Boston in snow at dusk

Feeding the heat

Biomass and hydrogen are two potential pillars of mid to long-term decarbonisation of the heating sector in European Cities

The EU climate goals require a complete green-energy transition by 2050 in the electricity, transport and heating sectors. The national policies already in place today are mainly aimed at increasing the generation of renewable electricity, while the heating sector has been less in focus, despite higher primary energy demand. In Europe, half of the total 12,300 TWh of annual final energy consumption is used to provide heat in different forms and only around 800 TWh of heat comes from renewable sources. Technologies already available for the generation of CO₂-neutral heat include electricity via heat pumps or power-to-heat solutions (P2H), solar- and geothermal energy, biomass, waste-to-energy and within upcoming years also hydrogen. In the long term, green hydrogen could play an important role in decarbonising the heating sector, replacing natural gas in numerous gas-fired combined heat and power plants (CHPs). But in the shorter term, the availability of green hydrogen and lack of a developed transport and storage value chain will be obstacles. 

The recently published EU hydrogen strategy does not envisage a widespread use of hydrogen in urban heating systems but indicates that its use would be suited best to industry, sector coupling and the transport sector. It is unlikely that renewable hydrogen will be produced very close to the heat demands and so, transportation and storage will have to be added on top of the costs of delivered hydrogen. Importing hydrogen from countries in North Africa or the Middle East will increase costs further. 

Comparing the projected fuel costs in 2040 for renewable or other low-carbon hydrogen demonstrates the principle for the heating sector. The cost of natural gas will range from 20-35 €/MWh (including network and CO₂ charges), whereas renewable hydrogen is expected to cost between 60-80 €/MWh to produce, plus a further 25-30 €/MWh for pipeline transportation. Although renewable hydrogen production costs in MENA are much lower, the transport of hydrogen would be much higher, especially in liquid form, as liquification will add another 20 €/MWh and transport by ship another 60 €/MWh, depending on the place of origin and transport. The transport of hydrogen in the form of ammonia would be cheaper but conversion and reconversion costs also have to be added to the overall costs. Using low carbon natural-gas-based hydrogen could be cheaper to both produce and to import but this will depend on the acceptance of Carbon Capture and Storage (CCS) or the development of pyrolysis at a commercial scale. The EU hydrogen strategy only foresees a transitional role for low-carbon hydrogen produced from natural gas.

Lack of alternatives

If the priority is given to the development of renewable hydrogen, then there may be a limit on the volumes of hydrogen that can be produced in Europe – a point that is noted in the German hydrogen strategy. This could give rise to significant volumes of hydrogen imports just to meet demand in the industrial and transport sector where there may be a willingness to pay a higher price due to the lack  of alternatives.

Generating heat by tapping the potential of environmental heat from water-heat pumps, solar or geothermal energy might be an option for specific locations, but is only available in limited quantities and is also often restricted in its output by seasonal constraints. On the other hand, biomass useful for district heating can cover the basic and medium heating load, when burned in both centralised or decentralised plants. It has thus got the potential of replacing natural- gas plants and becoming a decisive cornerstone in the urban heat supply of the near future.

Biofuels can be procured locally or be purchased on the global market. Their use must be continuously analysed on an individual basis, taking into account local availability and required supply chains. Examples of locally available biomasses are waste wood, straw and wood chips. Globally traded biogenic materials are, besides wood pellets, e.g. bio-ethanol or bio-methanol. The largest suppliers of wood pellets are the USA, Canada, and the Baltic States. The pellets can be obtained and are certified in relation to sustainable by-products and residual materials from the forestry sector. Thus, relying on certified biofuels does not compromise the UN Sustainability and Development Goals (UN SDG) and at the same time supports the goals of cheap and clean energy supply and sustainable cities.

Increasing competitiveness 

Currently, heating solutions based on biofuels are generally not economically viable without subsidies. Within the next decade, however, AFRY foresees a significantly increasing competitiveness of biomass as an alternative fuel for the heating sector. This change is primarily driven by rising CO₂ costs and sufficient availability of biofuels. Furthermore, the requirements for fuels for the future heat supply are well met by biomass owing to its base-load capability, flexibility and CO₂ neutrality.

In the medium term, the use of biofuels and, in the long term, the large-scale use of hydrogen will be a key component in the transition of the heating sector from fossil fuels to CO₂ neutrality, mainly for district heating. The implementation is becoming increasingly viable, even in areas where other fuels or technologies were used in the past. 

In this changing environment, AFRY Management Consulting has successfully assisted various European cities in developing solutions for a sustainable reduction of CO₂ emissions and profitable heat supply. This was achieved by a threefold approach backed by technical expertise, profound knowledge of the energy sector and well-established models for energy and commodity prices. 


Bülent Mutlu

Senior Principal, AFRY Management Consulting

Robert Schwarz

Principal, AFRY Management Consulting

Carlo Frevert

Consultant, AFRY Management Consulting
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Out now! AFRY Insights - Winter 2020

Introducing our latest edition of AFRY Insights magazine, which focuses on the energy transition and features fresh insights from AFRY Management Consulting experts as well as inspiring interviews with our Head of Sustainability, Marie Trogstam, and Anja-Isabel Dotzenrath, CEO of RWE Renewables

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