Heating and Cooling Sector

Energy use for the provision of useful heat represents about half of total world final energy consumption.78 Modern renewables (excluding traditional biomass) meet a small but gradually rising share of final global heat demand (about 10%).79 ln some markets, they already contribute substantially. For example, renewables provide over 60% of final energy for heat in Iceland and Sweden.80 In Brazil, where bio-heat covers a significant portion of industrial heat demand, the renewable share is about 43%.81 Renewables meet 20% or more of final energy demand for heat in Austria, Denmark, Israel, New Zealand, Norway, and Thailand, and significant shares also in India (11%), Indonesia (7%), and South Africa (6%).82

Modern biomass, solar thermal, and geothermal energy provide hot water and space heating for tens of millions of domestic and commercial buildings around the world. These renewables also supply heat for industrial processes, agricultural applications, and cooking, at a range of temperature levels. Modern biomass accounts for the vast majority (about 90%) of renewable heating.83 Markets for renewable heating and cooling have increased rapidly in recent years, particularly for solar thermal and some bio-energy systems.84 In addition, passive solar building designs provide a significant amount of space heating (and light), and their numbers continue to increase, but they are not included in this report due to lack of data.

Bio-heat capacity is growing steadily, at an estimated 1-2% annually.85 During 2013, Central Europe and the United States, in particular, saw a continuing shift towards the use of biomass for heating.86 For old and larger buildings, bioenergy systems— such as district heat systems in Scandinavia or pellet stoves in Austria—can be more cost competitive than heat pumps. For industrial heating, bioenergy is the primary resource replacing fossil fuels, often in combined heat and power (CHP) generating systems.87

Most bio-heat is derived from solid biomass resources, but biogas is becoming an increasingly important heat source.88 Although Europe remains the leading region for bio-heat consumption, mainly for space heating, demand is rising elsewhere, particularly in China.89 The use of biogas as a cooking fuel continues to rise in a growing number of developing countries.90

Over the five-year period to end-2013, the capacity of solar water heaters increased by an average of 14% annually.91 Solar thermal collectors are used worldwide for water (and increasingly for space) heating in homes, schools, hospitals, hotels, and government and commercial buildings.92 Their use is extensive in China, where solarwater heaters cost less overtheir lifetimes than do natural gas or electric heaters.93 An increasing number of district heat systems rely on solar thermal technology, particularly in Central Europe, and interest in solar process heating and cooling also is growing as technologies mature.94

Geothermal energy is used for space heating (including district heat networks), domestic hot water supply, direct and indirect heating of public baths, greenhouses, and process heat for industry and agriculture.95 Technological advances are making it possible to extract heat from even relatively low-temperature geothermal fields for both power and heat generation.96

Air-, ground-, and water-source heat pumps also provide renewable heating and cooling. One of the more significant trends related to heat pumps is a move towards the use of hybrid systems that integrate several energy resources (such as solar thermal or biomass with heat pumps) for the range of heat applications.97 China's market for hybrid-heat pump products is double the size of Europe's, with both growing rapidly.98 There is also growing interest in the use of larger-scale heat pumps for district heating as well as industrial processes.99 (See Sidebar 4, page 42.)

Use of modern renewable energy technologies for heating and cooling is still limited compared with their potential. Marketgrowth in this sector continues to lag behind the power sector, due in part to a limited awareness of the technologies, fragmentation of the market, and a relative lack of policy support.100 Further, growth of renewable energy for heating is constrained, in many countries, by high upfront investment costs of some technologies and competition from subsidised fossil fuels. However, where a carbon charge exists, heat users tend to seek low-carbon fuels.101 Consumers in Denmark, Japan, and the United Kingdom can choose "green heat" via voluntary purchasing programmes, but options are relatively limited compared to green power purchasing.102

Despite the relative lack of policies globally in support of renewable heat, several national and local governments have enacted supporting policies or set ambitious targets. Denmark banned the use of fossil fuel-fired boilers in new buildings as of 2013 and aims for renewables to provide almost 40% of total heat supply by 2020; in early 2014, the U.K. launched its Renewable Heat Incentive for residential consumers; and across the EU, all new buildings must be near zero-energy (producing as much energy as they consume) by 2019.103 Beyond Europe, most heat-related targets focus on solar thermal energy, although Thailand has heat targets for bioenergy as well.104 (See Reference Table R14.)

