European countries are currently facing complex energy challenges including major external energy dependence or an increasing concern about climate change. The Conclusions of the European Council in 2007 and 2011 established a need for reaching at least a total 20% of savings in the European primary energy consumption by 2020 (2007 baseline). In order to meet this challenge, the European Union published in 2012 the Energy Efficiency Directive 2012/27/EU (EED), which has established a common framework to promote concrete actions related to energy efficiency in the European market. Within the EED, the Article 14 stands out for promoting the energy efficiency through the use of CHP (combined heat and power), district heating and cooling and by recovering industrial waste heat.

1. Article 14 of Directive 2012/27/EU:
“Promotion of efficiency in heating and
cooling”
Carolina Fondo, Manager
24 September 2015 at 13h00 CET
Article 14 of Directive 2012/27/EU:
“Promotion of efficiency in heating and
cooling”
Carolina Fondo, Manager
24 September 2015 at 13h00 CET
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3. • History and context of the Article 14
- European EE objectives: 20% 2020
- Directive 2012/27/EU
• Main content of the Article 14
• Main impacts on European markets
• Business opportunities
Agenda
• History and context of the Article 14
- European EE objectives: 20% 2020
- Directive 2012/27/EU
• Main content of the Article 14
• Main impacts on European markets
• Business opportunities
3

4. DIRECTIVE 2012/27/EU
• European countries are currently facing
complex energy challenges including major
external energy dependence or an increasing
concern about climate change
• The European Council concluded in 2007
and 2011 that the European Union should
save over 20% of their expected primary
energy consumption in 2020
- The 2020 projection was estimated on a
2007 basis and accounted for 1.842 Mtoe
• Energy Efficiency (EE) arises as one of the
most valuable tools to carry out this
objective
- The Conclusions of the European Council
February 2011 stand out that “...investments
in energy efficiency enhance
competitiveness and support security of
energy supply and sustainability at low cost”
368
1.200
1.400
1.600
1.800
2.000
EU Primary energy consumption projections
and objectives1
The European Union has established a 20% energy saving target by 2020
for all the EU countries
4
• European countries are currently facing
complex energy challenges including major
external energy dependence or an increasing
concern about climate change
• The European Council concluded in 2007
and 2011 that the European Union should
save over 20% of their expected primary
energy consumption in 2020
- The 2020 projection was estimated on a
2007 basis and accounted for 1.842 Mtoe
• Energy Efficiency (EE) arises as one of the
most valuable tools to carry out this
objective
- The Conclusions of the European Council
February 2011 stand out that “...investments
in energy efficiency enhance
competitiveness and support security of
energy supply and sustainability at low cost”
1.842
1.474
0
200
400
600
800
1.000
2020
Estimation
2020
Objective
Required
savings
Mtoe
Note: 1 2007 baseline
Source : Conclusions – European Council 4 February 2011; Directive 2012/27/EU

5. DIRECTIVE 2012/27/EU
• In order to meet the 2020 20% challenge, the European
Union published in 2012 the Energy Efficiency Directive
2012/27/EU (EED), which has established a common
framework for EU countries related to energy efficiency
- The EED was adopted on 25 October 2012 and came
into force on June 2014
• The EED establishes both general guidelines and also
specific measures and targets to ensure major energy
savings for consumers and industry
• This Directive is composed of 30 articles related to all
stages of the EE chain
- Building renovation (art. 4),
- Energy efficiency obligation schemes (art. 7),
- Energy audits and energy management systems (art. 8),
- Metering (art. 9),
- Cogeneration and district heating and cooling (art. 14)
- Etc.
Directive 2012/27/EU
The 2012 Energy Efficiency Directive provides an approach to help the EU
reach its 20% energy efficiency target and covers all stages of the energy
chain (from production to end users)
5
• In order to meet the 2020 20% challenge, the European
Union published in 2012 the Energy Efficiency Directive
2012/27/EU (EED), which has established a common
framework for EU countries related to energy efficiency
- The EED was adopted on 25 October 2012 and came
into force on June 2014
• The EED establishes both general guidelines and also
specific measures and targets to ensure major energy
savings for consumers and industry
• This Directive is composed of 30 articles related to all
stages of the EE chain
- Building renovation (art. 4),
- Energy efficiency obligation schemes (art. 7),
- Energy audits and energy management systems (art. 8),
- Metering (art. 9),
- Cogeneration and district heating and cooling (art. 14)
- Etc.
http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:31
5:0001:0056:en:PDF
Source : European Comission; Directive 2012/27/EU

