Utilities concerned as EU to grant energy efficiency greater sway

The European Commission is keen to prioritise greater energy efficiency in a move that has prompted concerns among utilities in terms of impact on their power sales.

At the moment heating and cooling amounts to 40 per cent of overall European Union energy use and the Commission plans to target energy wastage, making heating and cooling part of climate policy.

While big utilities are in favour of electrification, Brussels strategy is to have greater focus on district heating and cogeneration technologies.
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The Commission plans in February to formulate recommendations on heating and cooling with a view to update EU energy legislation and possibly draft new directives. In five "issue papers", seen by Reuters, the Commission presents options for a heating and cooling policy more focused on renewable energy and district heating systems that bring hot water into homes via underground pipelines.

The papers state that the use of renewables in heating should be boosted with tax measures, public procurement and public investment to stimulate the development of markets.

"We are convinced that in Europe we can do much better than today, when we are spending almost 40 per cent of our energy on heating and cooling," EU energy chief Maros Sefcovic told Reuters on Thursday.

Big power utilities such as EDF and E.ON fear that more renewables in heating and a switch to collective heating will further reduce power demand.

Choices between gas or electricity, between better insulation or more efficient heaters, and between collective or individual heat production could have a major impact on the business models of EU energy firms.

Renewable energy already accounts for 26 per cent of electricity production in the EU but just 16.4 per cent of heating and cooling.

The Commission estimates that half of Europe's heat demand is in areas where population density is high enough for district heating infrastructure, which would be more efficient than alternatives and could cover 40 to 70 percent of EU heat demand.

In less dense areas, electric heat pumps - which upgrade heat from air or ground water - and other new technologies offer the most energy savings for individual houses.

The papers also highlights the efficiency of cogeneration. A switch to district heating would be a huge change for most of Western Europe, where households mainly rely on individual gas-fired boilers for space heating and hot water.

In coming weeks, trade groups and country representatives will lobby the Commission to try to steer the drafting of the communication, which will be a first step towards integrating heating and cooling into EU energy legislation.

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