Trends in the heating and cooling sector include the increasing use of renewables for CHP; the feeding of renewable heating and cooling into district systems, particularly in Europe; hybrid solutions to address the building renovation segment; and the growing use of renewable heat for industrial purposes, from Chile to India to the United Arab Emirates.105 At least 20 countries in Europe use renewables in their district heat systems, with at least 20% of EU-wide district heat generated by renewable sources.106 Heat storage systems for low-temperature applications such as district heating have been demonstrated and are now available in some European markets.107

A limited number of countries has begun using district heat systems to absorb heat generated by renewable electricity during periods of excess supply. An example is the use of surplus wind power to heat water, either with heat pumps or directly using resistance heaters.108 Denmark is increasing the reliability of its energy supply by combining variable renewable electricity with CHP and district heating, and has made this practice a cornerstone of its energy policy.109 In 2013, China called on high-wind provinces to begin pilot testing of wind-to-heat technologies to ease the strain on local grids and reduce local air pollution.110 There is also a general movement globally towards electrification in the heat sector.111

78 IEA, World Energy Outlook2013, op. cit. note 1, p. 207

79 Small but gradually rising share from IEA, Medium-Term Renewable Energy Market Report 2013, op. cit. note 1; modern renewables met 8% of global demand for heat in 2011, per IEA, World Energy Outlook 2013, op. cit. note 1, p. 207; the portion of modern renewable energy in total final heat demand "is currently above 10%," per idem, p. 199.

80 IEA, Medium-Term Renewable Energy Market Report 2013, op. cit. note 1, pp. 217-18.

81 Ibid.

82 Ibid.

83 IEA-Renewable Energy Technology Deployment (IEA-RETD), Renewables for Heating and Cooling - Untapped Potential (Paris OECD/Paris, 2007); about 90% based on 12.8 EJ of heat from modern biomass out of a total 13.8 EJ in 2010, from IEA, Medium-Term Renewable Energy Market Report 2013, op. cit. note 1, p. 217, and considering rapid growth of solar thermal heating in recent years, from an estimated 0.7 EJ in 2010, from idem, to 1.01 EJ in 2013, from Mauthner, op. cit. note 1, and on Mauthner and Weiss, op. cit. note 1.

84 See relevant sections and endnotes in Market and Industry Trends for more details and sources.

85 Based on data from IEA, World Energy Outlook2011 (Paris: OECD/IEA, 2011), and IEA, World Energy Outlook 2013, op. cit. note 1. See also Bioenergy section in Market and Industry Trends.

86 Heinz Kopetz, World Bioenergy Association, personal communication with REN21, 13 January 2014.

87 Ibid.

88 IEA, Medium-Term Renewable Energy Market Report 2013, op. cit. note 1, pp. 222-24; European Biogas Association, "Six National Biomethane Registries Are Developing the Foundation for Cross-border Biomethane Trade in Europe," press release (Brussels: 25 November2013), http://european-biogas.eu/wp-content/uploads/files/2013/11/2013.11.25_ggg_press-release_biomethane-registries.pdf; particularly in Germany, biogas is being blended with natural gas, from D. Loy, Loy Energy Consulting, Germany, personal communication with REN21, 15 April 2014. See also Bioenergy section of this report.

89 IEA, World Energy Outlook 2013, op. cit. note 1, Chapter6.

90 IEA, Medium-Term Renewable Energy Market Report 2013, op. cit. note 1. See, also, Bioenergy and Distributed Renewable Energy sections in this report.

91 Based on data from Mauthner, op. cit. note 1, and on Mauthnerand Weiss, op. cit. note 1.

92 Ibid.

93 Solar heaters cost an estimated 3.5 times less than electric water heaters and 2.6 less than gas heaters over the system lifetime, according to Chinese Solar Thermal Industry Federation, cited in Barbel Epp, "Solar Thermal Competition Heats Up in China," Renewable Energy World, 10 September 2012, http://www.renewableenergyworld.com/rea/news/article/2012/09/solar-thermal-competition-heats-up-in-china.

