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This paper discusses the compatibility of district heating (DH) networks with deep retrofits of buildings under various European climate conditions and city typologies. The study analyses five cities with different DH market shares, climate zones, population densities, and transferability potentials. First, we have forecasted population, heated floor area, and share of floor area per construction period until 2050, and then calculated three different heat demand scenarios for varying building refurbishment rates of 1%, 2%, and 3% of the total floor area. Second, future suitable DH regions with min 25 GWh/km2 networks were identified. By applying a bottom-up GIS model, based on the type of city area, number of buildings, street length, and heat density, the DH distribution capital and operation costs were calculated. Lastly, to compare the total cost of heat supply for each scenario, the cost of individual heat per building type was calculated. The results show that even in the scenarios with high refurbishment rates of 3%, high percentage of the built-up areas, between 23% and 68% depending on the city typology, are suitable for DH supply in 2050. The share of DH from the total heat supply varies between 49% and 83%. An increase of the DH price between 14% and 35%, depending on the scenario and case study can be expected due to the reduced heat densities compared to the current ones. Nevertheless, maximizing the DH connection rates in the identified regions leads to lower total cost of heat in almost all the analysed case studies.

European Union (EU) legislation is increasingly embracing the energy efficiency first (EE1st) principle. This principle seeks to prioritise energy efficiency measures whenever these involve lower costs to society than generators, networks and other energy supply options while achieving the same outcomes. This study contributes to the quantitative evidence on the relevance of EE1st by modelling the impact of moderate to ambitious end-use energy efficiency measures on energy supply and the associated system cost under a net-zero greenhouse gas emissions constraint by 2050. These measures focus on the EU building sector and include both building retrofits (e.g. wall insulation) and efficient products (e.g. lighting). The results indicate that implementing more ambitious energy saving measures reduces the total electricity, heat and hydrogen capacities needed to achieve the net-zero target. Reducing energy use in buildings by at least 21% between 2020 and 2050 is essential to avoid excessive energy supply costs. This requires actions that go well beyond business-as-usual trends. Reductions of around 30% could be justified on the grounds of (i) high fossil fuel prices and (ii) multiple impacts (e.g. health benefits). Overall, the outcomes provide reasonable justification for the EE1st principle. To put the principle into practice, policy actions such as doubling building renovation rates and setting higher energy efficiency targets are key.

Among other critical actions, putting the Energy Efficiency First (EE1st) principle into practice requires quantitative evidence on the extent to which demand-side resources (e.g. building retrofits) in various contexts are generally preferable over supply-side resources (e.g. networks). These contexts range from municipal heat planning, over electricity network investment, up to the development of high-level policy strategies for Member States and the European Union (EU) at large. In previous quantitative work, the ENEFIRST project demonstrated for the EU building sector that end-use energy efficiency measures can effectively reduce the need for energy supply infrastructures in transitioning to net-zero emission levels, while also bringing a variety of co-benefits or multiple impacts. The present report provides additional quantitative evidence on EE1st by investigating five model-based case studies. The scope of these case studies is deliberately narrower compared with the EU-wide analysis, providing opportunity for a detailed evaluation of demand- and supply-side resource options in different contexts of building types (residential, non-residential), infrastructures (electricity, district heating, gas) and local conditions (weather, costs, etc.). The key findings of the five case studies are as follows: ❶ Cumulated energy savings based on cost-optimal analysis | If carried out within the next 10 years, single stage building renovations come with a lower cost than stepwise renovations. In both cases, exhausting the potential of deep renovation by achieving the highest energy saving is critical. The results support the instrument of renovation passports for building owners to enable informed renovation decisions. ❷ Building retrofits and district heating systems | District heating networks can be economically viable in scenarios with high refurbishment rates under different climate conditions and city typologies. The network’s ability to combine multiple heat sources balances the impact of high fuel prices. Municipal heat planning can help lower total cost of heat and reduce the risk of energy poverty. ❸ Heat pumps: Efficiency, CO₂ emissions and the value of flexible heat pumps | By using buildings’ thermal mass, residential heat pumps can provide additional flexibility to the power system. Depending on the building type, envelope, and location, the flexibility potential is between 18%-35% of the heat pump energy consumption. The economic profitability strongly depends on the regulation, fees, taxes, etc. ❹ Strategic energy planning in commercial areas | Thermal retrofits for office and education buildings can cost-effectively reduce the need for individual heat supply, distributed generation, heat networks, utility-scale generation, and seasonal heat storage. Advanced retrofit packages can possibly pay off within 13 to 14 years, making building retrofits a critical demand-side resource in the scope of the EE1st principle. ❺ The trade-off between energy efficient household appliances and new electricity generation | Efficient household appliances (e.g. refrigerators) can reasonably substitute for new renewable, fossil and hydrogen-based electricity generation. Cost-effective savings are in the range of 3.8%-19.4%, compared to an inefficient base case. Ecodesign standards and labelling are key instruments to achieve these savings. In conclusion, integrated energy systems modelling is key to make the EE1st principle a reality. Practitioners can use model-based evidence to help formulate strategies and to put together a sound package of policy instruments for EE1st. At the same time, there remain critical challenges to quantitative modelling in the scope of EE1st – including the proper consideration and aggregation of multiple impacts, the selection of discount rates, and others.

