Joint Committee on Environment and Climate Action debate -
Tuesday, 20 Jun 2023

Decarbonisation of the Heat Sector: Discussion (Resumed)

An Cathaoirleach

I have received apologies from Deputy Farrell.

The purpose of this morning's meeting is to continue the discussion on the decarbonisation of heating. On behalf of the committee, I welcome the following witnesses to the meeting: from the Irish District Energy Association, Ms Yvonne Murphy, chief executive officer and Dr. David Connolly, chairperson; and from Aalborg University in Copenhagen, Professor Brian Vad Mathiesen. Members of the committee should note that Professor Mathieson will only be in attendance until 12 noon, Irish time, at which point he will have to leave the meeting.

Before we begin, I will read a note on privilege to remind witnesses of the long-standing parliamentary practice to the effect that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. If their statements are potentially defamatory in relation to an identifiable person or entity, I will direct them to discontinue their remarks and it is imperative that they comply with any such direction.

Our witness who is attending remotely from Copenhagen should note that there are limitations to parliamentary privilege when witnesses are not on the Leinster House campus and as such, he may not benefit from the same level of immunity from legal proceedings as a witness who is physically present on the campus.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable. I remind members that they are allowed to participate in the meeting only if they are physically located in the Leinster House complex. I ask those members who are joining the meeting remotely that, prior to making their contributions, they confirm they are on the Leinster House campus.

I will go first to Ms Murphy for her opening statement.

Ms Yvonne Murphy

I extend my thanks to the Chair and members of the committee for inviting us to speak this morning. I am joined by my colleague, Dr. David Connolly. We represent the interests of Ireland's district energy sector. Dr. Connolly is one of the co-founders of the Irish District Energy Association, or IRDEA, as we are likely to refer to it today. He continues to play a leading role as our current chairperson. I am IRDEA's first chief executive officer and have served in that capacity since the beginning of this year. Prior to my appointment, we operated on a voluntary basis with the support of contract administrative, research and communications services. The fact we have begun to evolve and grow is indicative that we envision significant growth in the sector in the coming years and my appointment is part of that. We made a short submission to the committee in advance of today's proceedings that gave a brief overview of our organisation's focus and a basic sense of how we believe district energy can aid the decarbonisation of the Irish heat sector. We intend our opening statement to add to our submission and we look forward to engaging with the committee and expanding on both this morning.

By way of background, IRDEA was founded in 2018.

Our key purpose is to promote the development of low-carbon district energy in Ireland. I emphasise the low-carbon aspect because that is certainly an area of priority for us. This includes district heating and cooling, albeit that the greater focus at present is on the heating side. We are the only association in Ireland dedicated to supporting and representing the interests of the district energy industry and sector. Our stated mission is to see district heating grow to account for at least 30% of heat demand in Ireland by 2050. We are a membership-based organisation, with core funding supplied primarily through annual fees paid by our members. As of this month, we have 27 members in our ranks. Among those members is a broad variety of specialism, expertise, commercial focus and size. Our members range from locally focused energy co-operatives, local authorities, academic institutions and consultancies to large-scale utilities and multinationals at the other end of the spectrum. There is a really broad mix. As such, we span the value chain and project life-cycle of district energy projects in Ireland. many of our members have experience and interests in different jurisdictions across Europe and further afield. We believe the depth of expertise in our ranks is one of our greatest assets. We like to use that as much as we can to deepen understanding and learning about the sector as it evolves and grows.

I will pass over to Dr. Connolly, who will give the committee a bit more of an introduction to district energy.

Dr. David Connolly

Good morning to all. I thank the committee for having us here today. I will paraphrase rather than read verbatim because I find it easier to speak from the soul and off the top of my head rather than from a piece of paper. I will hopefully make four key points that it will be great to discuss in detail. A number of those points might surprise members immensely, but I can assure them that there is plenty of evidence to show that there is massive potential for district heating in Ireland.

The first point I would like to emphasise is scalability. District heating can be rapidly deployed at scale in Ireland far beyond what might be expected. Historically, we have struggled to build more than a few kilometres of pipework each year, whereas countries of similar size are building hundreds of kilometres of pipework to decarbonize their heat sectors each year. I am happy to go into that in some more detail later on.

The second point relates to the potential. We have seen analysis from a number of different bodies, such as the University of Flensburg in Germany and the Sustainable Energy Authority of Ireland, SEAI, which has shown that up to half of the buildings in Ireland are suitable for district heating. Not 1%, a few per cent, or 10%. Up to 50% of our building stock is in areas that would be deemed suitable to have a low-carbon heat network supplying their heat. That low-carbon aspect Ms Murphy mentioned is the critical part of that, and how these hot water networks will be supplied with low-carbon heat. That is all based on renewable heat and waste heat sources. I hope to go into this in more detail during the meeting, but I will give one example now. We waste more heat in Ireland than is needed to heat every building. Again, this is not a small amount of heat that is being wasted or a small percentage that we could potentially supply; this is enough waste heat to heat every urban building in Ireland multiple times over. That gives members a sense of the scale. The buildings are in the right areas and the potential to use low-carbon heat is enormous.

The third point is that there are a couple of significant barriers. We can talk about them in more detail later, but the main one is that it is actually not possible to apply for a licence to run a district heating pipe under a street in the same way that electricity cables, gas networks, cold water mains, or telecoms networks can be put in place. As can be imagined, that is a huge challenge to putting pipe working in place.

The final point I will make, and this is what really excites me about district heating, is that the supply chain exists. There are 500 TWh of district heating in Europe today. Our target is to have 2.7 TWh by 2030. We need to add 2.7 TWh on top of an existing market that is 500 TWh in size and that serves 70 million customers across Europe. This means that if we want to order something from the market, we could pick up a phone tomorrow and get what we need to start developing projects. I look forward to going into any of these points in more detail, but I truly believe this is an extremely exciting opportunity to decarbonise urban heat in Ireland.

Professor Brian Vad Mathiesen

I am grateful for the committee's invitation. I am professor of energy planning at Aalborg University in Denmark. I have been working with energy systems and energy transitions for the last 15 years. Along with my colleagues in our group we try to understand the role and potential of different parts of the energy system. Having said that, I will share my slides which the committee will also be able to receive afterwards. I ask the Chairman to confirm once the committee members are able to see it. Is it on the screen?

An Cathaoirleach

Yes, they are there now. Please go ahead.

Professor Brian Vad Mathiesen

What I am about to say is based on a number of scientifically based research projects financed by the European Commission. We have a project called sEEnergies which can be viewed on our website. We also have a number of projects that we jointly call Heat Roadmap Europe where we also have a website. The heating sector is subject to quite a lot of turmoil these days as we have an energy crisis that is not at all over. We have seen that with initiatives in REPowerEU and the high prices where we have 20% to 25% less gas consumption in the winter period which is a significant achievement by the European Community. There are vast differences across Europe but the general picture is that quite significant savings in natural gas have taken place.

The issue is how do we understand and continue these savings because there are differences between the countries. Some countries have created quite significant structural changes through changing the heating systems. Some have got considerable savings based on pure savings like end demands not being met. I will come to some of the solutions that we can talk about.

As Dr. Connolly mentioned, the heating sector is really an underestimated part of the European system. The map on screen shows how much of the entire energy demand for Ireland is represented by heating and cooling - it is around 45%. Therefore, what we do in the heating sector matters and, in my opinion, it has been hugely neglected not only by the European Commission but also by most member states.

In our research we try to understand the heating sector as part of an overall energy system transition meaning that we have to understand the entire supply chain of a future green or decarbonised energy sector. This is what we have tried to do in many projects. A slide illustrates our approach in a project called sEEnergies where we look at buildings, transport, industry and energy grids. We also try to relate this to the European Commission's ambition for a decarbonised climate-neutral Europe in the publication called A Clean Planet for All outlining scenarios for a carbon-neutral Europe. We try to compare our results and those results.

When we analyse these kinds of systems, we try to understand how we can use the different grids in a smart way. There seems to be considerable focus on how to integrate renewables based only on the electricity sector, which is highly problematic.

