thermal storage in individual houses. The rationale for heat and electricity sector integration in a district heating system therefore is remaining but should change in character in a transition from a fossil- to a renewable energy based energy supply system. (Lund, Mathiesen, et al. 2014). However, if these technical and economic potentials should be realized across the European continent, it would require changes in politics and regulation. It is of especial importance, as fluctuating renewable energy sources are continuously expanding, to look at the balance between investment in international interconnectors between neighboring electricity sectors and the investment in local/regional/national integration of the fluctuating renewable energy based electricity into its neighboring heat (and cooling) sector. The European Union already has policies and institutions that financially support investments in international interconnectors between neighboring electricity sectors. What is still lacking is a materialization of the newly developed political awareness of heating and cooling into changes in policies that sustain the development of the heating and cooling sectors as an integrated part of the European energy policy. In this article, we will point out some concrete policy structures that do not support an efficient allocation of investments. These structures have in common that they disfavours electricity-to-heat integration in district heating systems and subsidizes electricity-to-electricity integration. If these issues are not addressed politically, they may severely weaken the prospects of a cost efficient European energy system based upon increasing amounts of fluctuating renewable energy sources. Four instances of distortive regulation Change and adjustment of policies are probably necessary at many levels and further research should be conducted on this issue. In the following, we highlight four identified regulative focus points which are important for a cost-efficient development of the European electricity and heat supply.
District heating is not only here to stay but should expand and change in a European energy future. But it requires changes in policies and regulation to realise the huge potentials of district heating infrastructure across the continent. A failure to meet the required changes would imply a less green and a less cost efficient common European energy system. European potentials of district heating In these years, a lot of interesting research and development is happening around the district heating sector. At the same time, international political awareness of the importance of the heat and cooling sector is on the rise. In February 2016, the EU commission released its first heating and cooling strategy. Meanwhile, the Heat Roadmap Europe studies conducted by Danish and Swedish researchers have demonstrated large potentials for district heating infrastructure across Europe. In the perspective of a European Energy Union, it therefore has important economic and environmental perspectives to integrate district heating infrastructure in the policy goals as well as in the regulation. Traditionally, the competitive edge of district heating has been the high fossil fuel efficiencies associated with combined heat and power production, as well as utilization of waste heat from industries. The amount of heat wasted from these sources across Europe are currently larger than the total heat demand in buildings (Connolly 2016). In the transition to a renewable energy supply, district heating infrastructure will continue to play a vital role for the efficiency of the total energy system. Questions about how district heating should change to create most value for a renewable energy system has been addressed in the 4DH research project (Lund, Werner, et al. 2014). A district heating system adjusted to the demands of a renewable energy supply has been termed 4th generation district heating (4DH). This concept entails, among others, lower distribution temperatures that would further enhance the supply of climate friendly heat sources. Likewise, a close integration with fluctuating electricity supply has shown to be of high environmental and economic value. Combined heat and power generation will in the long run be downsized as all thermal electric capacity based on fossil fuels are phased out. Meanwhile, district heating can (and should) retain its competitive edge by absorbing excess electricity from the steeply increasing share of fluctuating renewable energy sources. This can be accomplished in district heating systems with high efficiencies through a combination of large scale heat pumps and large thermal energy storage units. These storage units are 20-80 times cheaper per MWh storage than
National taxation schemes. Do national tax policies support an economic and fuel efficient development?
There are large synergies to be achieved through cross- sectoral integration in a situation where primary energy supply is dominated by increasing shares of fluctuating resources. However, it is determining for the energy systems' overall efficiency that tax structures support this cross sectoral integration. In aEuropeanperspective, it is important tobe aware
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