Strengthening support policies geared to renewable heat production

Oeko-Institut has developed recommendations for effective support instruments in EU member states

The increased market penetration of renewable energies in the heat market is a key element of achieving the ambitious expansion targets for renewable energies, which the EU aims to fulfil by 2020. However, in most EU member states there is substantial need for improvement in terms of the promotion of renewable heat production. While electricity production from renewable energies is now supported by a very broad range of instruments, there is a lack of comparably effective policy tools aimed at promoting heat production from renewable energies.

In the project “Policy development for improving RES-H/C penetration in European Member States (RES–H Policy)” Oeko-Institut analysed – together with nine research partners (including the Technical University of Vienna, the University of Exeter, Lund University, the Energy Research Centre of the Netherlands, and the Fraunhofer Institute for Systems and Innovation Research) – what support instruments are suitable on a national level for promoting the market development of renewable energies in the heat sector.

The goal of the project was to provide support for selected EU member states (Austria, Greece, Lithuania, the Netherlands, Poland and the UK) in implementing the requirements of the European Directive on the promotion of the use of energy from renewable sources (2009/28/EC) in national law.

Point of departure: Overview of different support options

As a basis for the analysis of specific national policy instruments a detailed overview of different support options was provided. “Up to now most member states have limited themselves to supporting renewable heat production through government-funded support programs,” says Veit Bürger, the project leader. But there are many other support options available. “If the heads of state and government really want to meet the set targets for renewable energies, they should think ‘outside the box’ and also consider other support instruments. They could then even relieve pressure on public budgets, which isn’t unimportant in times of limited resources.”

Qualitative and quantitative evaluation of national support instruments

For the project’s selected countries the research team assessed different national support instruments on the basis of qualitative and quantitative criteria. Key assessment parameters were determined, including distribution of the expansion target to different technologies (e.g. solar heat, ambient heat, biomass), the necessary funding, the avoided costs of conventional fuels, and job effects. “Our analyses give decision-makers important assessment parameters, on the basis of which they can make smarter decisions on future support policies,” says Veit Bürger.

General recommendations

In the following a selection of the most important recommendations provided in the research project “Warming up to Renewable Heat. Boosting Renewables in the Heating Market” is given.

• Coherent support policy. Policy framework conditions have to take into account the diversity of the heat market. Alongside measures for overcoming economic obstacles, non-economic barriers and regulatory and administrative obstacles, psychological and social aspects like personal attitudes, preferences and anxieties, and technical barriers and information deficits should be considered.
• Integrated policy measures. Programs for renewable heating and cooling systems should be coordinated with, in particular, programs geared to the energy efficiency of buildings, combined heat and power, and the use of industrial waste heat.
• Innovative support instruments. Alongside widespread use of financial support instruments such as investment grants, tax concessions, low-interest loans, etc. which are financed from the governmental budget, new instruments should be implemented such as obligations to use renewable energies, quota systems, and bonus models (in the latter case the instruments are financed via the apportionment rule of the German Renewable Sources Act (EEG) and not from tax revenues).
• Reliable investment conditions. Financial support programs must demonstrate high continuity and reliability in order to provide reliable and foreseeable investment conditions. Support conditions which change within the scope of the member state’s annual budget decisions lead to uncertainty and the discouragement of potential investors.
• Significance of existing buildings. Given the low building rate in most member states, the existing building stock is a key feature of support programs. Such programs should take this into account so that better use can be made of the current potentials of renewable energy technologies for heating and cooling in existing buildings. A significant share should be allocated to the non-residential sector (e.g. office buildings, commercial buildings, hospitals, etc.). This sector also has large potentials for renewable heating and cooling.
• Long-term perspective. New technology options must be developed for renewable heating and cooling systems and technologies which are not yet sufficiently mature to be launched on the market should be supported to facilitate market entry at a later date. Support policies must take this into account appropriately.
• Quality standards. To develop high market standards, support policies should not only address appliances that are of high quality and very efficient. The same holds for the installation requirements for the systems and appliances.
• Synergies in administration. The administration of support programs requires additional resources, e.g. for allocating funds and monitoring the fulfilment of duties. As part of efforts to minimise administration costs, it is advisable to make use of existing administration structures and, above all, transaction routines (e.g. with regard to energy tax, monitoring compliance with building directives).
• Monitoring and evaluation. Monitoring and evaluation of the effectiveness of support measures are crucial in order to recognise undesired side-effects at an early stage, to adapt support measures to changed framework conditions and ultimately to ensure that the set targets are realised.
• Transparency and data availability. In order to achieve high transparency, the member states should regularly evaluate the effect of their support programs and give appropriate accounts of them, paying attention to, amongst other things, data collection on the use of renewable energies in the heat and cooling sector.

Further information

The research project “Warming up to Renewable Heat. Boosting Renewables in the Heating Market” and further information can be found on the RES-H Policy Project website at: www.res-h-policy.eu.

Contact

Veit Bürger
Researcher, Energy & Climate Division
Oeko-Institut, Freiburg Head Office
Phone: +49-761/45295-259
Email