As I said previously, since heating is such a big part of our problem then of course it does not make sense to solve the problems of integrating renewables isolated in the electricity sector. We need to look at the transport, industrial, and heating sectors as well. There are huge synergies in doing that and I will just mention one that Ireland could benefit from, which is the storage of energy. District heating really creates a possibility to use the cheapest storage available. The most expensive electricity storage is the Tesla Powerwall, which some members may be aware of. I believe this is problematic. In our transition we should be careful with these very expensive solutions. When we go to large electricity storages, there could be pumped hydrogeneration on a hill where it could go down to close to €100 per kilowatt hour. If one compares this to the thermostat side we can have individual storage at €90 per kilowatt hour, even down to €1 per kilowatt hour, if we have pit storage.

When we look at flexibility the individual heat storage is really not very flexible. If Ireland focuses solely on integrating renewables and balancing its system with individual heat pumps and the flexibility they may provide, this is really not going to help a lot and Ireland would have to install quite a lot of capacity on the electricity side to support transitioning the heating sector solely by heat pumps. When it is cold it is going to be cold for weeks and it is not very well correlated with electricity supply from renewables. On the other hand, thermal storage provides a very flexible option where one can use electricity, large-scale heat pumps and other sources that I will come to shortly.

In the synergies project, we look at the different sectors and we try to identify the different solutions. We try to help this smart energy systems approach, and by doing that we can have a much cheaper transition than otherwise. We have also looked at Ireland in this project and people may go to our website to have a look. In any case, we are able to decrease the primary energy consumption in Ireland and in Europe by more than 40% - in Ireland it is by up to 50% - because there are some huge inefficiencies, for example, in using boilers in the heating sector currently.

The heating supply in our vision for Europe is illustrated on the right side of our presentation, where one can see the Clean Planet for All strategy. The 1.5° Tech scenario represents the European vision and the sEEnergies1.5° scenario represents a balanced system that we have identified, which is 20% cheaper and still as resource efficient. What we do here is to reduce the existing building demand by 40% which means that we insulate the building. Insulation of buildings goes hand-in-hand with district heating. A significant amount of excess heat can be integrated. As Dr. Connolly said, in Ireland there is enough heat to heat all of the houses. This is also the case when we look at Europe as a whole. We have waste heat enough in Europe to cover all the heat demands if they were, of course, located next to the heat demands, which they not always are. In our scenarios we then choose to use less of the excess heat demand than there is potential for. We identify different solutions for all of the EU 27 countries, plus the UK. We can see that there is a vast possibility to use excess heat. Looking at the presentation, we can see figures for excess heat in Ireland and the UK.

If we take the example of the UK, which people may be familiar with, it can be seen that we actually have excess heat to more than half of the district heating we propose there. On average, we suggest around 50% district heating plant supply for Europe, which is currently at 12%. This figure of 12% is higher than what Ireland has, as the committee knows.

What does this heat production look like? What we can see is that to harvest renewable energies other than electricity from wind power through individual heat pumps, we need to build a thermal grid and the thermal grid is able to include quite a significant amount of industrial waste heat. We are also talking about power-to-X heat in the future. We have geothermal. We have waste incineration, also in a scenario with significantly more recycling. We have a small amount of solar thermal, and then we have very large-scale heat pumps. As opposed to what many on the committee may think, we will need power plants in the future. When we operate these power plants, they will operate much less than today but we can still use the excess heat from those. What we can see is that there is really huge potential to use a diversified heat supply in the district heating system that enables us also to be much more robust against any kind of price fluctuations on the sources we have. We have made a roadmap for expanding district heating in Europe, and I am happy to share that.

In sEEnergies, we created policy recommendations. We also have a number of other projects where we have done so. One of the key elements is to look at a building envelope, to have strict rules about the building envelope and not to mix the building envelope demands with the demands for sustainable heat supply. When these things are mixed up, it is difficult to see the possibility for community-based solutions, which will always be more cost effective if people have a neighbour. We also have other recommendations about local screening for waste heat, local heat planning procedures, and recommendations for ownership models and deployment models for district heating.

I would like to end by saying that in Denmark we have more than 60% district heating and, as part of our response to the energy crisis, we are currently increasing the district heating supply to cover more than 70% of our district heating demand within the next three or four years.

That concludes my opening remarks. I am happy to take questions.

An Cathaoirleach

Thank you very much, Professor Mathiesen, for a very interesting presentation. I ask members to indicate to ask questions and the Clerk will take a list.

I will go first and I direct this question to Ms Murphy or Dr. Connolly. Dr. Connolly mentioned that it is impossible to apply for a licence to put a thermal grid in the ground. We are reviewing the Planning and Development Act at the moment. Has this issue been broached? Is this the opportunity to make provision in that Act?

My second point is addressed to all of the speakers. We have the challenge of matching power generation with supply. We also have the challenge of new housing and whether we design for heat pumps or for district heating. I spoke to Dr. Connolly before the meeting commenced and up until then it was my impression that the generation needed to be near the demand. However, from our conversation the impression I got was that the heat can travel quite a few kilometres.

Professor Mathiesen said that locating heat-generation demand was important. Maybe we should clarify the potential and the technical challenges in transporting heat too.

Dr. David Connolly

On the licence, if someone wanted to put an electricity cable or a telecoms fibre in the road, they would apply to the regulator - the Commission for Regulation of Utilities, CRU, in the case of electricity or ComReg in the case of a fibre cable - and get a licence to put the cable or fibre network in the road if one has reached certain tests. However, because we have no history of district heating, there has been no need for the regulator to have the power to hand out a licence to someone to put a district heating pipe in the road. Without that licence, we expect it will be immensely challenging to build district heating networks that will stretch 5 km, 10 km or 15 km in length along the public road. It would be necessary to have that to have the right of way to physically construct something in the road. We think the planning and development legislation could be a place to enable that. We are trying to raise awareness that this is something we need as we are conscious it is going through the Houses at the moment and this might well be a window to enable that.

On distance, when we speak to people in Ireland who are looking at district heating, the perception is often that heat can be moved hundreds of metres or a kilometre or two. However, take the example of the Copenhagen network on which Professor Mathiesen lives. The spine of that network alone is about 100 km long and the entire pipe work on the system is probably thousands of kilometres long. I am not sure of the exact figure. The first phase of a project in Ireland would be more than capable of transmitting heat at least 5 km or 10 km. It is probably back to perceptions. In different countries experience leads to different perceptions of what is possible. From talking to many stakeholders, it seems there is a perception that one can move heat a much shorter distance than is possible. Professor Mathiesen is quite correct that the heat sources still need to be close to the heat demand but what we find when we engage with stakeholders is that what close means is very different from what is possible. People think it has to be right next door whereas it can be a couple of kilometres away and still be very viable.

An Cathaoirleach

I thank Dr. Connolly. Does Professor Mathiesen wish to come in?

Professor Brian Vad Mathiesen

I will share an image, which shows Dr. Connolly's point. The rule of thumb is that the higher demand centres one has then the longer away production plants can be because the bigger the pipes, the lower the losses. The losses in a district heating grid is not from the transmission system. I am showing the committee a map with black lines. There are very small losses on these kinds of grids. The losses occur in the piping going out to the houses. The more densely populated the areas, then the less length the smaller pipe going into the house will be. There are many places in Denmark where there are transmission lines of several kilometres. The world's biggest system is in Moscow but the map I am showing the committee is one of the world's biggest district heating grids. It features a transmission system with quite a lot of production units on it. Misunderstanding distance is a problem because the main production can be placed quite far from demand centres.

An Cathaoirleach

That is very enlightening and has certainly corrected my impression. I will go to Deputy Bríd Smith.

Deputy Bríd Smith

This is fascinating stuff and there have been very good submissions from everyone. I do not know enough about it to be able to challenge any of it but I do not think it is challengeable. It is very interesting and positive. It does look like it will be the future for heating buildings, particularly in the context of the measures we have to take to reduce our emissions, and it is very exciting.

My concern is a bit different. I am concerned by what happened here last winter when the price of energy went through the roof. Most of us saw 50% to 60% increases, but those with homes in district heating systems, and the Minister told me in a reply to a recent parliamentary question that there are about 11,000 in Ireland, saw an increase of around 300% in their energy bills. The usual regulation or limitations do not apply to them. They cannot shop around to get costs brought down, as we are all told to do, as it does not apply to them and they are not covered by the same protections as other households. They are not protected from being cut off because they are registered as a vulnerable customer, for instance. I asked several times about the role of the Commission for Regulation of Utilities, CRU. I believe the CRU has a certain role since last February but it does not seem to have any role that is meaningful. It is very concerning.