6. DIRECTIVE 2012/27/EU
• Article 14 extends the scope and replaces the substantive provisions of Directive 2004/8/EC
on the promotion of cogeneration (the so-called CHP Directive)
• The overall objective of Article 14 is to encourage the identification of cost effective potential
for delivering energy efficiency in heating and cooling (H&C)
- According to the Directive, the use of CHP, efficient district H&C and the recovery of industrial
waste heat would represent the most effective tools to achieve that potential
- When these technologies are not cost-effective, the potential may be seek through other
efficient H&C supply options
• Article 14 also requires Member States to design practical instruments to ensure that if the
technology/measure that has been analyzed (CHP, district heating, etc.) contributes to
increase the cost effective potential, the technology/measure has to be promoted or
developed
Article 14 intends to promote the energy efficiency in heating and cooling
through the use of combined heat and power (CHP), district heating and
cooling and the recovery of industrial waste heat
6
• Article 14 extends the scope and replaces the substantive provisions of Directive 2004/8/EC
on the promotion of cogeneration (the so-called CHP Directive)
• The overall objective of Article 14 is to encourage the identification of cost effective potential
for delivering energy efficiency in heating and cooling (H&C)
- According to the Directive, the use of CHP, efficient district H&C and the recovery of industrial
waste heat would represent the most effective tools to achieve that potential
- When these technologies are not cost-effective, the potential may be seek through other
efficient H&C supply options
• Article 14 also requires Member States to design practical instruments to ensure that if the
technology/measure that has been analyzed (CHP, district heating, etc.) contributes to
increase the cost effective potential, the technology/measure has to be promoted or
developed
Source : Guidance note on Directive 2012/27/EU on energy efficiency, amending Directives 2009/125/EC and 2010/30/EC, and repealing Directives 2004/8/EC
and 2006/32/EC Article 14

7. • History and context of the Article 14
• Main content of the Article 14
• Main impacts on European markets
• Business opportunities
Agenda
• History and context of the Article 14
• Main content of the Article 14
• Main impacts on European markets
• Business opportunities
7

8. 1 Developing a comprehensive assessment of the
potential for the application of high-efficiency
cogeneration and efficient district H&C
Adopting policies which encourage the use of
efficient H&C systems
Carrying out a cost-benefit analysis (CBA) in order
to identify the most cost-efficient solutions to
meeting H&C needs
Adequate measures to ensure that a H&C
infrastructure is developed when its CBA shows
potential
Ensuring the development of a CBA for all those
new or refurbished thermal electricity generation
installations, industrial installation or DH networks
2
3
6
ARTICLE 14. CONTENT
7
Excluding from the CBA those peak load and back-
up electricity installations, nuclear power
installations and installations placed near a
geological storage site
Adopting authorization criteria to take into account
paragraphs 1 and 5
Excluding specific individual installations from
implement options whose benefits exceed their
costs for justified reasons
Paragraphs 5, 6, 7 and 8 shall apply to installations
covered by Directive 2010/75/EU
Ensuring that the origin of electricity produced from
cogeneration can be guaranteed according to
objective, transparent and non-discriminatory
criteria laid down by each Member State
Ensuring that any support for cogeneration is used
to achieve primary energy savings
8
The Article 14 is composed of 11 paragraphs which aim the Member
States to the promotion of efficiency in heating and cooling
Developing a comprehensive assessment of the
potential for the application of high-efficiency
cogeneration and efficient district H&C
Adopting policies which encourage the use of
efficient H&C systems
Carrying out a cost-benefit analysis (CBA) in order
to identify the most cost-efficient solutions to
meeting H&C needs
Adequate measures to ensure that a H&C
infrastructure is developed when its CBA shows
potential
Ensuring the development of a CBA for all those
new or refurbished thermal electricity generation
installations, industrial installation or DH networks
4
5
Excluding from the CBA those peak load and back-
up electricity installations, nuclear power
installations and installations placed near a
geological storage site
Adopting authorization criteria to take into account
paragraphs 1 and 5
Excluding specific individual installations from
implement options whose benefits exceed their
costs for justified reasons
Paragraphs 5, 6, 7 and 8 shall apply to installations
covered by Directive 2010/75/EU
Ensuring that the origin of electricity produced from
cogeneration can be guaranteed according to
objective, transparent and non-discriminatory
criteria laid down by each Member State
Ensuring that any support for cogeneration is used
to achieve primary energy savings
9
10
11
8
Source : Official Journal of the European Union Directive 2012/27/EU

