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. 20.6.2006 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

3. 20.6.2006 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…

4. 20.6.2006 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

5. 20.6.2006 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

6. 20.6.2006 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

7. 20.6.2006 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

8. 20.6.2006 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?

9. 20.6.2006 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!

10. 20.6.2006 Jari Kostama 10 Harmonized Efficiency Reference Values

11. 20.6.2006 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

12. 20.6.2006 Jari Kostama 12 Harmonized Efficiency Reference Values / Power

13. 20.6.2006 Jari Kostama 13 Harmonized Efficiency Reference Values / Power Grid loss correction Ambient temperature correction

14. 20.6.2006 Jari Kostama 14 Harmonized Efficiency Reference Values / Heat

15. 20.6.2006 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!

16. 20.6.2006 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

17. 20.6.2006 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 –§

18. 20.6.2006 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

19. 20.6.2006 Jari Kostama 19 European heat market

20. Thank you!