If this is the future and the way we need to go to reduce emissions, then like everything, we have to bring people with us. We cannot leave them behind. This will definitely leave people behind if we do not get our act together and set about changing it and giving proper regulation, whether to the CRU or another body. Somebody has to be able to regulate it, to regulate the price and the suppliers and to give certain freedoms and space to the customers so they can feel they are being treated the same as everyone else. The constituency I represent is full of apartments that are run on district heating systems and it is also full of homes like mine that are not. The letters I received from people about the bills they received last winter were just unbelievable. I was left open mouthed that this could happen but it turns out it is happening because the CRU has no regulatory role over this. That is something this committee needs to look at, to bring to the Minister's attention and to change. I am serious about this because we want to see our emissions come down but we must bring people with us. It is like saying there will be no just transition. District heating sounds really exciting from what the scientists and the experts here today have said but we must address this.

Dr. David Connolly

I absolutely share the Deputy's concern and frustration with that. I will tell her something that will astonish her more than anything I have said earlier, which Professor Mathiesen can probably confirm. While all of us here were suffering immensely from incredible price hikes throughout 2022, 90% of district heating customers in Denmark, which is about 1 million people, saw zero increase in their heating costs and some of them saw it reduce. We have to ask how we in Ireland can have 300% and 400% increases in our district heating prices when, throughout the same energy price disaster that took place throughout 2022, 90% of district heating customers in Denmark saw zero increase and some saw a reduction.

In Ireland, we do not really have any district heating. The Danes would call what we have blokvarme, or block communal systems which just heat a building. Any of the heating systems we have which we think of as district heating are effectively just a gas boiler in the basement of an apartment complex heating a building communally whereas what we mean here by district heating is capturing all the waste heat that is being thrown away, putting it in a pipe along the street, removing the gas boiler currently being used in the basement and sticking in the waste heat stream to supply the heat for that building. Hence we get to the situation in Denmark last year, of which we are incredibly envious, that when gas prices went through the roof, the price of the heat being thrown away did not.

I completely hear the Deputy's frustration around the failure of the CRU.

It is probably a much longer-term failure, namely, that we did not connect those communal heating systems to the vast amounts of waste or renewable heat they could have been using but, rather, had them still using gas, in effect. That meant that as gas prices went up twentyfold in 2022, it was rippling through to the bills of the people who were on these communal heating systems. There is good news. We may be able to put patches on it in the short term but the ultimate solution is to get those community heating systems off natural gas and onto these waste heat streams that are present across Dublin city as soon as possible in order that they can have a stable heat price, or at least, given that one cannot predict the energy world, a very high probability of one, into the foreseeable future. They would no longer be dependent on natural gas but, rather, on low-carbon waste heat.

An Cathaoirleach

I am mindful of Professor Mathiesen's time. As he has just 15 more minutes, we will come back to the regulatory question, which is important in the Irish context. He may wish to speak on the Danish regulatory approach. I will allow members to direct questions to Professor Mathiesen because he has limited time.

Deputy Richard Bruton

I thank the witnesses for their very good presentations. Who drives the system in Denmark? Is it local authorities taking a block-by-block area? Do they pick areas that have the potential density and relatively low retrofitting costs and build it up in blocks? How does it relate to mixed ownership, that is, public ownership versus private ownership? I presume there is a significant cost to connection to the individual home even after the spine of the system has been laid. Who pays for that sort of thing? If a system is not planned with that in mind, does it become a much bigger obstacle when retrofitting? It seems most of our stuff would have to be retrofitted.

I ask Professor Mathiesen to clarify his remarks on heat pumps. Is he saying we are anticipating too great a role for heat pumps coming off the electricity grid? I did not understand the point he made in respect of our approach to heat pumps.

Deputy Darren O'Rourke

I ask Professor Mathiesen to expand on the points relating to his policy recommendations. I ask him to touch on those three items.

Professor Brian Vad Mathiesen

I thank the Deputies for their questions. I have taken notes and will go through the points.

On the communal district heating systems that are in place, I highly recommend being careful in respect of how these things are worded. District heating is an infrastructure like the electricity grid. What is put into that grid is what defines the price. The committee may not be familiar with how those more expensive systems have been designed. In Denmark, systems with natural gas combined heat and power have experienced very low heating prices because the heating has been paid for by the electricity part. Natural gas has not only created high prices; it has also created low prices if it is like that. There is a vast number of sources that can be used. To call district heating one system and to base our discussion on one type of system would be a very bad situation. We need to transfer the current systems and build new systems. We have a lot of literature explaining how that can be done and I am happy to share it with the committee.

What we will need in the future is a flexible system that can integrate all of these renewable and waste heat sources.

With reference to the slide that is being shown, I will try to explain the heat pump situation. What I try to explain in respect of heat pumps is that if domestic consumers look at their bill, they will quickly realise they use far more heat than they do electricity for other purposes. When we start to focus only on heat pumps, the system becomes extremely vulnerable in the sense that, on average, two or three times the number of kilowatt hours are used for heating as are used for electricity. All that heat is placed in a few months during winter, with quite high peaks. This exposes and challenges the electricity grid but it also means we need power plants at the other end to make sure we are able to meet those demands. The heat pump community will say individual heat pumps are flexible. They are flexible, but not to the scale we need to integrate renewables. I am not against individual heat pumps. Obviously, it is an extremely important technology and we need to do that. Where it is possible to build district heating where we can also put in heat pumps and other sources, however, a much more robust system that also safeguards more against fluctuating prices is created.

On the price index for Danish energy consumers, the slide being displayed provides information on district heating during 2022. It shows the gas price, electricity price and some of the other smaller parts. As we have a district heating system that is based on a large variety of prices, district heating has been stable or reduced in price during this period rather than it having increased. It safeguards not only against energy poverty but also against inflation, against which we are all fighting in Europe.

As regards the question on of who drives the system, the Danish system was developed through many years but many countries in Europe are building their own regulation. In Denmark, it is built in a way that the local communities have to make heat plants. When they make the heat plants, the local utilities are able to build or expand the district heating plants. Who drives it? It is very locally driven. It is driven by the communities. My recommendation for Irish policy is to enable local communities to develop district heating grids with the ownership structure they prefer in those local communities. With a locally driven system, there is collaboration between utilities, if present, and the municipality. The municipality tries to kick-start issues. If there is a community that wants to build a new system, the local knowledge helps along the lines of building new pipelines. To build a new pipeline, you need to know the location of the local school, factory or hospital. Those are the units that would be connected when a new district heating grid is built.

The big consumers are identified in order to then gradually connect the smaller communities. In Denmark, our systems go all the way to the detached houses. It is really locally driven. There is a lot of regulation on how this is done to protect the consumers, not against high prices per se, because the prices are due to a lack of resources, but against too high profit-taking and loans at too high interest rates. Of course, Ireland has to find its own solutions. In the Danish system, the communities are not able to take any kind of dividend or profit when they build district heating. Having said that, those plants that supply district heating to a grid, that is a monopoly system, they might be able to take a profit if they sell electricity and then they sell the heat. There are rules about that.

Who pays? That is a good question. There is an energy crisis situation and a before-the-energy-crisis situation. Normally someone who builds a new house in a new area would pay somewhere around 50,000 kroner, which is equivalent to approximately €7,000. A new house would involve that. Then the homeowner is de facto a co-owner of the system. Their tariff and what they pay then also pays to expand the systems. The consumer pays. In a situation where prices are high, and in a situation in the Danish community where we want to allocate workforce to the area, there are subsidies to mitigate the very high cost of installation that we see right now, which we also see on individual solutions, by the way. There is no problem in having what was referred to as retrofit. I guess that question was about what the costs would be on an existing urban development. That is very different from community to community. It depends on what kind of urban setting it is and how big the costs are for the construction work. In Danish society at the moment, we are connecting around 60,000 homes to district heating in this energy crisis situation, hopefully up to 80,000 next year. These are not new houses but old houses that had natural gas before. It is really possible to do that.

On the policy side, that is a really long story. I refer to the concerns raised before about members' experience with high prices from these communal systems. Our system is based on what I would call trust. There are two kinds of trust that we need to build into this kind of system. One part of the trust is that consumers are not connecting to a monopoly where they can be exploited. There is a trust in how much they are going to pay and that if they pay a lot, it is due to high energy prices in general, not due to high profit-taking. The second part of this trust built into our system would be about who owns the system. People are sure when they connect their pipe that they are not going to be owned by a Swiss company, somebody abroad or somebody they do not trust. These two elements are really important and are built in. There is also a policy regarding the build-out.

