To figure out the future, you sometimes need to look to the past. In the winter of 1973, as Europe shivered its way through the oil crisis, the Danish government was under intense pressure. With 90 per cent of its energy coming from oil, the drop in supplies from the Middle East saw temporary factory closures, cuts to street lighting and even a ban on Sunday driving. Something, it was decided, would have to change.
And change it did. The Danes decided to go all in on a system for heating homes that had been limited up to then. It is called district heating. This involves using a network of underground pipes to heat entire buildings or even neighbourhoods from a central source such as a giant boiler. Denmark rolled it out at scale, to the point where 99 per cent of Copenhagen’s buildings are now heated through a 2,000km network of underground pipes.
While the Danes initially relied on coal, and later gas, to heat their giant boilers, recent decades have seen them transition towards renewable energy to do the job. The lessons learned from the 1973 oil crisis meant that when the United States and Israel’s bombing of Iran sent oil and gas markets into a panic this spring, Denmark was in a far better position than Ireland. While the price of home-heating oil jumped by two-thirds in Ireland overnight, most Danes were largely insulated from such price hikes.
Ireland, sadly, didn’t take the same lessons from the 1973 oil crisis and instead doubled down on fossil fuels. More than 90 per cent of the fuel we still use to heat our homes is fossil fuel-based, with four-fifths of it coming from abroad. This makes Irish households among the most vulnerable in Europe to price shocks and interruptions in supply.
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A case might reasonably be made that the dispersed population of 1970s Ireland wouldn’t have been suited to district heating, which works at greatest efficiency when it’s deployed in densely-populated urban areas. There may have been some truth to that argument back then, but it’s an argument that no longer holds much water.
The Government is targeting the construction of 300,000 new homes by 2030. Much of this accommodation will need to come in the form of apartment blocks and high-density housing estates if the State is to have any chance of coming close to these targets. District heating could help speed up the rollout of such housing.
Government policy currently incentivises developers to install individual heat pumps in every home or apartment. While this is an improvement from a climate and air-pollution perspective, it doesn’t lend itself to the rapid rollout of badly-needed accommodation. Were the Government to prioritise district heating, one giant heat pump connected to a network of pipes could cater for an entire neighbourhood’s housing needs, removing the need to install a heat pump in every home.
This would also deliver significant lifetime savings for those who end up living in these new homes. District heating works out at 40 per cent cheaper than air-source heat pumps, offering savings of more than €600 per year for a standard Irish household.
The Government has already endorsed the benefits of district heating. The programme for government commits the Coalition to accelerating the rollout of these schemes, while the Sustainable Energy Authority of Ireland estimates it could meet 54 per cent of Ireland’s building heat demand.
Despite these official endorsements, the rollout of district heating remains stuck, with just one per cent of our current heat demand served by it. The high upfront capital costs of laying the initial pipe infrastructure acts as a disincentive for developers. It leads to developers – even of the type of high-density apartment schemes that would be best suited to district heating – going for individual heat pumps. This slows construction times and denies future residents of these buildings the opportunity to make savings.
Some positive steps have undeniably been taken by the present Government. Last year, Minister for Climate Darragh O’Brien approved the allocation of €5 million to support pre-construction development costs for district heating projects in Ireland, with a further €100 million allocated towards the rollout of district heating networks.
But more needs to be done urgently. If the State were to provide financial support towards the upfront investment of laying the underground pipe network, many developers would be more likely to opt for district heating given the quicker completion timelines it would mean for their projects.
Individual heat pumps currently enjoy a 9 per cent VAT rate and SEAI grants of up to €12,500 per home, as well as up to €100,000 per business. The tax regime needs to be amended so that district heating benefits from similar support to that of individual heat pumps.
Pauline O’Reilly is the chief executive of the Irish District Energy Association (IrDEA), a member-led organisation representing public and private organisations
