Minister O'Brien allocates €5 million to support development costs of district heating projects

Climate Action Fund support will bring industry to the next step; this early-phase investment will underpin the future development of district heating networks

Minister for Climate, Energy and the Environment Darragh O'Brien has approved the allocation of €5 million to support pre-construction development costs for efficient district heating projects in Ireland. The funding will come from the Climate Action Fund (CAF).

Government policy supports the expansion of district heating in Ireland, contributing to the diversification of fuel supply and decarbonisation of the heat sector. Deployment of district heating at scale, particularly in densely populated areas with readymade heat sources located nearby, is a key government objective under the Climate Action Plan. It is also a key component in meeting the 'Built Environment' Sectoral Emissions Ceiling.

The State has financially supported the development of district heat networks in Ireland through the CAF. For example, there is a relatively large-scale scheme operational in Ireland, which was developed by South Dublin County Council (SDCC) in Tallaght, supported by the CAF. In addition, Dublin City Council is working to develop a large project that will use waste heat from the Dublin waste-to-energy facility in Poolbeg to heat public sector, commercial and residential buildings, initially in the adjacent area with plans to progressively expand into Dublin city.

District Heating Steering Group

In line with the government's District Heating Steering Group Report recommendation to provide financial support for district heating, the Minister is also seeking a multi-annual financial allocation – to enable the construction of efficient district heating projects over the period 2026 to 2030. As part of this process, and in line with the Infrastructure Guidelines, the Department – in partnership with the Sustainable Energy Authority of Ireland's (SEAI) District Heating Centre of Excellence – is preparing a business case seeking to establish future State funding (2026-2030) to support efficient district heating projects in suitable locations, usually urban areas with high heat density.

Support for the pre-construction development costs for efficient district heating projects is being introduced, to ensure efficient district heating projects are in position to avail of this future funding. It was critical that this funding was put in place to encourage a significant number of efficient district heating projects to be ‘shovel ready’ once future funds are available.

Minister O'Brien said:

Fund availability

This fund will be open to both private and public authorities who want to advance efficient district heating in Ireland. It is envisaged that this funding can be used to support pre construction development costs. However, this allocation is intended to also support projects which have already started some of their development work.

The government recognise that investing now in the early phase infrastructure will deliver key backbone elements for district heating networks that will decarbonise heat for larger anchor customers within this decade, and can be further leveraged, through future investment, to target smaller heat loads in the medium-to-longer term.

ENDS

District Heating

District heating can deliver the decarbonised heat necessary to meet a significant portion of Ireland’s renewable heat targets. National policy in Ireland has recognised the contribution that district heating can make to Ireland’s energy and climate goals and is underpinned by the findings of the Sustainable Energy Authority of Ireland's (SEAI) National Heat Study 2022, which highlighted the significant potential of district heating, using renewable energy sources, to meet heat demand in Ireland. District heating currently accounts for a very small share of the Irish heating sector; estimated to be significantly less than 1%, representing one of the lowest shares of district heating in Europe.

Climate Action Plan 2021 affirmed the significant contribution district heating can make to increasing the level of renewable energy in the heat sector and reducing emissions. Climate Action Plan 2023 built further on this commitment, including a target to deliver of up to 2.7TWhr of district heating by 2030.

Climate Action Plan 2024 confirmed the Climate Action Plan 2023 targets, as well as committing to drafting of the General Scheme of a Heat Bill to establish a regulatory model for district heating that ensures consumer protection and the delivery of a vibrant district heating industry. Climate Action Plan 2024 also commits to introducing a mandate on the public sector to connect to district heating, where feasible. Climate Action Plan 2025 further reaffirmed Ireland’s commitment to district heating.

Efficient District Heating

The EU Energy Efficiency Directive (2012/27/EU, revised in 2018 and 2023) supports Efficient District Heating systems as part of its strategic development to achieving a net zero economy.

Article 26 of the recast Energy Efficiency Directive (EED) sets out criteria for efficient DH (and district cooling) systems. These criteria relate to the nature of the heat sources used for such systems over the period to 2050, and beyond. The criteria set out increasingly stringent thresholds over time; by 2050 an efficient DH system may only use renewable energy and/or waste heat.

It is proposed that any or all district heating projects, to be supported will fulfil criteria for district heating set out in the Energy Efficiency Directive.

Climate Action Fund

The Climate Action Fund was established on a statutory basis in 2020 to provide support for projects, initiatives and research that contribute to the achievement of Ireland’s climate and energy targets, and for projects and initiatives in regions of the State, and within sectors of the economy, impacted by the transition to a low carbon economy. The Fund supports projects that would not otherwise be undertaken.