Our policy is based on enabling the local community to carry out heat planning and create the processes that engage and release local investment. I hope that answered some questions. I will stay on the call for another 15 minutes in case members have more questions.

An Cathaoirleach

I thank Professor Mathiesen for a very comprehensive answer. I want to give Deputies Bruton and O'Rourke a chance to address questions to Dr. Connolly and Ms Murphy as they did not have the opportunity.

Deputy Richard Bruton

Maybe we could ask questions to the professor before he leaves?

An Cathaoirleach

Yes.

Deputy Richard Bruton

His account is very comprehensive. The issue for a country like our own is that we do not have communities used to developing heat plans. We have sustainable energy communities, but their ambitions would not tend to go beyond insulation-type work in most cases. In the professor's view, can municipalities and-or central government do something to prime the pump of this model? We are at zero in terms of genuine district heating grid as the professor would describe it. Does Government need to enunciate a vision beyond the 2.7 TWh to start to map the ambition, where development might start and what the pump-priming initiatives would be? Is that what we need to do, coming from a zero base?

Professor Brian Vad Mathiesen

I thank the Deputy for the question. There is a competence build-out that needs to take place. I am pretty sure that Dr. Connolly can also elaborate on this. One of the things we did in the 1980s when we wanted to exploit this waste heat potential was to have a governmental initiative. It was kind of like a travel team that went around to help different communities and regions in Denmark to engage in this process of heat planning. That is one thing that can be done. It would involve a central competence. I do not know if it would mean travelling today, but that is what they did in the 1980s.

Another thing would be to highlight the possibility, if there is willingness in the Parliament, to build legislation that enables the local community. Members could try to replicate what we have been trying to do for the past decade or more in Europe, namely, to highlight that there is big potential here and enable this knowledge to hit the local community. In Europe we have knowledge of the potential for district heating down to the square kilometre, including in Ireland. Members can have a look at our heat roadmap on the EU website. They can even find their own village there. We also have some reports showing what the processes could be if states want to engage in developing a heat planning process whereby they decide they want individual heating in one area and district heating in another.

Central government can do a lot. It can also create targets where each region would have to develop a plan and identify the technical potential. This would, in the process, build in competencies in the communities as they would need to become knowledgeable about the heating technology and what it could do for them. There are a number of actions that can be taken. The informative process can be started long before starting to redesign the regulatory framework to be built more on trust.

I hope that answered the question.

Senator Pauline O'Reilly

My questions are for whoever wants to answer them and are not specifically for Professor Mathiesan. There was a reference to just 1% of Ireland having district heating. We do not have a history of collaboration when it comes to pretty much anything in Ireland but especially in construction, other than where a developer builds a housing estate or block of apartments. What are the low-hanging fruit? What is the next step, in the views of the witnesses, for Ireland? I fully agree with some of the earlier comments, and Deputy Bruton's point about mapping this out for the country was very good. We need to look, not just in the coming years but over the next decade, at what we are going to do, and this is a really exciting proposal. Are there some low-hanging fruit to allow us to move from that 1% to 10%, for instance? Is it on the commercial side or in homes, for example?

Dr. David Connolly

As briefly as possible, I might give a synopsis of where we are, after 15 years of trying to inject life into this sector, and what has become the ultimate bottleneck. Believe it or not, we have been talking about doing something at scale throughout that period. The crux of this comes down to what happens when we decide to build infrastructure for €50 million or €100 million that is the spine of the network, on the basis we hope to persuade sufficient numbers of customers to connect to it in order that we can pay for that infrastructure in which we will have invested. In a context such as in Ireland, where that has never been done, it is a fairly high-risk environment to be in. At the moment, the only people able even to consider undertaking such a project are a local authority, given it is the only body that is allowed to put any kind of infrastructure in the road. In Europe, that is probably one of five to ten types of business models we could choose from, with the other four to five or six to seven, depending on which report we read among the reports that put some of these business models on the table, being a mix of some kind of private entity and a local authority working together. They tend to be brought together because the former is typically more comfortable with risk, while the latter is central to any kind of a district heating network being rolled out.

As of today, however, a private entity in Ireland is not allowed to put a district heating pipe in the road. There is no licence for which it can apply to say it wants to put a pipe in the road. I have been on sites sitting across from homes that could heat hundreds of thousands of homes if the developer were allowed to put a pipe in the road in front of them, but nobody is even looking at that in great detail, other than a few of us in the Irish District Energy Association, because they know they could not put the pipe in the road even if they found out it was a good idea. The number one ask of the Irish District Energy Association, therefore, following a survey of members towards the end of last year, is to have sight, as soon as possible, that a mechanism is coming that will allow people to put a pipe in the road. In our view, there is absolutely no shortage of low-hanging fruit projects, but there is a signal at the moment to the effect that even when you find one, and I have seen them, you will not be allowed to do it.

The natural question is why we do not just let local authorities lead it all, but that is a very challenging step for a local authority to take with a project that deals with a sector it has never seen. There is not really a strong competency in Ireland to do it, and we would have to dedicate significant bandwidth within the local authority to take in that kind of competency and undertake a project of that scale and technical complexity when there is no experience of it in Ireland. It would be very different if we were at, say, 15% district heating and we had even a small ecosystem of people who could be called on. This is not a view I developed only in recent months. I formed it having been in the district heating space in Ireland for the past ten to 15 years and dealing with many different versions of trying to see the sector start.

Dr. David Connolly: As briefly as possible, I might give a synopsis of where we have got to, after 15 years of trying to inject life into this sector, and what has become the ultimate bottleneck. Believe it or not, we have been talkjing about doing something at scale throughout that period. The crux of this comes down to what happens when we decide to build infrastrucutre for €50 million or €100 million that is the spine of the network on the basis we will, we hope, convince sufficient numbers of customers to connect to it in order that we can pay for the infrasturcutre in which we have invested.... In a context such as in Ireland, where it has never been done, it is a fairly high-risk environment to be in, and at the moment the road.

This is the crossroads we have constantly hit, whereby only one type of entity is at present enabled to do it, and all other entities that would like to do it are not allowed to do it. In our view, the way this industry could go, from putting in a couple of kilometres of pipework a year on average to putting in 100 km, 200 km or 300 km, as other countries of our size in Europe are putting in, is to facilitate the fact both types of ownership could work.

I would be surprised if only those types of projects ended up being developed. What I can see happening is the same outcome that has happened in many other European countries, whereby as soon as both types are facilitated, partnerships and mixes will emerge all over the place because there is no way this can happen without that happening. I can go into more detail, because I am conscious of having the floor for too long, but there are oceans of examples of this. We could not supply 70 million customers throughout Europe with this infrastructure without every type of mix of partnership and business model being in existence today. There are oceans of examples of how it could be done, but the mistake we are making in Ireland is that we are simply not allowing 60% or 70% of the horses that could run the race to run, and that has led us to a very difficult set of circumstances.

Senator Pauline O'Reilly

That is helpful. There are two ways to make anybody do anything, one of which is where it is in their best interest to do it, and a lot of people who are signed up to Dr. Connolly's organisation are in that space. The other is where it has been determined by law, regulations or a climate action plan, for instance, and local authorities all now have to develop their climate action plans. I acknowledge Dr. Connolly is saying we should let organisations do this themselves and go around the local authorities, but is there a route also through the local authorities if we were to develop regulations such that the authorities had to facilitate those working in the space, whether through a climate action plan or some other kinds of guidelines or regulations?

An Cathaoirleach

Before Dr. Connolly responds, I thank Professor Mathiesan, who needs to leave, for his time. It has been very valuable to us and his contributions will help us as we deal with this exciting subject for our country.

Dr. David Connolly

All the feedback we get from members, and even my experience of this, suggests it is highly unlikely that one of the top three priorities on the list of anyone developing a project would not involve meeting the local authority, given that would have to happen if a pipe had to be put in the road. The developer would need to have a very good sense of what level of interest or support the local authority had for the project, from the second or third day-----

Senator Pauline O'Reilly

I apologise for interrupting, but I did not mean that the developer would bypass the local authority in the sense they would never speak to each other or anything like that. I am looking at it only from the point of view of whether we have a couple of options. Of course, there still would be collaboration with the local authority even if we went down the route Dr. Connolly is talking about. I would not for a moment suggest there would not be.

