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2017 COGEN Europe National Snapshot Survey

Executive Summary

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Overview of CHP in Europe

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CHP in Europe - OverviewElectricity and Heat Generation (2007-2015)

3Data source: European Commission, Eurostat, 2017

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CHP Generated Electricity and Share in Total

Electricity Production by Country in 2015

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0

10

20

30

40

50

60

70

80

90

Ger

man

y

Ital

y

Net

her

lan

ds

Po

lan

d

Fin

lan

d

Spai

n

Slo

vaki

a

Un

ited

Kin

gdo

m

Den

mar

k

Swed

en

Fran

ce

Be

lgiu

m

Cze

ch R

epu

blic

Au

stri

a

Po

rtu

gal

Ro

man

ia

Hu

nga

ry

Bu

lgar

ia

Latv

ia

Irel

and

Gre

ece

Cro

atia

Lith

uan

ia

Esto

nia

Slo

ven

ia

Luxe

mb

ou

rg

Cyp

rus

Mal

ta

TWh

CHP electricity generation (left axis)

Share of CHP in total electricity generation (right axis)

Data source: European Commission, Eurostat, 2017

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CHP Fuel Mix in the EU (2007-2015)

CHP fuel mix strongly influenced by fuel price dynamics & support schemes.

RES is increasing its share in the CHP fuel mix, reaching 20% in 2015.

18,0% 43,5% 20,6% 4,9% 13,1%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2007

2008

2009

2010

2011

2012

2013

2014

2015

Solid fossil fuels and peat

Natural gas

Renewable sources

Oil and oil products

Other fuels

Data source: European

Commission, Eurostat,

2017

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2017 Cogeneration National Snapshot Survey

…representing 95% of installed capacity in EU28 & Turkey

Expert contributions from 20 CHP national experts…

…capturing the European CHP industry sentiment

…expanding outside of Europe, with guest contribution from Japan

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CHP Market Developments in Europe

(2012-2016)

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CHP Installed Capacity CHP Generated Electricity

Growth

No change

Decline

No data

Generally stable installed

capacity but…

…more pronounced

standstill or decline in

generated electricity and

share in total electricity

production

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Main Factors Affecting CHP Markets at National Level

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Stable support schemes in some markets (especially for RES)

Positive on-site spark spreads in key markets (positive impact on small scale CHP)

Depressed wholesale spark spreads/low wholesale electricity prices

Unpredictable regulatory framework

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Policy Environment

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0%

10%

20%

30%

40%

50%

60%

70%

Positive

Negative

No change

Not clear

National Comprehensive Assessments of the

Potential for CHP/DHC (EED, Art 14.1)

Developing policy to promote CHP/DHC based

on indentified potential (EED, Art 14.2)

Eligibility of CHP under Energy Savings

Obligation (EED, Art 7)

Electricity system operators facilitating grid

access for CHP (EED, Art 15)

Percentages represent the share of CHP in

EU28 impacted by the implementation of

specific Energy Efficiency Directive (EED

provisions

Implementation of CHP provisions in Energy Efficiency

Directive – Experts’ Evaluation

10

Hardly any follow up in terms

of additional policy to realise

the identified potential

Member States

assessments of

CHP/DHC potentials

“nice-to-have”

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Available Support for CHP in EU28 & Turkey in 2016

11

0

1

2

3

4

5

6

7

8

9

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Feed-in Tariff Feed-in Premium Quota Obligation

& Certificates

scheme

Investment

aid/Capital grant

Tax incentives Other No

Share of CHP market (Left Axis) # of countries (Right Axis)

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CHP Markets Outlook

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5-year CHP Markets Outlook

In nearly 60% of the CHP markets in

Europe, experts expect steady and

moderate growth in the next 5 years.

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CHP in Europe OutlookPrerequisites for Growth

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Better prospects for the CHP sector are contingent on:

✓An ambitious implementation of the EED

✓A favourable and stable policy environment taking an integrated view on the energy

system & recognising the flexibility of CHP plants

✓(EU) state aid policy adapted to potential and needs of CHP sector

✓Applying fair/real-use grid tariffs charged on electricity self-produced & - consumed

✓Improvement of energy market conditions

✓Better awareness of CHP technologies

✓Improved investment/financing opportunities

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Getting the Clean Energy Package right for Cogeneration

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Energy Efficiency Directive – Key asks

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Apply energy efficiency across whole energy value chain

→ Account for both primary AND final energy

Set accurate EU PEF (Annex IV)

→ Proper methodology & value – current efficiency & 2.3 or higher

→ For EED only

→ For Ecodesign & Labelling of heaters account for seasonality and

electrification impact on increasing carbon intensity of heating sector

Strengthen Energy Savings Obligation (article 7)

→ Ensure cogeneration is the preferred alternative to final energy saving up to 25%, as part MS flexibility to deliver Art 7 obligation

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Renewable Energy Directive – Key asks

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Support Biomass use in high efficiency cogeneration for installations larger than 20 MWth (thermal input) and limit alternative support where cogeneration is not feasible (Article 26.8)

Consider high efficiency cogeneration to increase renewable heat share in energy consumption

→ Ensuring cost-effective, reliable and efficient heat supply to different types of energy consumers (Article 23)

Reward efficient and low carbon flexibility solutions that support the integration of electricity from intermittent renewable

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Governance – Key asks

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Cogeneration should be accounted in Member States Climate & Energy Plans (Art 19 & Art 4)

Member States should report on supply side efficiency as part of Annex II

References to limiting curtailment of cogeneration should be maintained as part Annex I

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Electricity Market Design – Key asks

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Maintain priority of dispatch for existing cogeneration projects & provide adequate definition for “significant modifications”, re-assuring market operators that the business case for their investment will not be lost (Electricity Regulation, Articles 11 and 12)

Maintain guaranteed access to the grid for high efficiency cogeneration, so limit curtailment as last resort solution especially for self-consumed electricity (ib.)

Include cogeneration in local economy as part of adequacy assessments(Electricity Regulation, Article 19).

Ensure transparent, cost-reflective and non-discriminatory network tariff structures based on the real use of the grid (Electricity Directive, Article 15.2).

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Cogeneration outside Europe - Japan

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Sneak Peak on Japan!

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Positive Market Trend

Political Backing

Optimistic Outlook

- CHP seen as key for security of supply

- Rapid growth in residential market

- Market entry of highly efficient CHP models

- CHP supported through tax incentives and subsidies (e.g. fuel cell micro-CHP) as part of energy & climate strategy

- New Feed-In Tariff for RES CHP

- Present growth expected to continue in the coming 5 years

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COGEN Europe • The European Association for the Promotion of Cogeneration

Avenue des Arts 3-4-5, 1210 Brussels, Belgium • T +32 (0)2 772 82 90 F +32 (0)2 772 50 44 info@cogeneurope.eu •

www.cogeneurope.eu

To purchase the 2017 Snapshot Survey:

Tanya Carre

Office Manager

Tanya.carre@cogeneurope.eu

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Alexandra Tudoroiu-Lakavice

Regulatory Affairs Manager

alexandra.tudoroiu@cogeneurope.eu