District heating (DH) systems provide multiple economic and environmental benefits. Their inherently high efficiency contributes to lowering the cost of heating in dense urban areas and industrial centres. The combined production of heat and power (CHP) leads to higher fuel efficiency and lower emissions of greenhouse gas and local air pollutants. The role of DH systems in decarbonising heat supply has been strengthened in the recent revision of EU energy and climate legislation. The Energy Efficiency Directive and the Energy Performance of Buildings Directive introduced new requirements for efficient district heating and cooling systems, which determine eligibility for certain types of public funding. Additionally, they mandate municipalities with more than 45,000 inhabitants to develop strategies for district heating.
Romania, with its extensive DH network of over 4,380 km and approximately 1.05 million customers, should be well-positioned to reap the benefits of centralised heating. However, decades of infrastructure neglect, uneconomic business models dependent on public subsidies, and outdated system design have resulted in consistent decline of connections to the DH networks. The regulated prices of heat have relied on subsidies to cover operational costs and shield consumers from higher prices. This has strained local budgets and left little room for financing the necessary maintenance works, which increased the network losses. Out of the 10.7 TWh of centralised heating produced in 2022, only 6.7 TWh was sold to consumers – energy losses and operational consumption have therefore accounted for no less than 38% of the energy produced. The highest losses were recorded in Constanța, Iași, and Arad, cities with some of the lowest shares of households supplied by the local DH networks. The system was operated most efficiently in Râmnicu Vâlcea, which is also the municipality with the highest share industrial heat consumption from its DH network.
As DH operators have been unable to bankroll their own investments, they have come to rely on investments from EU funding and different types of public support. While most infrastructure retrofitting has been funded by governmental and EU grants, the investments implemented so far often lack strategies for reducing fossil fuel use and integrating modern renewable technologies, heat pumps, and waste heat. Meanwhile, several European cities have already pioneered initiatives to store thermal energy, capture and use energy from wastewater, deploy heat pumps, and integrate renewable energy and waste heat.
The strategies implemented at the local level for thermal energy provision within the 11 municipalities analysed in this paper show an overwhelming focus on maintenance and refurbishment of existing networks. These priorities are coupled with investments to replace existing thermal plants with new gas-fired CHPs. This reliance on gas can be partially explained by Romania’s anticipated expansion of natural gas supply, but such investments can only lead to incremental emissions reductions and fail to account for the long-term evolution of fossil fuel and carbon prices, and larger EU-level shifts in primary energy demand.
Multiple actions are needed to more effectively address current challenges and prepare the Romanian DH systems for the future:
- Adopt clear and ambitious national and local strategies for district heating and cooling. Such plans should outline a clear vision for the refurbishment, decarbonisation and even potential expansion of DH systems. The latter is particularly important given the upcoming expansion of carbon pricing to cover residential heating. Local authorities should be more ambitious in promoting plans aimed at maximising the use of locally available renewables, reusing waste heat, and developing heat storage solutions. To maximise impact, such strategies should be complemented by ambitious building renovation plans.
- Identify and remove legislative and regulatory barriers. Focus on enabling the implementation of new technologies that facilitate system integration, reduce limitations on the autonomy of local municipalities, improve data transparency, and enable private entities to participate more actively in the market.
- Gradually channel investment towards cleaner energy sources. While some investment in gas-fired CHPs is urgently needed for the short term to continue the uninterrupted supply of heat, decarbonised solutions are needed to ensure the long-term viability of these plants. Partially switching to hydrogen or biomethane may be implemented in some locations, but this requires clear roadmaps for how such fuels will be produced, transported, and stored. In the medium- to long-term, DH networks should incorporate solutions such as large-scale heat pumps, renewable energy (including geothermal), waste heat (metro stations, industrial halls, data centres, etc.), and heat storage to the maximum extent possible. With rising temperatures in urban areas during the summer, district cooling solutions should also be pursued.
- Improve the business model and fund investments in new technologies. A careful balancing act is needed to both gradually expose consumers to price signals in order to reduce reliance on subsidies and shield households from unaffordable heating prices. In the short- to medium-term, most investments will still need to be funded through public grants, including from EU funding sources. These investments will need to prioritise the refurbishment and modernisation of heat distribution infrastructure, as well as fund pilot projects which implement innovative technologies. Gradually, public funding should be made available increasingly through loans and state-backed guarantees to maximise the number of beneficiary municipalities. The long-term objective should be to develop financially self-reliant systems.
Alexandru Ciocan, EPG Senior Researcher
Alexandru CIOCAN become a member of the EPG team at the end of 2023 and started working as a Senior researcher in the Energy System Programme. Previous he has working extensively for almost 10 years in the field of hydrogen-based technologies, renewable energies sources and lithium-ion batteries. Between 2012 and 2021 he held various research positions at the National R&D Institute for Cryogenic and Isotopic Technologies – ICSI Rm. Valcea.
Nevertheless, Alexandru gained experience in the energy policy, following his contribution to the national strategic documents from the position of Senior Advisor within the Energy Policy and Green Deal Department into the Ministry of Energy of Romania between 2021 – 2023.
Since 2017 Alexandru holds a PhD in engineering sciences from the IMT Atlantique as well as the University Politehnica of Bucharest.
Contact: alexandru.ciocan@enpg.ro