Dr. David Connolly

It might be useful to send a position paper on this after the meeting but our proposal, which is just a proposal, is that anybody who wanted to develop a district heating network in Ireland would have to pass a fit-and-proper-person test, which is a similar structure to what we have in the offshore wind or waste sectors. Our proposal is that if such a threshold were passed, we could on the back of that build some requirements for a local authority where an entity that approached it about a project were deemed a fit-and-proper person as a developer. The local authority could be obliged to provide information such as that relating to the existing utilities on the road, the routes where projects may be being developed and the kinds of heat loads that local authority or other public sector buildings might have. There could be something like that, where a certain threshold that would have to be passed would kick in some requirements.

At the other end of the spectrum, if we step back from local authority and speak about the public sector at large, in any of the works I have seen, the existence of a district heating network in a city hinges absolutely on whether public sector buildings decide to connect to it.

For example, if individual public sector buildings in a city all decided to install an individual heat pump, that would be the end of a district heating system for that city because of what Professor Mathiesen referred to earlier. Those anchor loads that underpin that spine of the network are the public sector buildings in the vast majority of cases. I know we started with a niche discussion about local authorities and help could be provided there but from the wider public sector perspective, they will certainly underpin these networks in many cases.

Ms Yvonne Murphy

I want to add to that in terms of finding mechanisms to encourage the proliferation of district energy. District-led heat planning and that sort of thing are key in moving it forward. The idea that one size would fit all does not fit for district energy. It is contingent on where the heat is located, what the needs of the individual districts are, what the topography is and what all the various different elements are. From a central strategic basis, that is the sort of instruction that would be helpful to send out to regional and local government to make sure it is trickling downwards and that the individual mapping and planning that need to happen on a local basis are there to take advantage of local opportunities. That would be in addition to the public sector buildings, the opening up and the different models of ownership and development. It is about adding in those various different layers to unlock it as a whole.

Deputy Darren O'Rourke

It is depressing to listen to this and to draw the comparison between Denmark and Ireland and the opportunity that was lost. Professor Mathiesen referred to planning going back to the 1980s and in the period since we deregulated our energy system in this country and disempowered local government. At best we had a tokenistic approach to district heating that is not even district heating, is costing people a fortune and is damaging the concept of district heating. That is just a point of frustration that I am sure some of the witnesses share.

It is clear that there is spectacular opportunity in this, as shown by other countries. I want to pick up on some of the questions that were put earlier and an issue I have raised in the past. I am a Deputy for Meath East, I have been a member of the local authority in County Meath and I was on the climate action committee there and have stayed in good contact with it. We have lots of industry in Meath, including waste energy industry, that has the potential to play a role in real district heating systems. There is a gap in understanding the mindset in some of the pieces that have been touched on here in terms of distance. On the low-hanging fruit, maybe the witnesses could speak about the opportunity in Poolbeg and what might happen there immediately. What are the immediate priorities to enable this type of development in Ireland in the time ahead?

I will flag some of the challenges in the resourcing and capacity of our local authorities, as they are not in this space at the minute. They are under-resourced in many areas and have additional responsibilities heaped on them on a daily or monthly basis. Is there capacity to deliver on that? There is a need for co-ordination between different agencies, Departments and the private sector to deliver on this.

I presume that the drive for this must come from the Government in the form of legislation and regulation, that local authorities must be empowered to deliver on this, and that it has to come with a step change with regard to planning, building, and delivery. We can see lots of challenges even with ESB connections and Uisce Éireann connections. This is potentially another strand of that. This is the kind of step change that is needed and the elements that might be involved.

Dr. David Connolly

I can only agree with a lot of the Deputy's statement. The Deputy's reflections there are exactly my own sense from the crossroads, which is that in the past it had to be led by the local authorities. However, as the Deputy has reflected upon, the resources available are so tight and given the things the local authorities have to do now, this is a huge additional burden to take on. To date it has been really only been Dublin City Council and South Dublin County Council, with the benefit of an energy agency, that have had the capacity to try to take on projects. Our sense from the membership is that there is a huge appetite for the private sector to develop projects and to partner with local authorities in many different business models to try to make projects happen, where the skills and expertise, as well as the investment, can come but where the partnership can be done in lots of different ways. There are probably six or seven mainstream business models that can be done, depending on circumstances. It usually comes down to the individual local authority rather than it being a case of "This is the right one to do". I imagine that those types of conversations will happen very naturally and very early in any kind of a project because one would have to engage with the local authority very early in a project. Out of that would emerge ideas discussions and negotiations around what might suit the particular project.

I will also reflect briefly for the committee that from the numbers we have seen, from the analysis we have carried out in the Irish District Energy Association, IrDEA, and from talking to projects, the conditions for really good scalable projects in Ireland absolutely exist. For example, I would say that Poolbeg is one of the best opportunities in Europe and not just in Ireland. This analysis is somewhat out of date because we did it back in 2018 but when IrDEA did the analysis back in 2018, at that time there were so many different sources of heat in Poolbeg - and not just the incinerator - there was more heat going into the Liffey than was needed to heat all of Dublin. This was not a case of going a kilometre or two down the Liffey and that would be the end of it. This was the scale of heat available because there were so many other sources on the Poolbeg peninsula that it was enough to remove natural gas from Dublin city. The project is a fantastic one. I am aware that Dublin City Council has just released a new document on it last week, which is great, and we are hoping there will be more momentum now in trying to see the project realised. From all of the technical analysis it is a really excellent project. It is definitely not the only one, however, but there are conditions. Professor Mathiesen referred to a heat atlas. which is also on the IrDEA website. One of the partners for developing this was the University of Flensburg, which Professor Mathiesen works with. They literally show every town and city in Ireland in a certain colour indicating what part of it is suitable for district heating. As we mentioned earlier, up to half of the buildings in Ireland are suitable for that.

The step change we see to really unlocking this would be a signal through the likes of the Planning and Development Act that people would be facilitated in being able to put pipes in the street in this regard. This would send the signal that people should start developing these projects. It would send a signal that if one starts now trying to create these projects then people will be able to deliver them perhaps in two years' time or whenever it may be when people are allowed to build them. The signal is not there at the moment that this will be possible. For many people, not having that signal means that the door is shut for now and they cannot spend hundreds of thousands of euro doing feasibility studies, sites surveys, or scanning the roads. A signal through the Planning and Development Act that this was starting to be created and worked on would be a first real and significant kick. We can share our own position paper on that piece of work also.

There are other two or three other items, one of which is replicating the grants scheme in the UK. That has proven successful and I would say the UK is a similar state to Ireland in terms of gas-based heating systems being converted to district heating. The second point, which I will leave to Ms Murphy to elaborate on, is that of equalising the grants between heat pumps and district heating. Right now, we are incentivising people to put heat pumps in cities, which is undermining the entire business case to have district heating where we can actually put into a network. Ms Murphy might want to deal with those matters.

Ms Yvonne Murphy

Obviously, heat pumps are an incredibly important part of decarbonisation and the journey that we are on, but there is a critical mass that could potentially be lost if we move too prolifically across to heat pumps in areas that would be very effectively served by district energy. This is where the high-level strategy and planning are needed to make sure we identify where the heat demand and heat loads are, so we are able to say that these would be preferable for district energy rather than individual heat pumps, and we can then deploy the two technologies in a complementary way where it is most useful and efficient. We need to get out ahead of that.

One of the areas that is quite obvious is that there is no equalisation in terms of the financial incentive for individuals connecting and thinking about their own plans for how they are going to heat their homes, but also even in terms of the infrastructural load. That is where the grants come in. Dr. Connolly spoke about the UK. There are three areas of investment that are needed for a district heat network: one is the heat generation side, one is the consumer side and the other is the network side in-between, which requires significant capital expenditure, capex. It is a very high level, front-loaded investment but that investment serves needs for 50 years or thereabouts. As a result, it is significant in terms of what we are looking to achieve and put in the ground for future generations.