The recast of the Energy Efficiency Directive proposed by the European Commission as part of the Fit-for-55 package (July 2021) states, in its new Article 3, that the Energy Efficiency First (EE1st) principle should apply to planning, policy and major investment decisions related to energy systems as well as non-energy sectors, where those sectors have an impact on energy consumption and energy efficiency. Planning practices, policies and investment frameworks shall consider energy systems as a whole, with resources available on both sides (supply and demand), and interactions between demand and supply. This means that policies and regulatory frameworks dealing with energy supply and infrastructures should consider demand-side options as alternatives to increasing supply, thereby valuing the contributions of energy savings and flexibility to energy systems and, where possible, other objectives (e.g. the reduction of greenhouse gas (GHG) emissions, improved health). On the other side, policies and regulatory frameworks dealing with energy end-use efficiency should consider their impact beyond the demand side, as they can also have an impact on supply (e.g. on the investments needed to deliver a specific level of energy services). The Energy Union put EE1st at the core of the energy transition and has enshrined it in various pieces of legislation. The Governance Regulation of the Energy Union ((EU) 2018/1999) has defined EE1st (see Article 2 (18)) and made EE1st a guiding principle for energy policies: the regulation set requirements to ensure that national energy efficiency targets are defined as part of the overall planning exercise reported by Member States in their National Energy and Climate Plans (NECPs). However, the NECPs (submitted in 2019-2020) provided limited information on how the Member States define and plan to implement the principle. The reported information was limited to: • referring to EE1st as a principle that has been considered in the preparation of the NECP • stressing the importance of energy efficiency policies and measures as “being the first pillar of the energy transition” or as the “key horizontal policy” • referring to demand-side participation in energy markets • a few countries linking energy efficiency with investment decisions or other decarbonisation measures in general (Cyprus, Ireland, Malta and Portugal) Implementing the EE1st principle has proved to be a difficult task for Member States, at least partly because EE1st is still a relatively new concept. This report provides a set of recommendations for Member States (MS) to support the implementation of EE1st in their policies. The analysis builds on previous work done in the ENEFIRST project, where policy approaches for each main policy area (buildings, the power sector, district heating) were analysed in detail, providing the basis for guidelines for integrated approaches. It takes the lessons learnt from the analysis ofthree countries (Germany, Hungary and Spain) and translates them into recommendations that are applicable to all MS. Most of the current policies are not designed around the EE1st principle, but they can be adapted to reflect EE1st, and new policies can be designed to integrate it. EE1st, however, cannot be simply mandated: its implementation requires dedicated effort from the Members States and stakeholders involved in policy design, capacity building and cross-cutting cooperation. To be effective, EE1st must be constantly considered when implementing policies at national and local level. Member States, national and local authorities need to adjust their practices and increase capacity building to secure its integration and avoid silo-thinking. Only by investing time and resources to continuously integrate EE1st in day-to-day practices, would it be possible to achieve the benefits of adopting a systemic approach to policy making that embraces EE1st and goes beyond the classic portfolio of energy efficiency policy and supply side measures. Implementing EE1st also implies a multi-level and multi-stakeholder coordination so that the decisions made by public authorities, regulated entities and market players be aligned with the overall integrated planning, and that national, regional and municipal planning be coherent. The adoption of the fit-for-55 package constitutes a distinctive opportunity to further enhance EE1st in EU legislation (e.g. Energy Efficiency Directive, Energy Performance of Buildings Directive, Electricity Directive). A full implementation of this and existing energy legislation would considerably help move the EE1st principle further, even if it is not sufficient to get it systematically implemented across all areas. The European Commission’s sectoral guidelines will still be needed. Finally, adopting EE1st as a decision and planning principle contributes to better decision-making beyond climate and energy policies: if embraced, it can improve how policies are designed and how investment decisions are assessed and made. It can also serve as a delivery mechanism of societal benefits, such as the reduction of inequalities, poverty alleviation and lowering adaptation pressures. Systematically implementing EE1st would bring benefits across all areas and enable a better management of existing resources.

