From consumers to pioneers: insights from thermal energy communities in Denmark, Germany and the Netherlands

Abstract

Background

While energy communities working on electricity provision have been extensively studied, thermal energy communities (TECs) focusing on bringing district heating (DH) systems to decarbonise heat systems in buildings have been relatively under-researched. This study addresses this gap by presenting the first comprehensive examination of key factors influencing the emergence and development of TEC projects in Denmark, Germany, and the Netherlands. The study uses an established analytical framework from previous research encompassing seven dimensions: market structure, hard- and soft institutions, financing, physical infrastructure, capacity, and interactions with other stakeholders. Data are gathered through a literature review and interviews.

Results

TECs have emerged at different times in each country, shaped by contextual circumstances and diverse forms of institutional support. Elements that have supported the development of TECs are regulatory frameworks promoting DH growth, heat decarbonisation policies, economic incentives to use waste heat in plants, targeted financing mechanisms, and assistance to enhance the capacity of TECs. External factors such as high oil prices, seismic events, and recent rising energy prices have also spurred project initiation. TECs also rely on additional factors for success, including organisational and entrepreneurial abilities to engage with stakeholders, gain social acceptance, and secure commitment from community members. Involvement from local government, intermediary organisations, and private companies is crucial for TEC implementation.

Among the studied countries, Danish TECs stand out as the most developed, benefiting from a stable policy environment, decades of experience with DH and TEC, and positive societal perceptions. Conversely, Dutch and German TECs face challenges because of the early stage of their heat transition, dealing with financial obstacles, underdeveloped policies, unfamiliarity with DH technology and with TECs, as well as the need for expensive infrastructure changes. Shared challenges across regions include capacity limitations in small projects and implementing cost-effective, local, and sustainable heat sources.

Conclusions

In light of the study's findings, policymakers must consider establishing stable, integral and flexible policies supporting heat decarbonisation and TECs, addressing TECs' reliance on limited capacities, involving TECs in local heat municipal plans, and facilitating high DH connection rates where DH is the most cost-effective solution from a socio-economic perspective.