It is fairly well acknowledged and recognised that the State has a role in that. The UK is looking at 40% of support for capex, which sounds very large and daunting. If we look at the numbers in the Irish context, however, our overall target for 2030 is to achieve 2.7 TWh of district energy. If we translate that across, it would be a capex support of between €500 million and €1 billion. When we put that in the context of the retrofitting budget, for example, and the range of different things we are investing in, it is important that we see this for what it is, and that is the long-term investment that it represents but also the kick-start that the industry needs.

To go back to what Deputy O'Rourke and Dr. Connolly have said, it is really about market certainty and de-risking these projects. If we want to unlock the private sector investment that can introduce agility and that kind of capital injection that is needed for this kind of infrastructure to be developed, what we need is that de-risking. The market signal that this would send is that Ireland is open to this, that we are taking a partnership approach and that we understand that a leg-up is needed. It is not the case that we would envision that level of support in perpetuity, but, rather, that it be leveraged for the kick-start to which I refer, and it could then be tapered off as we get the sector off the ground.

An Cathaoirleach

Those are very interesting points. Has the Irish District Heating Association done an analysis of the opportunity cost of not supporting the industry? The Government makes the decisions. It sounds like that €500 million to €1 billion investment that might be needed to get the industry going can be compared with the support that is there for retrofitting. If we do not do this, is it going to cost a hell of a lot more to install heat pumps everywhere? Is there an analysis that can help the Government to make a decision?

Dr. David Connolly

We have never done the analysis. It is a very good point. It is a piece of work that we would like to do, as we presented at our AGM last week, so, hopefully, in the near future, we will be able to give the committee actual numbers. Off the top of my head, I can give some that would be indicative or at least analogous to what I think the likely outcomes of such a study would be.

The first point is the heat density in our urban areas. This is the magic word. Some of the largest district heating areas in Europe are in Milan, Brescia and Zagreb, all very warm places, and all because of heat density and how close buildings are put together. If we look at our heat density, that is the metric that SEAI and the University of Flensburg used to say that Irish buildings could convert about half of the building stock to district heating. In those areas, I would be astonished if district heating is not a magnitude cheaper than the cost of everyone putting in their own individual heat pump. Off the top of my head, I would say that we should be getting something like a 50% reduction in installation costs when comparing one to the other. When calculating the cost of building the network, building the heat facilities and connecting buildings to one another versus every single building putting in its own heat pump, the district heating network should come out at something like half the cost.

The reason is this. If we imagine that we all put in a diesel generator to produce electricity in each of our homes versus building and sharing a power plant, the cost of us all having an individual diesel generator means that we all need enough capacity to cover peak demand every day of the year. It is the exact same concept with district heating. We could put a large heat pump on a district heating network and have much lower investment costs than having an individual heat pump in every single building because we are effectively all sharing the cost of a very large heat pump. I am not sure if these numbers would be specific to Ireland but from seeing it in other places and with people having done projects, it has typically been somewhere in the region of half when people shared a network and shared the generation capacity versus doing it all on their own.

The other big factor in all of this is the price of generating heat. If I had been asked this question two years ago, I would have given a bunch of modelling results. What Professor Mathiesen showed the committee is the real world that everyone was trying to model for the last 20 years, which was that while we were all seeing gas prices double, triple and quadruple because we were basing our heat supply and district heating on waste heat streams and locally available renewable heat, they kept the price of district heating stable. Off the top of my head, I would say that it could have saved us some €500 million to €1 billion on fuel costs last year if we had magically had district heating in our cities instead of natural gas. It was for that reason that, as Professor Mathiesen said, even though Denmark has the highest share of district heating in Europe, it had record installation levels throughout all of last year. I was astonished when I heard the numbers because I know how many homes Denmark has converted, but that is the underlying driver of all of that.

An Cathaoirleach

With regard to the 50% of buildings that are suitable for district heating, and that is what the heat density map shows, that is not looking at the generation, so we are not saying the 50% are near a waste heat stream. If we were to aspire to connect 50% of our building stock, we would be talking about new heat generation plant. If we are, then what kind of heat generation plant are we talking about?

Dr. David Connolly

For some, it might require new plant but many can actually use the waste heat streams. We have a projection for today and we have a projection for 2030. Let us ignore today and just talk about 2030 because, by the time district heating is at scale, that is likely where we will be. Even in the year 2030, we will have more waste heat in Ireland than is needed to heat all buildings, based on our forecast. What will happen is that, depending on where we start a network, we will either get that on day one or, as the network grows, we will reach it eventually. Let us talk about Cork versus Dublin, no better analogy. Dublin can access its waste heat very quickly because it is located right in the city centre.

In Cork, a large amount of waste heat is quite a distance from the city, in Aghada and the refinery area. They will not get access to that for many years.

An Cathaoirleach

Does Cork have the advantage in that it might be possible to build out in Aghada whereas in Dublin we would be trying to connect to an old city, essentially?

Dr. David Connolly

The old city is perfect. The old city is where we would be bringing the biggest benefit. One of the biggest benefits which I should have flagged earlier is that when a building is connected to district heating, heat can typically be supplied at 70°C or 80°C which means we do not need building fabric upgrades to get a 70% or 80% upgrade in the carbon emissions footprint. That does not stop anybody who will be connecting to district heating in, say, 2027 from upgrading their windows. That would mean they would buy less heat, in the same way that using LED instead of incandescent light bulbs reduces consumption. It means we would not have to have all the building retrofits done before doing anything, which is often a major hindrance, especially in city centre locations. City centre locations are incredibly difficult projects, but many people in the industry are interested and willing to do them. They are ideal places for district heating to start because heat density is highest there.

Going back to the Deputy's point about waste heat, with district heating we have to apply a time horizon to every answer. For some projects, getting access to waste heat will happen on day one but for others it may be in year ten. I would be astonished if most of our major cities were not connected to some kind of waste heat stream at some point in that time horizon. I would not expect all of them to have it on day one. I would expect most of them to get there in ten or 15 years, after a network is developed. The flip thing then happens. When industries see there is a district heating network, they start to locate nearby. I was in a sulphuric acid plant once and the manager said that if it was not for the district heating network in that city, they would be in China. That is the benefit they had by being there.

An Cathaoirleach

On the Planning and Development Act, one ask is to look at how we might license the thermal grid under that Act. Is there another piece on residential density to make district heating viable? High density, which the Danes do very well, lends itself to district heating. Might it make sense that the Planning and Development Act would make special provision for high density to make district heating work?

Dr. David Connolly

Completely. High density is fantastic for district heating networks. We have many new apartment blocks being built around the country at the moment. They would all be ideal customers for a district heating network. Some 70 million customers around Europe today are buying their heat from a district heating system. There is no technology leap required or anything like that. We have many communal systems, which Deputy Smith referred to earlier, which could quickly transition over if we had a network running by the font door. As my colleague, Ms Murphy, mentioned earlier, it would be really straightforward to equalise the heat pump grant for those customers. If they are making a decision for a complex of 200 apartments, they might get €4,500 per apartment to put in a heat pump but they get zero to put into district heating. They might be in a perfectly suitable area for district heating but they are being incentivised to do something different which will actually make it more difficult to put district heating into that area in the future. That may be one of the low-hanging fruit fixes.

Senator Lynn Boylan

I would echo what Deputy O'Rourke was saying. It is very depressing when I think of what the potential was and how slow we have been in grasping district heating. Dr. Connolly has more or less answered the question about the need to retrofit. While we want to get to greater efficiency, the benefit of district heating is that it is not necessary to have a house retrofitted to a certain standard as is the case with heat pumps. It is possible to get the district heating system in place and then work through retrofitting later.

I attended a district heating conference where the point was made about not having to retrofit the existing housing stock. It was also said that the benefit for new housing stock is that it reduces completion time for houses. This reduces costs as well because it is a case of doing one system rather than installing heat pumps individually. The new houses that are going up now are of a very high energy rating but they all have individual heat pumps. Is it true that opting for a district heating system rather than heat pumps can speed up the delivery of houses and reduce the cost at which they are delivered?