The principle of Energy Efficiency First (EE1st) is gaining traction in the political debate. As set out in previous reports of ENEFIRST, the principle aims to consider and prioritise investments in demand side resources (e.g. building retrofits) whenever these cost less or deliver more value than default energy infrastructure (e.g. networks). Meanwhile, energy efficiency is increasingly associated with a variety of environmental, economic, and social benefits known as multiple impacts (MIs). It is often argued that taking thorough account of the EE1st principle in energy-related investment and policymaking means to incorporate MIs in the decision-making process to ensure a fair comparison of resource options. This concerns various decision-making instances – including the impact assessments prepared by the European Commission, infrastructure planning conducted by regulated network companies, up to individual building owners when assessing the costs and benefits of different building renovation options. However, a theoretical account of how the concepts of EE1st and MIs fit together is still missing. The objective of this paper is twofold. First, based on an expert workshop and a literature review, it aims to integrate the theoretical state of knowledge on the concepts of EE1st and MIs. This involves questions of how various MIs can be aggregated in the form of cost-benefit analysis (CBA), multi-criteria analysis (MCA) and other frameworks to inform decisions on what resource options actually provide greater value. We argue that, in itself, each of these frameworks has important limitations, which is why none of them can replace human judgement. For instance, CBA has inherent problems in coming up with robust monetary estimates of individual MIs, while MCA struggles with ensuring objectivity and representative stakeholder involvement. Another important issue is how the evaluation perspective (societal, private, etc.) affects the selection of MIs that should ideally be taken into account in quantitative assessments. Each of these perspectives is shown to have distinct application areas and practitioners should make sure to apply a consistent perspective when quantifying and aggregating MIs to compare resource options in the scope of EE1st. The second objective of this report is to address the ongoing lack of quantitative evidence on individual MIs, especially in the context of the EE1st principle. We substantiate the previously developed ENEFIRST scenarioswith bottom-up estimates of MIs. The key idea behind this so-called socio-environmental assessment is to move away from the previously used indicator of energy system cost that is limited to capital costs, fuel costs and other financial metrics. By investigating two selected types of MIs, we obtain a more comprehensive picture of the true societal value of end-use energy efficiency in the building sector. One type of MIs investigated are air pollution and climate change impacts. Even though the ENEFIRST scenarios are all set to reach the common objective of net-zero greenhouse gas emissions by the year 2050, we find significant differences in cumulative emissions and ensuing costs from both air pollutants and greenhouse gases. The inclusion of these cost estimates significantly enhances the cost-effectiveness of energy efficiency measures from a societal viewpoint. Another type of MIs in this assessment are indoor comfort improvements. A new method was developed to quantify comfort gains as a result of building retrofits for the entire building stocks of individual Member States. The results indicate significant comfort gains for countries with poor efficiency of the building stock in the base year. As a result of the modelled retrofit measures, the share of poorly heated floor space below 18°C can be reduced by more than 30 percentage points, with ensuing benefits for health, well-being and workforce productivity. In conclusion, any model-based assessment or scenarios in the scope of the EE1st principle should be substantiated with quantitative and qualitative estimates of different MIs to ensure a fair comparison of demand and supply side resources and thus to enable informed decisions on technology investment.

