02 September 2019

Heating Fund: wood energy to the fore!

The Heating Fund, a round-the-table topic at the last edition of Bepositive, is a government promise arising from France’s “Grenelle de l’environnement” policy meeting. This is the fund’s tenth year. Managed by ADEME* and intended for collective dwellings, local authorities, and businesses, this fund sets out to develop heat production from renewable energy sources. We focus on wood energy, which produces 67% of the megawatt-hours so far financed by the Heating Fund.

*ADEME: French Energy & Environment Agency

Heating accounts for nearly half of today’s energy consumption and is a strategic lever in the European Climate Plan. The Heating Fund sets out to favour heat production from renewable resources—biomass, geothermal, direct solar—and from industrial processes (“unavoidable heat”) and to enable it to compete with conventional energy sources. It provides support to renewable heat production installations and to energy transport mains (creation, densifying, extension).


A fund rising in power

Since 2009, the Heating Fund’s yearly allocation has doubled, going from €169m/year to €307m in 2019. The assistance given over 10 years represents a total of nearly 2bn euros toward a total work cost of €7bn. The fund is directed at large and small projects alike, with a minimum production threshold adjusted according to the fuel. To maximize access to this fund, a standard aid system lets project owners know in advance how much subsidy they will receive, as has been the case in 80% of assisted projects. As for large scale projects, these are judged on the basis of an economic analysis.

As well as providing advice for setting up the project, ADEME calculates subsidies as accurately as possible in order to provide effective aid to as many projects as possible. The average aid provided is around 35% of the investment cost

explains Nelly Lafaye, in charge of Wood energy– Heat transport networks–Deep geothermal power at ADEME.


Wood projects, an important share of the fund

Biomass represents a large share of projects. In the 10 years since its implementation, the Heating Fund has helped develop many collective and industrial heating plants. Out of nearly 2 billion euros provided to 4800 installations subsidized by the Heating Fund, 39% were used to fund wood-fired heating plants and 39%, heat transport mains. In comparison, solar and biogas each account for 4% of the total aid amount, with geothermal and heat pumps at 8%. In 2018, the Heating Fund helped funded almost 28TWh of production capacity, of which 67% was from wood-fired heating plants. Although high investment is involved in the installation of wood burning plants and heat transport mains, they lead to a steadier global energy bill; in the long term, renewably sourced energy becomes more cost-effective than fossil energy.

The cost price of heating is dominated by the amortization of investments (calculated over long periods: 60 years for mains and 20 years for wood boilers), therefore this value is stable in the long term. The variable costs, maintenance and fuel, are small in comparison. Conversely, for fossil-fuel installations, it’s the highly variable gas or oil costs that dominate. That’s why we call renewably-sourced energy capitalistic.

underlines Nelly LAFAYE.


Lyon’s biomass choice...

In April 2019, Lyon Métropole finished commissioning the largest biomass-fuelled public heating plant in France powering public heating mains. The local authority and its appointed contractor have invested over €200m in the project to extend the central grid in the Métropole and construct a wood-fired boiler plant, aided to the tune of €42m by the Heating Fund. This new unit will provide 20% of heat distributed via the public mains, complementing the Gerland waste processing plant, which covers 45% of needs. All these investments will initially enable winter heating of 45,000 home-equivalents, eventually rising to over 130 000 home-equivalents.

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The biomass boiler of Surville: an exemplary partnership between the Métropole de Lyon, ADEME and Dalkia.

85,000 tonnes/year of wood will fuel three 17-megawatt boilers. The wood is composed of woodchips, bark, timber offcuts, and end-of-life wooden articles, from an average radius of less than 90km from Lyon. This new installation is operated by Dalkia-ELM in the scope of a public service concession. The 25-year contract anticipates a rate of 65% renewably-sourced or recovered energy for the whole of the urban network. Biomass CO2 emissions are only a twentieth of those from fuel oil. Moreover, this project has created over fifty direct jobs in management/maintenance of the service and in the supply chain.

...and Aurillac’s too

A new wood heating network will enter service in Aurillac in the summer of 2020. The foundation stone of a new heating plant that will supply the town’s wood heat main was laid at the end of June, 2019. The investment amount is €17m, including €10m funding from ADEME.

When this installation is running, it will enable better management of the environmental impact of heating 3400 home-equivalents, namely 130 buildings over a total distance of15km, by producing 42GWh of renewably-sourced heat yearly and avoiding the emission of 9,600 tonnes of CO2. The mains grid can deliver up to 28,000 megawatts. Bear in mind that very few heating mains run on wood alone, with Aurillac running on 89% wood topped up by a fossil-fuel boiler running alongside on really cold days. The local biomass sector will also be consolidated by the structuring nature of this project: 18,000 tonnes of wood products, 87% of them woodchips, will be monetized every year as heat energy, with the sourcing area stretching for 100 km around the heating plant. As regards setting up the project, “this type of project is seldom put together by local government because the costs would be too big a proportion of the council budget, while new skills would need to be hired in the town’s services. Aurillac therefore chose to operate in the scope of a public service concession, with ENGIE Cofely as the appointed contractor,” explains Nelly Lafaye.


To take things further… Dynamic bois

The Heating Fund’s ambition is also to favour employment and the structuring of the sectors involved, as well as experimenting with new technologies for better mobilization of renewably-sourced energy with a view to making it widespread. The timber sector strategic contract signed in December, 2014 has enabled the Heating Fund to extend its scope to include actions for the mobilization of wood. The objectives of the French Energy Transition Act involve further mobilization of wood and the preparation of future resources on a regional scale to give durable impetus to sourcing for wood heating plants. This is the context in which the Dynamic Bois call for interest was launched in 2015 then repeated in 2016. The Heating Fund has funded various such projects, notably sponsored by forestry consortia.

There is plenty of timber in France. But although accessible sites are fully exploited, many parcels remain uncultivated due to difficult access. This Dynamic Bois operation has increased the mobilization of timber. The sustainable management of forests is a major issue in the development of wood-derived heat renewables.

Find out more on the Heating Fund (French only)

 

Photo credits: Dalkia

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