EU Recovery funds: where is the support for District Heating?

The text was originally published at https://energypost.eu/

With an average heating season lasting 200 days, Latvians need to keep warm. More than half (58%) of Latvia’s primary energy consumption is used for heating. Not only are the type of system and boiler efficiency important for effective heat supplies, but the energy source or fuel is also crucial.

Although most of Europe has turned its focus to meeting its heating needs through individual heating units powered by electricity, Latvia has a well-established, efficient and well-monitored central heating system that has the potential to boost the local economy by using locally-produced, renewable resources.

Modernising Latvia’s district heating system

A new briefing from Bankwatch and Green Liberty analyses district heating projects implemented in Latvia with the support of EU funds over the past 20 years. Thanks to this support, many changes have been made to Latvia’s district heating system in the last two decades, including renewed and expanded networks, new efficient boilers and a switch across most of the system from gas and other, dirtier energy resources to biomass.

Such investments not only make district heating more efficient and less polluting, they also make it more attractive financially. As a result of these upgrades, district heating can be the most affordable form of heating and provide full service for customers with stability, safety and comfort at the best value for money.

Read District heating – the role of EU investments in Latvia

Gas versus ‘renewable’ woodchips

Using fossil gas for district heating has for too long continued to receive direct and indirect financial support in Latvia. In addition to its negative consequences for the climate emergency, fossil gas also threatens Latvia’s energy independence, because it is still mainly imported from Russia. There has been a lot of greenwashing around fossil gas in Latvia for the last decade, including state support mechanism for green electricity that leads to support for fossil gas as a mandatory procurement component.

Switching to renewables is absolutely an improvement, but the only problem here is that the ‘renewable’ source most commonly found in Latvia is solid biomass or woodchips. Including more renewable sources in the energy balance will help Latvia to achieve its climate and energy policy goals, and Latvia already has substantial wood resources available locally and a thriving forest industry.

The EU does have sustainability requirements for the use of woodchips as biomass that should limit when it can be considered a renewable resource. These can be found in a 2010 report on the sustainability of biomass for use in heating and cooling, as well as in the draft EU Taxonomy for sustainable finance.

Our briefing demonstrates a predictably significant trend towards biomass use in Latvia. But the question remains for how long and at what cost can biomass be considered the solution.

Solar powered District Heating

Latvia should instead focus on its well-established heating network and efficient production of heat. Instead of locking in fossil gas and unsustainable biomass as the sources for district heating, Latvia needs to consider other innovations that will keep district heating using renewable sources, while also moving it away from reliance on biomass.

Latvia already possesses a good example of a modern and super-efficient, low-emissions technology system, the solar district heating plant Salaspils Siltums, which generates an estimated 12,000 KWh of power per year.

Inspired by the vast deployment of solar collectors in Denmark, Salaspils’ system was built in less than six months. Total project costs were just over EUR 7 million, of which the EU’s Cohesion Fund co-financed EUR 2.73 million. The plant provides all of the district heating capacity, which covers 85% of the municipality of about 18,000 people.

Other district heating innovations, like building the system as an energy-hub, implementing grid stability mechanisms or developing centralised heating and cooling systems, can be implemented in the future, provided there is political will and available financing.

EU Recovery Funds: inadequate long-term solutions

Latvia has an opportunity to really push the country towards a green and just transition, as it is set to receive up to EUR 1.9 billion from the new EU Recovery and Resilience Facility. Yet though a spending plan for the new recovery funds is currently being drafted, environmental groups warn that the current drafts don’t include adequate long-term solutions for curbing emissions or improving energy efficiency.

On 24 February, twenty Latvian environmental groups sent a letter to the European Commission expressing their concerns with the country’s draft recovery plans. The letter points to the limited funding for energy efficiency measures, which are a necessary complement to all well-functioning district heating projects.

No support for District Heating

Moreover, the draft plan does not include any support under the climate goals for district heating projects, which is a massive missed opportunity. Addressing climate and energy issues in Latvia cannot exclude heating, which has the largest impact on energy consumption. Funding is needed not only for developing non-emissions technologies but also for connecting new customers to district heating systems and for installing filters to minimise dust from using biomass.

Opening the recovery planning process to public consultations and including more ambitious climate goals and projects is crucial if Latvia wants to seize this historic opportunity and build back better. Earmarking funds from not just the Recovery and Resilience Facility but the country’s whole allocation from the upcoming EU budget can lead to innovation, improved energy efficiency and ultimately create a Latvian model of an efficient, effective district heating system.