Dr. David Connolly

If the developer is confident that there will be a pipe at the door when the building is complete, it is a very quick process. The biggest challenge is being able to make that commitment. At the very least, we try to encourage new builds to be district heating-ready and to have the pipe in the basement waiting for the day the pipe outside the door arrives. Using district heating speeds up construction and reduces the cost of the building. There are many fancy words for what district heating is but the basic premise is that it is a heat exchanger. Heat exchangers are very well understood. The technology has been around for hundreds of years. There is nothing complicated. It is very easy for a normal plumber who has worked with oil and gas boilers for the past 40 years to install and maintain them. It is very likely that many plumbers in Ireland have worked with heat exchangers in other parts of their business. For developers, instead of installing an individual heat pump, getting district heating-ready means putting a heat exchanger into every apartment. There are lots of fancy names that the district heating sector uses but effectively it is a heat exchanger. The heat comes up from the basement and goes through the heat exchanger, which moves it into the radiators and the hot water scheme in the house. Because they are tiny they should take up a lot less space so there is more room for people to live in the apartment. Heat exchangers should be relatively low cost to install because they are such a well-known technology and have been around for so long. It should be something an existing mechanical guy or lady is able to install. That is why it should be cheaper and better.

The one big concern, which comes back to that famous old problem, is that the developer needs to be confident that the State will get a pipe to the door at some time horizon that is in line with theirs. If I wanted to supply a local network to ten or 20 local buildings, as soon as I leave private grounds and go onto a public road, in district heating I cannot apply for any kind of right of way to put the pipes in the road. In another sector such as gas, I could apply for the licence. If we can get that confidence with a new build area, there is a very strong case that district heating would be more appealing.

This is a small point but it is very important, maybe in terms of policy. I lived with district heating in Copenhagen. To live with district heating is very enjoyable. I turned on my hot water tap and hot water came out. I closed my hot water tap and hot water stopped. I did not have a boiler to maintain, no emissions, no carbon monoxide alarm or fumes. I just paid per kWh like I do with electricity. From a quality of life perspective, which is often overlooked because it is not necessarily a funding or policy support, it is not like we are asking people to sacrifice anything. District heating has a very high quality of life bonus. With all the caveats that people are getting a fair price with an efficient, low-carbon system, there should be very happy customers at the end of the district heating pipe. I say that from personal experience.

Senator Lynn Boylan

It might have come up earlier that there is probably less embedded carbon in laying pipes as opposed to installing individual heat pumps.

Can this be taken on board? The selling point of needing no boiler maintenance, where the hot water is available without the carbon monoxide, is an important point for households. Is there also a benefit in regard to embedded carbon? When Dr. Connolly spoke about the heat exchangers, another point struck me. Should the Government look at a just transition for plumbers? Fossil fuel boilers are still being installed as part of the SEAI grant scheme. Putting an end to that will leave mechanics or plumbers saying, "Well, that is my livelihood down the road". Is there a body of work to look at that workforce so that if we get the district heating system off the ground and running, there is long-term viability for them if they acquire whatever skills are needed to bring them up to speed on district heating? At least their careers can continue. We will not put them out of business.

Dr. David Connolly

The opportunity to reskill is enormous. Right now, as painful as it is say, we are continuing to expand our gas network, continuing to put gas and oil burners into people’s homes and, in many cases, it can be challenging to say, “Stop doing that, instead we want to do something different”. In regard to the people putting pipes into the streets, 90% of those skills should be transferable to putting district heating pipes in the streets. The only unique skill set that cannot be translated over is the welder of the pipes for the district heating network. To put this in context, the training course to upskill a welder for district heating pipes is in the ballpark of two to three weeks. We are not asking people to take on a six-year course. If that is the most specialised skill that needs to be transferred, it should be transferable. With regard to the people or plumbers installing boilers, they should be familiar with what a heat exchanger is, how to plumb it together and connect the pipework. It is not at all the leap that might be the case with a heat pump, for example, where there is a good deal more complexity to the installation. That would require some upskilling. However, it involves minor jumps in existing skills rather than learning completely new skills. The last thing we want is that people will be unemployed out of the transition. However, there is a huge possibility here because district heating will experience the same issue as the rest of the economy. We will be tight on tradespeople and labour. If it was a case of being able to redirect labour from fossil fuel boiler installations to district heating and heat exchanger installations, it would be an ideal way to transition across.

Deputy Ruairí Ó Murchú

In fairness, I have listened to most of this but that does not mean I will not need to be corrected at some stage about something I did not hear. Professor Mathiesen’s take was interesting. Deputies O’Rourke and Smith dealt with the issue of communal heating systems. On some level we all see the potential in regard to district heating systems. Everyone gets the idea of Poolbeg and this huge volume of waste heat. Why not use it? There is not even too much worry about losses from efficiency or whatever, as it is all waste. That is spectacular. However, a particularly Irish situation has been created. There was a Danish idea on communal heating systems being fed by some form of biomass. A number of them were built throughout Britain and Ireland. For multiple different reasons, they morphed and became fed by gas. From an environmental point of view, as has been said, the difficulty is that most of the heat loss happens through the house. In some cases, there could be a 50% efficiency rate. That means half is being lost and, therefore, it takes twice the amount of gas to feed. When gas prices went through the roof, people were absolutely hammered. Where did this come from? It was probably only then that people discovered what sort of heating system they were on.

Carlinn Hall in Dundalk is one of these. It was actually opened by the then Minister, Deputy Ryan, in 2007. It went through a series of Celtic Tiger disasters.

I believe Britain has changed the rules. It is something we need to do so that there can no longer be gas-fed systems and no new ones can be built. I have spoken to Kaizen and to Frontline who tell me they are constantly talking to developers who are putting these systems in, saying to them not to do so in any way, shape or circumstances. The problem for them is they will take the calls from customers who are looking at ridiculous prices now. They say they make their money from the upkeep of the system and not from the price. However, when you are called Frontline Energy, it is probably not the greatest name in these particular circumstances and you are going to take the heat, for want of a better term.

That is a particular circumstance we have here. There is a steering group on district heating. I would like to think it will come out with recommendations fairly soon to deal with this anomaly. It needs to be dealt with. It is the Achilles' heel for the witnesses in regard to selling district heating. If someone came along regarding laying pipe, no matter how good an idea it was, unless that pipe was going to Carlinn Hall to alleviate the problem we have at the minute, that would be an issue.

I had a decent enough interaction with the Minister, Deputy Ryan. It is not the first time I brought up this issue. He said the SEAI was:

...to complete a report on the viability of retrofitting an existing communal heating system with a shallow geothermal energy source using Carlinn Hall as the case study. [That has been carried out.]

The report will be provided in two parts. Recommendations will be made on heat network efficiency, options for a low-carbon heat alternative and the costs of installation and operation. The final draft of this initial element is due for review by the project steering group and is expected to be completed within the next month. The second part will extract the main learning on heat network decarbonisation in Ireland. This part is expected to be completed by the end of the summer.

Obviously, I would prefer if this was already done and dusted and we could move on. I hope this will be relatively positive and that we can operate this, because we looked at solutions such as putting back in woodchip and whatever else. I heard all these stories that the reason people switched was because you could not get woodchip. This was during the glory days of renewable heat incentive, RHI. However, I spoke to the developer and he said that actually all these stories turned out not to be true, that it was a case of some particular delineation or marking scheme the European Commission had at the time that resulted in gas ending up being higher than woodchip and that, to meet the planning requirements, they had to switch to gas. I have put these questions into the Minister, the Department and its officials. I am fairly sure that if I do not get answers fairly quickly, they will switch to parliamentary questions. What I have pointed out is an anomaly.

There probably is a solution for biomass. Do not get me wrong. Anyone in a management company in Carlinn Hall or wherever will want to see the outworkings of this geothermal study. He or she will not want to pick the second-best option when the first one might be around the corner. It is only around the corner, however, if the SEAI is following up with a grant scheme, because a third-party company will have to do this building and all the rest of it.

I am interested in the witnesses' views in that regard. I am quite taken with what they are saying about the distances as we all would have all understood them. I also heard of studies carried out on heat storage and moving it from one place to another. I am thinking almost in cartoon terms, but I was told that it was almost as if a 40-foot truck would have container units that would take heat. I think have thrown out enough. I am interested in the view of witnesses in this regard. It is a particular problem that needs to be dealt with legislatively. We then need to deal with the retrofitting scenario. I get the witnesses' idea about heat pumps but sometimes we are looking at the larger, collective scenario.

It might involve bespoke solutions where it is part heat pump, part geothermal and part fed from whatever. Unless this is organised at that level, we will have all these anomalies or nothing will happen because there are too many bad news stories out there. Anyway, that is enough.

An Cathaoirleach

That is enough.