94 Solar District Heating, Intelligent Energy Europe Programme of the European Union, "Solar District Heating," viewed 6 March 2014, http://www.solar-district-heating.eu/SDH.aspx; Jan-Olof Dalenback, "An Emerging Option: Solar District Heating and Cooling," Euro Heat & Power, Vol. 10, No. (2013), pp. 26-29; Jan-Olof Dalenback, Chalmers University of Technologyand Solar District Heating (SDH), personal communication with REN21, 12 April 2014; SolarHeatforlndustrial Processes—SHIP Database, IEA-SHC Task 49/IV, http://ship-plants.info/projects, viewed 10 April 2014; Eva Augsten, "The world of solar process heat," Sun & Wind Energy, March 2014, pp. 36-45; Uli Jacob, Green Chiller, "Status and Perspective of Solar Cooling in Europe," Australian Solar Cooling 2013 Conference, Sydney, Australia, April 2013.

95 See, forexample, Lund, Freeston, and Boyd, op. cit. note 1.

96 See, forexample, Bundesverband Geothermie, "The Altheim Rankine Cycle Turbogenerator," www.geothermie.de/wissenswelt/archiv/englisch/the-altheim-rankine-cycle-turbogenerator.html; also see Geothermal Power and Heat section of this report.

97 Burkhard Sanner et al., Strategic Research and Innovation Agenda for Renewable Heating & Cooling (Luxemburg: European Commission, European Technology Platform on Renewable Heating and Cooling (ETP-RHC), 2013), p. 30, http://www.rhc-platform.org/fileadmin/user_upload/members/Downloads/RHC_SRA_epo_final_lowres.pdf. For hybrid systems, see, forexample, Stephanie Banse, "Thailand: Government Continues Subsidy Programme in 2013," Solar Thermal World, 15 February 2013, http://solarthermalworld.org/content/thailand-government-continues-subsidy-programme-2013; and "Solar + Heat Pump Systems," Solar Update (IEA Solar Heating and Cooling Programme), January 2013.

98 Thomas Nowak, European Heat Pump Association (EHPA), personal communication with REN21, 16 April 2014.

99 Ibid.

100 Less attention from policymakers and the heat market is more fragmented and diverse than the electricity market, for example, Frankl, op. cit. note 14.

101 Economic feasibility of delivering renewable heat at competitive prices (relative to relevant alternatives) is "limited due to the unfair competition from fossil energy and high upfront investment cost," from Sanner et al., op. cit. note 97; also from Nowak, op. cit. note 98.

102 Dong Energy, "Green Heat to the Greater Copenhagen Area," press release (Fredericia, Denmark: 8 April 2013), http://www.dongenergy.com/EN/lnvestor/releases/Pages/omx%20feed%20 list%20details.aspx?omxid=678722; UN ESCAP, "Low Carbon Green Growth Road map for Asia and the Pacific...," op. cit. note 71; U.K. from Dave Elliott, "Green Energy Retailing," Environmental Research Web, 28 April 2012, http://environmentalresearchweb. org/blog/2012/04/; Bullfrog Power in Canada provides green natural gas to the nation's natural gas pipeline for household and other purposes, from Bullfrog Power, "Green Natural Gas: Simple. Affordable. Climate Friendly," http://www.bullfrogpower.com/greenenergy/greennaturalgas.cfm.

