14/12/2022
Renewable heat - the most important facts at a glance
The Austrian federal government has drafted the Renewable Energy Act (EWG, Erneuerbare-Wärme-Gesetz), which is expected to contribute to making Austria climate neutral. The draft EWG bill aims at switching the heat supply of buildings to renewable energy sources and providing so-called ‘quality-assured’ (i.e. decarbonised) district heating by 2040 through the gradual prohibition of the burning of fossil fuels. The EWG will also regulate the installation of heating systems in new buildings as well as the conversion of heating systems in existing buildings. The draft, which will likely not be passed before January 2023, contains the following points. Residential and non-residential projectsThe installation, conversion and extension obligations for heating systems envisaged in the EWG bill will be of crucial interest to project developers since it will cover all kinds of existing and newly constructed buildings, both residential and non-residential. Ban on fossil heat transfer media in new buildingsThe bill’s main innovation is a comprehensive ban on installing oil, coal and gas heating in new buildings from 2023. Such a ban has been in force for central oil and coal heating since the Oil Boiler Installation Prohibition Act 2019 (ÖKEVG, Ölkesseleinbauverbotsgesetz). According to the draft, from 1 January 2023 the ban will extend to cover existing decentralised heat supply systems running on oil and coal as well as gas heating systems. The ÖKEVG is to be replaced by the EWG. Decommissioning requirement for central heating systems existing buildingsThe law centres on the decommissioning requirement for central heating systems in existing buildings. Natural gas heating systems must be decommissioned by 2040, and oil, coal and liquified petroleum gas (LPG) heating systems must be decommissioned by 2035. In addition, buildings with central heating systems running on oil, coal or LPG will be particularly affected since building owners must decommission heating systems earlier than this depending on the system’s year of construction. According to the current draft, central oil heating systems built before 1980 must be decommissioned by 2025, while newer systems must be gradually decommissioned by 2035 (as part of the successive decommissioning requirement). This will mean significant additional costs since existing fossil-fuel systems must be de-installed and converted to other systems. Those costs must be carefully considered for buildings already in operation and for project planning and contract design, especially when determining the purchase price of real estate. Renewable energy requirement for central heating systems in existing buildingsIf a central heating system in existing buildings is renovated, improved or renewed, it must either be converted to a system using use renewable energy sources or the building’s heating supply can be switched to quality-assured district heating. Consequently, as of 1 January 2023, central heating systems not running on oil, coal or LPG any more may not be replaced with another fossil heating system. The heating system to be replaced must be decommissioned. The EWG offers some flexibility. For example, the replacement of old systems will not be required and a switch to district heating and other alternatives is also possible as explained below. Developers are encouraged to take the renewable energy requirement into account for their projects, both in planning and contract drafting. For repairs, refurbishments and improvements to fossil-heating systems, the costs of removing and disposing of old systems and installing new ones must be weighed against a possible switch to district heating (for which the bill provides technical exceptions). Conversion requirement for decentralised systemsExisting decentralised plants running on oil, coal or gas will be treated more strictly. They must be converted to centralised non-fossil fuel plants by 2035 or, if operated by natural gas, by 2040. Operating a building will only be permitted if the building is heated with renewable energy sources or quality-assured district heating. For decentralised natural gas heating systems, this only applies if the building is located in an area, which already has quality-assured district heating or where this will become available by 2035. If this is the case, individual units (e.g. flats, offices, shops) must be connected to this central system within five years. If this conversion has not taken place in a building, this must be taken into account in project planning and cost planning. In individual cases, it must be examined in more detail what exactly "quality-assured district heating" means and how a real estate investor can determine this or check whether "it will have district heating by 2035". It is also not clear whether tenants can insist on a certain changeover or, conversely, oppose it. According to the bill, further regulations are to be expected for those natural gas-based systems that are not covered by the renewable energy requirement, the successive decommissioning requirement and the requirement to convert decentralised systems. Therefore, another draft to address the phase-out of fossil gas heating systems in existing buildings will appear soon. However, these natural gas plants will also have to be decommissioned by 2040. Energy Outlook – is green gas the future?According to the draft, declared objectives of the EWG include the expansion of district heating and the conversion of heat supply to renewable energy sources or quality-assured (i.e. decarbonised) district heating. According to the draft, energy from renewable gas falls under energy from renewable energy sources and is therefore a means of decarbonising district heating. The explanatory notes to the bill refer to the use of green gas for the latter in addition to waste heat utilisation, heat pumps, geothermal energy and biomass. As a result, heating systems that are operated with renewable gas are exempt from the decommissioning requirement for central heating systems. Pending regulations on natural gas heating absent from the EWG will not change this either. Green gas plants can be operated beyond 2040. Authors: Thomas Hamerl, Dr. Johannes Hysek, Karl Weber-Woisetschläger
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