This paper presents an overview of policy frameworks for district heating (DH) in Europe. We develop a classification for policy aspects addressing DH, comprising regulation of ownership, prices, metering, consumer grid connection, third party access as well as support schemes and carbon taxes. This classification builds on existing literature and expert assessments collected in an online survey and interviews. The relevance of the paper lies in giving a comprehensive picture of the existing policy frameworks for DH in 23 European countries. For the overview, the countries are clustered along assigned categories. It is shown that the policy frameworks for DH can be clustered into five distinguishable groups. While some countries apply very strict regulations in special DH laws, others rely on less regulatory intervention, both with varying degrees of support for DH in place. The different policy frameworks are discussed in the context of the diffusion of DH and the integration of renewable and waste heat in DH. This analysis shows that high shares of DH and high shares of renewable and waste heat in DH can be observed in countries with a high degree of regulation as well as in countries with less regulatory intervention in DH markets.

This report aims to develop a methodological concept for a model-based analysis of the Energy Efficiency First (EE1st) principle for the EU-27 that iscarried out and analysed in subsequent reports of the ENEFIRST project. The objective of this energy system analysis is to investigate what level of demand and supply-side resources should be deployed to provide the greatest value to the EU's society in transitioning to net-zero GHG emissions for the building sector by 2050. On the demand side, the analysis focuses on the resource option of end-use energy efficiency in buildings, investigating the contributions of thermal retrofits, efficient appliances, and other measures towards the net-zero target. On the supply side, the analysis quantifies the possible deployment and costs of various generation, network and storage options for the provision of electricity, district heat and gas products for the building sector. By determining what resource portfolio should be adopted under given framework conditions to reach the 2050 target, this analysis can help decision-makers identify priorities for policy design and technology investment. The analysis covers a set of three model-based scenarios. Each of these scenarios is geared to reach the 2050 target of net-zero emissions in the EU-27. However, the scenarios differ in terms of the contribution of different resource options towards target achievement: (1) The LOWEFF scenario assumes that energy use in buildings is decarbonized primarily via the use of renewable-based supply-side resources. (2) The MEDIUMEFF scenario is characterized by an even deployment of demand- and supply-side resources. (3) In the HIGHEFF scenario, end-use energy efficiency measures in buildings are viewed as the most favourable decarbonisation option for the European energy system by 2050, representing a future in which the EE1st principle is comprehensively applied in energy system planning and investment. To capture the interactions between the building sector and the supply side of the EU energy system, this analysis couples four bottom-up energy models: INVERT, FORECAST, ENERTILE and NETHEAT. As such, the analysis features a comprehensive coverage of the major end-uses (space heating, water heating, space cooling, electrical appliances, lighting, cooking) in residential and non-residential buildings. On the supply side, operation and investment of both power and district heating systems are explicitly modelled. To measure the performance of the three scenarios, the outputs of the analysis are analysed in two respects. For one thing, the so-called techno-economic assessment focuses on the indicator of energy system costs, indicating the sum of capital expenditures and operating expenses needed to meet the energy service demand in the building sector. Supported by additional indicators, this assessment helps determine the extent to which society is better off – in pure monetary and technical terms – if demand-side resource were prioritized in energy planning and operation. For another, the so-called socio-environmental assessment investigates selected multiple impacts of the resource configurations computed in the different scenarios. Where possible, these impacts are quantified and monetized using dedicated methodologies. In sum, this model-based analysis addresses the four criteria of quantitative assessments for the EE1st principle: (1) It features an integrated model-based appraisal of demand- and supply-side resources in the building sector and associated supply sectors (electricity, district heat, natural gas and hydrogen). (2) There is a common planning and policy objective across all scenarios of reaching net-zero GHG emissions for the EU building sector by the year 2050 while meeting demand for energy services. (3) All costs and benefits are evaluated from a societal perspective, rather than a private one. (4) A systematic appraisal framework is used to compile all relevant cost and benefit items, including a selection of multiple impacts.

