Romania currently has a district heating network spanning more than 4,380 km, serving around 1.05 million customers, but business models dependent on public subsidies and outdated system designs have contributed to a steady decline in the degree of connection to district heating networks, shows an analysis by the Energy Policy Group (EPG).
“Romania, with its extensive district heating network of over 4,380 km and around 1.05 million customers, can take advantage of the advantages of these systems. However, decades of neglect of infrastructure modernization and renovation, business models dependent on public subsidies and outdated system designs have contributed to a steady decline in the degree of connection to district heating networks. Regulated prices have required subsidies for operational costs and protection of consumers from price increases. This burdened local budgets and limited the financing of maintenance works, which led to an increase in network losses. Of the 10.7 TWh of district heating produced in 2022, only 6.7 TWh were sold to consumers – energy losses and operational consumption therefore represented almost 38% of the energy produced,” energy specialists claim, according to Agerpres.
According to centralized data, the highest network losses were recorded in Constanța, Iași and Arad, cities with some of the lowest shares of households supplied by the local district heating network.
On the other hand, the system was operated most efficiently in Râmnicu Vâlcea, which is also the municipality with the highest share of industrial thermal energy consumption from the centralized network.
“Since district heating operators have not been able to finance their own investments, they have come to rely on investments from European funds and various types of government support. Although most of the infrastructure modernization has been financed by government and EU subsidies, the investments made so far often lack objectives for reducing the use of fossil fuels and integrating renewable technologies, heat pumps and waste heat. Meanwhile, several European cities have already launched initiatives for thermal energy storage, capturing and using energy from wastewater, using heat pumps and integrating renewable energy and waste heat. The strategies implemented at local level for the provision of thermal energy in the 11 municipalities analyzed in this paper show an overwhelming focus on the maintenance and renovation of existing networks. These priorities are doubled by investments for replacing existing thermal plants with new natural gas-fired cogeneration plants,” the specialized analysis states.
EPG experts believe that multiple actions are needed to more effectively address current challenges and prepare Romania’s district heating and cooling systems for the future.
A first initiative concerns the adoption of clear and ambitious national and local strategies for district heating and cooling, plans that “should outline a clear vision for the renovation, decarbonization and even potential expansion of district heating systems”.
Local authorities should be more ambitious in promoting plans aimed at maximizing the use of locally available renewable resources, reusing waste heat and developing heat storage solutions. To maximize the impact, these measures should be complemented by ambitious building renovation plans”, notes the cited source.
At the same time, it will be necessary to identify and eliminate legislative and regulatory obstacles, as well as gradually channel investments towards cleaner energy sources.
“Partial switching to hydrogen or biomethane could be implemented in some locations, but this requires clear roadmaps on how these fuels will be produced, transported and stored. In the medium and long term, district heating networks will need to include solutions such as large-scale heat pumps, renewable energy (including geothermal energy), waste heat (metro stations, industrial halls, data centres, etc.) and heat storage to the greatest extent possible. Given the increase in temperatures in urban areas during the summer, district cooling solutions should also be pursued,” EPG experts believe.
The business model and financing of investments in new technologies are also issues that need to be improved, with a careful balance needed both to gradually expose consumers to price signals, to reduce dependence on subsidies and to protect households from unaffordable heating prices.
“In the short and medium term, most investments will continue to be financed through public subsidies, including from European sources. These investments will need to prioritize the renovation and modernization of heat distribution infrastructure, as well as the financing of pilot projects implementing innovative technologies. Gradually, public financing will need to be increasingly available through loans and state guarantees to maximize the number of beneficiary municipalities. The long-term objective should be to create financially autonomous systems,” the document states.
The EPG report was authored by Alexandru Ciocan, Mihnea Cătuți, Alina Arsani and Corina Lazăr.