Ms Yvonne Murphy

I am sure Mr. Connolly also has a response. As Deputy Smith said, this is no good for us. Without consumer confidence and affordability, our industry will not be able to realise the level of demand that is needed to justify the network. It is very much in our interest that this be resolved and that the consumer confidence piece is there. It is incredibly unfortunate and we have significant sympathy with those who have been caught in this. It was an unforeseen situation when many of these schemes were put in place, particularly in terms of choosing gas. The long-term stability of low gas prices was relied upon.

In addition to any efficiency issues, the difficulty with these schemes was that they were sufficiently large scale to be on commercial contracts that operate much like tracker mortgages. They do not benefit from the buffer of hedging but very much track gas prices. The one benefit, which is cold comfort to those who have had a very difficult winter, is that this tracking moves both ways and so those prices should be tracking downwards. We absolutely need to learn from that.

In terms of the members directly involved and also those who do not operate that end of our organisation, we are very keen to make sure that measures are put in place for that kind of consumer protection. We recognise that it is an issue now and it needs to be dealt with. We are hopeful a strong regulatory regime but also strong levels of competition and efficiency across the networks would deliver the kind of system that could create dependability and affordability for consumers.

Mr. David Connolly

Over the past 12 months, the curtain was pulled back on what we always perceived to be the availability of choice and revealed what is actually happening when it comes to the availability of choice. I will outline two extremes of that. In any normal energy nerd conversations I have, people say to me that district heating is a monopoly that provides no flexibility and options as to supplier.

Deputy Ruairí Ó Murchú

People are reliant on their neighbours.

Mr. David Connolly

People are reliant on their neighbours. However, they say natural gas is not a monopoly because many suppliers can offer different rates on gas. However, what is behind those suppliers? Over the past 12 months we have established that there is very little flexibility behind the suppliers. We may have a different supplier, which uses a different logo and can tweak the rate by a couple of cent per kWh, and we can switch between those each year. However, the only thing that can be put into a natural gas grid is natural gas. That means we are reliant on whoever supplies the gas supplier with the natural gas.

While district heating is a monopoly locally, the one big benefit it has as long as everyone is behaving in a fair and reasonable way, which any person who wants to continue to have customers and grow a network should be, is that it is possible to heat water in many different ways. Even the cavemen knew how to heat water. It is possible to get a geothermal heat pump, a biomass boiler, solar thermal and all the waste heat flowing out of industry. When push came to shove in 2022 the reason that Denmark had stable heat prices was that it could rapidly diversify that supply. Even though the network might be a monopoly, the suppliers into the network have choice in how to heat their network. It is possible to heat water in many different ways.

Unfortunately, I do not have any examples and it is a pity that Professor Mathiesen could not give the committee one. People in Denmark on a district heating network that was using gas would have likely rapidly transitioned over to something else because it has a central energy centre. It is not like the example the Deputy has given where the boiler is in the basement of everyone's apartment.

Deputy Ruairí Ó Murchú

This is a housing estate; it is not even an apartment. It is probably somewhat anomalous compared with the rest of them, which are nearly all apartments - the 200 homes.

Mr. David Connolly

The energy mix on the district heating network in Denmark started with coal because that was cheap back in the 1970s at the time of the oil crisis. Then the green agenda came and it transitioned over to biomass. Then the sustainability of biomass became a concern and now we can see the growth of heat pumps, electric boilers and excess wind energy being used. No amount of regulations would have fixed the problem from last year because we were all at the end of a tap, the gas tap, which could not be rapidly fixed. However, if we had true district heating, which is not a small estate or individual apartment but an actual energy centre with 20 km of network at a single point in a city supplying it all, somebody rapidly taking out a gas boiler in an energy centre and rapidly putting in something else can be done in months to reduce heat costs. That is just one energy centre requiring one piece of equipment.

I often use this analogy. Have any of the members felt anything different coming out of their plug as Ireland has gone from zero to 40% wind power? The answer is "No". Everyone switches on the lights as they always did and has the fridge running the same. That is exactly what it is like for a district heating customer as Denmark has experienced in switching to various fuel supplies over the years because it is very simple thing to do. However - and it pains me to watch the news stories from last year - it is incredibly difficult to go into a building, take out a boiler and replace it with something else. That is a very invasive thing to have to do and is very difficult to do at scale.

It has been very saddening to see what has happened over the past year because we are very conscious that it frequently gets associated with the bigger picture of district heating. However, the ultimate solution to this needs to be not a small estate or an individual apartment block getting a solution. We need to provide cities and towns with access to that low-carbon waste heat and renewable heat sources in a central plant so that for the next crisis that comes along, we can then react rapidly to ensure we do not see those price escalations we witnessed in the past 12 months.

Deputy Ruairí Ó Murchú

I accept everything that Mr. Connolly has said and obviously this is an issue that needs to be dealt with. Carlinn Hall will clearly need a bespoke a solution. Hopefully, geothermal with a follow-up grant scheme or whatever will provide it with that, yet beyond a bespoke solution for that estate, we all understand the heat produced by a data centre or whatever. I am just wondering what is produced by a pharmaceutical company, for example. I am trying to think of everything that exists around-----

Mr. David Connolly

They have it.

Deputy Ruairí Ó Murchú

-----the general Dundalk area and whether we are talking about kilometres rather than 1 km, which would provide considerable bandwidth.

The regulation or legislation is necessary so that we do not continue with the problem that we have created, which even Britain has dealt with but we have not. Unfortunately, we are still slow to react. The information I got from that developer is correct. It was the European Commission's view that woodchip, biomass and whatever are not sustainable for the long term across Europe.

Mr. David Connolly

I am not 100% sure.

Deputy Ruairí Ó Murchú

It definitely makes sense. Grant schemes exist. If we are only talking about a small number of these, some companies could put the capital expenditure in and they would swap for biomass. They would be able to benefit from SEAI grant schemes. I am not sure that we have that part in play. Even if geothermal is theoretically possible, it need to be ensured that the grant scheme follows up. The bigger question is a feasibility study or a review into what exists in a particular area, how much heat is provided by varying types of operations and how we might go about that.

Dr. David Connolly

Off the top my head, and I would have to check with some of the members, but we are probably talking about 150 of these communal schemes in the country. I would imagine that at least half of them, if not more, are probably in areas that have waste heat very close by. These are only off the top of my head and are indicative numbers, but there are huge possibilities. I am not sure about the particular site the Deputy referred to. However, as a general solution to the problem, I would be astonished if the vast majority of those types of schemes would not be. I say this because they tend to be large apartment complexes by their nature and they tend to be in high density urban environments anyway. As an enduring solution, I would be confident in saying that there should be solutions available nearby that would showcase waste heat or some kind of renewable heat centre.

Deputy Ruairí Ó Murchú

Perhaps Dr. Connolly's organisation needs to be party to this conversation to make sure that everything is on the table when determinations are made. We will follow up afterwards.

An Cathaoirleach

Thank you. We are at the end of the session which has been very thought-provoking. I think all the members probably have many more questions. We are going to try to tackle the heat challenge. The session today will help us with our report, which will ultimately go to Government. We will certainly try to capture the asks.

If the witnesses want to come back to us with any further relevant information they would like us to know - the development of a position paper was mentioned-----

Dr. David Connolly

Yes

An Cathaoirleach

-----that would be very helpful. I would also ask the witnesses to consider the planning and development legislation which is going through the Oireachtas in the next couple of months and how that can be leveraged to support the development of district heating in the country. There are two sides to it. There is the very specific licensing of thermal networks in public roads and public lands, which is not a simple process. It is quite complicated, no doubt.

There is something else about density and making sure urban densities are high enough for very good reason. If they are, then they support district heating which is ultimately a low carbon solution for our residential sector. In that regard, I suggest that the witnesses might think about our sister committee, the Joint Oireachtas Committee on Housing, Local Government and Heritage, which is looking at that legislation. I think members there will be very interested in hearing what they have to say about it. I thank the witnesses once again. I also thank Professor Mathiesen, who had to leave earlier, for a very engaging and interesting session. We very much appreciated it.

Deputy Ruairí Ó Murchú

Is there any chance we could put a couple of questions to Professor Mathiesen on possible alternatives for some of those communal heating systems?

An Cathaoirleach

If the Deputy wants to direct some questions through me and the secretariat we can relay them on.

The joint committee adjourned at 1.08 p.m. until 11 a.m. on Tuesday, 27 June 2023.