103 Danish Ministry of Climate, Energyand Building, "Danish Energy Agreement," 22 March 2012, http://www.kebmin.dk/sites/kebmin.dk/files/climate-energy-and-building-policy/denmark/energy-agreements/FAKTA%20UK%201.pdf; Denmark targets from Danish Energy Agency, "Danish Climate and Energy Policy," http://www.ens.dk/en/policy/danish-climate-energy-policy, viewed 12 May 2014, and Danish Ministry of Climate, Energyand Building, "Energy Policy Report 2013," Ministry Report to the Danish Parliament, 24 April 2013, http://www.ens.dk/sites/ens.dk/files/policy/danish-climate-energy-policy/dkenergypolicyreport2013_final.pdf; U.K. Government, "Policy: Increasing the Use of Low-Carbon Technologies—Renewable Heat Incentive (RHI)," updated 9 April 2014, https://www.gov.uk/government/policies/increasing-the-use-of-low-carbon-technologies/supporting-pages/renewable-heat-incentive-rhi; European Parliament, "All New Buildings to Be Zero Energy from 2019," 31 March 2009, http://www.europarl.europa. eu/sides/getDoc.do?language=en&type=IM-PRESS&reference=20 090330IPR52892.

104 Data from REN21 database compiled from all available policy references plus submissions from report contributors. For online updates, see the "Renewables Interactive Map" at http://www.ren21.net. See also Reference Table R14.

105 District systems from Jan-Olof Dalenback and Sven Werner, CIT Energy Management AB, Market for Solar District Heating, supported by Intelligent Energy Europe (Gothenburg, Sweden: September 2011, revised July 2012), http://solarthermalworld. org/sites/gstec/files/story/2013-05-21/sw_solar_markets.pdf; Jan-Olof Dalenbäck, "An Emerging Option: Solar District Heating and Cooling," Euro Heat & Power, vol. 10, no. Ill (2013), pp. 26-29; Jan-Olof Dalenbäck, Chalmers University of Technology and Solar District Heating (SDH), personal communication with REN21, 12 April 2014; Miklos Antics, Ruggero Bertani, and Burkhard Sanner, "Summary of EGC 2013 Country Update Reports on Geothermal Energy in Europe," presented at European Geothermal Congress, Pisa, Italy, 3-7 June 2013; building renovation from Nowak, op. cit. note 98; industrial processes from Mauthner, op. cit. note 1; Jacob, op. cit. note 94; Solar Heat for Industrial Processes—SHIP Database, IEA-SHC Task 49/IV, http://ship-plants.info/projects, viewed 10 April 2014. See also Bioenergy and Geothermal sections of this report.

106 Euroheat & Power, District Heating and Cooling Country-by-Country 2013 Survey (Brussels: 2013). European countries include Austria, Bulgaria, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Iceland, Italy, Latvia, Lithuania, Norway, Poland, Romania, Slovakia, Slovenia, Sweden, and Switzerland, from idem, Italy, forexample, has 317 municipalities with district heating plants that use renewable energy sources, including biomass and geothermal, from "Legambiente presenta Comuni Rinnovabili 2014...," op. cit. note 75.

107 Sanner et al., op. cit. note 97, p. 32.

108 Balancing variable renewables from Rachana Raizada, "Renewables and District Heating: Eastern Europe Keeps in Warm," Renewable Energy World, 13 September 2012, http://www.renewableenergyworld.com/rea/news/article/2012/09/renewables-and-district-heating; see also Peter Kelly-Detwiler, "Denmark: 1,000 Megawatts of Offshore Wind, And No Signs of Slowing Down," Forbes, 26 March 2013.

109 Increasing reliability from Anna Leidreiter, Diane Moss, and Markus Groth, From Vision to Action: A Workshop Report on 100% Renewable Energies in European Regions (Hamburg: World Future Council, Nordic Folkecenter, and Climate Service Center at the Helmholtz-Zentrum Geesthacht, March 2013), p. 12, http://www.worldfuturecouncil.org/fileadmin/user_upload/Climate_and_Energy/From_Vision_to_Action_Policy_Recommendations_for_100__RE_in_European_Regions.pdf; cornerstone of energy policy from Nowak, op. cit. note 98.

110 China's National Energy Administration issued a notice to relevant authorities in the provinces of Jilin, Hebei, Shanxi, Heilongjiang, Liaoning, and the Inner Mongolia Autonomous Region and Xinjiang Uyghur Autonomous Region to start pilot tests, from Wu Hanxuan, "Intervention Necessary to Spread Wind Power Usage," Global Times, 7 August 2013, http://www.globaltimes.cn/content/802300. shtml#.UiCT3yzD9aQ.

111 Sims et al., op. cit. note 13.