is considered as CHP electricity => Quite easy criterion from our point of view… • If less than 75/80 % => calculations • Definition of high-efficiency CHP production • High-efficiency CHP production should give primary energy savings of 10/0 % compared to separate production of heat and electricity => Quite modest primary energy saving requirements from our point of view… Jari Kostama

4. CHP Directive Content 2(2) • Guarantee of origin for high-efficiency CHP • Analysis of national potentials • Framework for support schemes • Fair conditions for electricity grid access • Streamlining administrative procedures • Member States´ reporting issues • Commission reporting • Alternative PES calculations • Review • Committee Jari Kostama

5. Requirements for Member States • Establish the necessary legal basis for implementation • Establish a system for guarantee of origin • Initiate the analysis of potential • Identify heating and cooling demands • Feasible potential for CHP • Fuel availability, technologies e.g. micro CHP • Identify national barriers • Identified potentials will immediately call for action • Consider support mechanisms Jari Kostama

6. Requirements for Member States • Safeguard for fair and reasonable conditions • Grid access • Administrative procedures • Report statistics annually • Regular monitoring of development and taking new initiatives Jari Kostama

7. Implementation status in Member States • The requirements of the CHP directive have been fully implemented in some MS’s… • Many cases national legislation was given before the directive • …but some MS’s have done only the minimum so far • Examples of support mechanisms • Feed in tariffs • Green certificates, indirect • Investment subsidies, direct and indirect • Allocation of CO2 allowances • Tax reductions • Some other implemented measures: Guarantees of Origin, national potentials,… => Need for the Commission guidelines, need for harmonization of measures Jari Kostama

8. Comitology • Three Committee meetings so far • Determination of guidelines by a consortium of consultants (Cowi, ECN, Bremer Institute) • Euroheat & Power in the Advisory Committee • Guidelines on - Annex II: definition of CHP electricity - Annex III: reference values for separate production - Annex IV: studies of national potentials are still under preparation! => Next Committee meeting the 3rd of July- formal vote and Commission Decision in autumn? Jari Kostama

9. Debate on the Definition of CHP Electricity • Euroheat & Power launched a Workshop Agreement in the framework of CEN-CENELEC (European standardization bodies), CWA 14 • Background: provide guidance on implementation of Annex II and determination of power to heat ratio • Starting point: Euroheat & Power Manual • Workshop finalized in June 2004, Overall a 4-year process • Guidelines to implement SHOULD refer to the CWA • It is the production, not the plant, that is evaluated! Jari Kostama

10. Harmonized Efficiency Reference Values Jari Kostama

11. Harmonized Efficiency Reference Values • The same fuel categories • The best available and economically justifiable technology on the market in the year of construction of the CHP unit • The efficiency reference values for CHP units older than 10 years of age shall be fixed on the reference values of units of 10 years of age • The efficiency reference values shall reflect the climatic differences between Member States • Should have been established by the Commission by the 21st of February Jari Kostama

12. Harmonized Efficiency Reference Values / Power Jari Kostama

13. Harmonized Efficiency Reference Values / Power • Grid loss correction • Ambient temperature correction Jari Kostama

14. Harmonized Efficiency Reference Values / Heat Jari Kostama

15. CHP Guarantee of Origins; an important tool • To demonstrate the energy saving effect of CHP • To foster market transparency • To grow the market for CHP • To foster further harmonisation • With a few shortcomings • Only part of the CHP production will be covered • Only the origin of CHP electricity is guaranteed while the energy savings result from the combination of electricity and heat • System addresses electricity market actors only – not heat market actors! Jari Kostama

16. CHP Guarantee of Origins; requiring safeguards • Member States and the Commission need to secure proper monitoring and verification • Member States and the Commission need to secure data flow between certification bodies, authorities and international organizations • Disclosure for all CHP electricity production • GoO's must not replace but complement support mechanisms • Support mechanisms need to take care of the heat Jari Kostama

17. CHP Guarantee of Origins; CO2 savings • CHP Directive targets primary energy savings - Fuel neutrality is essential! • Emissions Trading Directive targets CO2 savings • EU renewables policy targets increase of i.a. biomass • Indication of CO2 savings on CHP-GoO's would be misleading and counterproductive => Avoid conflicts of interests and objectives • § Jari Kostama

18. Outlook • The Commission will (and should) give decisions on harmonized efficiency reference values and other guidelines this year • Member States will (and should) act accordingly • Full implementation of the CHP directive is needed for reaching several EU policy targets i.a. • Climate change prevention, • Security of supply, • Energy efficiency • Recognition of district heating as a means to collect heat loads, thus to enable CHP plant investments Jari Kostama

19. European heat market Jari Kostama

20. Thank you!