This paper discusses different decarbonisation scenarios for an existing district heating (DH) network supplied by coal-fired combined heat and power plants in Germany. Integrating higher shares of renewable heat is indispensable in reaching the climate goal and CO2 emission reduction targets. The study analyses the technical and economic aspects of integrating various technologies such as solar thermal, biomass boilers, waste incineration plant and heat pumps into the existing DH network, with the main focus on large-scale heat pumps. The approach consists of two main steps. First, we forecast future heat demand and the potential to extend the DH system by simulating the evolution and energy consumption of the city's building stock. Second, we use a supply dispatch model with hourly resolution to calculate alternative scenarios and sensitivities for the supply mix with a focus on heat pumps. Our results show that, under the current regulatory and economic framework, large-scale heat pumps are not cost competitive with the existing coal-fired CHP units. However, redesigning the regulatory framework and optimising heat pump design and operation could achieve cost parity. The CO2 price induced by the EU emissions trading scheme will most likely not be a sufficient incentive in short and medium term.

Energy demand for heating and cooling constitutes almost 50% of the total energy demand in Europe and strongly depends on fossil fuels. Decarbonising this sector and providing a sustainable supply should be a main goal of climate policy. The technical and economic feasibility of supply options depends strongly on local conditions. The focus of this research is to assess the cost-effectiveness of sustainable heat and cold supply solutions under southern European conditions. We use the city of Matosinhos (Portugal) as an example. The methodology includes estimation of thermal demands and hourly simulation of alternative supply scenarios. The results show that, from a socio-economic perspective, the use of excess heat from a refinery via a DHC network might be the economically most competitive option. In addition, the heat pump system combined with photovoltaics is cost-effective from a socio-economic perspective compared to the status quo if the capital costs of the status quo are also accounted for. This justifies support policies to also make it cost-competitive from a private economic perspective, which it currently is not. Sensitivity analyses were conducted for the most influential factors like capital investment costs, interest rate, and fuel prices.

Many earlier studies have assessed the DH generation mix without taking explicitly into account future changes in the building stock and heat demand. The approach of this study consists of three steps that combine stock modeling, energy demand forecasting, and simulation of different energy technologies. First, a detailed residential building stock model for Herten is constructed by using remote sensing together with a typology for the German building stock. Second, a bottom-up simulation model is used which calculates the thermal energy demand based on energy-related investments in buildings in order to forecast the thermal demand up to 2050. Third, solar thermal fields in combination with large-scale heat pumps are sized as an alternative to the current coal-fired CHPs. We finally assess cost of heat and CO2 reduction for these units for two scenarios which differ with regard to the DH expansion. It can be concluded that up to 2030 and 2050 a substantial reduction in buildings heat demand due to the improved building insulation is expected. The falling heat demand in the DH substantially reduces the economic feasibility of new RES generation capacity. This reduction might be compensated by continuously connecting apartment buildings to the DH network until 2050.