The European Commission has approved Romania’s appeal to support the construction and upgrade of district heating systems based exclusively on renewable energy sources. Romania relied on the more flexible state-aid rules introduced by the European Green Deal’s Investment Plan to design the supporting mechanism that is expected to cut emissions significantly in the next few years.
The existing district heating systems in Romania generate heat predominantly from gas or coal-fired boilers. The measure aims at supporting investments in the district heating generation installations up to a total of 60 megawatts (MW) of heat equivalent, enabling a fuel switch from fossil fuel energy production like coal and natural gas to heat production exclusively from renewable energy sources such as biogas, biomass and geothermal heat production.
This is expected to lead to an overall decrease in greenhouse gas emissions by up to 48,000 metric tonnes of CO2, as well as other polluting substances until 2023. Using biogas and biomass under the scheme is also in line with requirements on sustainability set out by the Renewable Energy Directive II and with the Waste Framework Directive.
Romania will provide public support of up to 750 million lei (approximately 150 million euros) for the construction and modernisation of district heating generation installations and distribution networks (for the latter up to a maximum of 20 per cent of the overall investment). The planned support would take the form of direct grants financed by EU Structural Funds managed by Romania.
Executive Vice-President in charge of competition policy, Margrethe Vestager highlighted that the European Green Deal’s Investment Plan unlocked the potential of district heating to contribute to the transition to a climate-neutral economy by giving Member States more flexibility when it comes to granting support for district heating generation, in line with EU State aid rules.
The Commission came out with the Sustainable Europe Investment Plan in January which enabled Member States to use additional flexibility when it comes to the maximum amount of support that can be granted for district heating generation.