9. Developing a comprehensive assessment of the potential for the application of high-efficiency
cogeneration and efficient district H&C
• Member States should carry out the assessment before 31 December 2015
• The assessment must contain, among others1:
- A description of H&C demand of the country and a forecast of how this demand will change in the next 10
years
- A map of the national territory identifying H&C demand points, existing and planned district H&C
infrastructure and potential H&C supply points
- Identification of H&C demand that could be satisfied by high-efficiency cogeneration
- Strategies, policies and measures that may be adopted up to 2020 and up to 2030 to realise the potential of
H&C
- Estimate of the primary energy to be saved
- Estimate of public support measures to H&C
• At the request of the Commission, the assessment shall be updated and notified to the Commission every
five years
ARTICLE 14. CONTENT
The Article 14 is composed of 11 paragraphs which aim the Member
States to the promotion of efficiency in heating and cooling
1
• Member States should carry out the assessment before 31 December 2015
• The assessment must contain, among others1:
- A description of H&C demand of the country and a forecast of how this demand will change in the next 10
years
- A map of the national territory identifying H&C demand points, existing and planned district H&C
infrastructure and potential H&C supply points
- Identification of H&C demand that could be satisfied by high-efficiency cogeneration
- Strategies, policies and measures that may be adopted up to 2020 and up to 2030 to realise the potential of
H&C
- Estimate of the primary energy to be saved
- Estimate of public support measures to H&C
• At the request of the Commission, the assessment shall be updated and notified to the Commission every
five years
9
Note: 1 Annex VIII / Directive 2012/27/EU
Source : Official Journal of the European Union Directive 2012/27/EU

10. Adopting policies which encourage the use of efficient H&C systems
• Member States shall adopt policies which encourage to take into account at regional and local level the
potential of using efficient H&C systems
• In particular, high-efficiency cogeneration shall be considered
ARTICLE 14. CONTENT
Carrying out a cost-benefit analysis (CBA) in order to identify the most cost-efficient solutions to
meeting H&C needs
• For the purpose of the assessment referred to in Paragraph , , Member States shall carry out a CBA covering
their territory based on climate conditions, economic and technical feasibility1
• The CBA shall facilitate the identification of the most cost-efficient solutions to meeting H&C needs
The Article 14 is composed of 11 paragraphs which aim the Member
States to the promotion of efficiency in heating and cooling
2
3
10
• For the purpose of the assessment referred to in Paragraph , , Member States shall carry out a CBA covering
their territory based on climate conditions, economic and technical feasibility1
• The CBA shall facilitate the identification of the most cost-efficient solutions to meeting H&C needs
Note: 1 In accordance with Annex IX / Directive 2012/27/EU
Source : Official Journal of the European Union Directive 2012/27/EU
1
Adequate measures to ensure that a H&C infrastructure is developed when its CBA shows
potential
• Where the assessment referred to in Paragraph 1 and also the CBA identify a potential for the application of
high-efficiency cogeneration and/or efficient district H&C, Member States shall take adequate measures to
ensure that kind of infrastructures will be developed
4
1

11. Ensuring the development of a CBA for all those new or refurbished thermal electricity generation
installations, industrial installation or district H&C networks
ARTICLE 14. CONTENT
5
• Member States shall ensure that a CBA1 is carried out when, after 5 June 2014:
- a new thermal electricity generation installation with a total thermal input >20 MW is planned
- an existing thermal electricity generation installation with a thermal input >20 MW is substantially refurbished
- an industrial installation with a total thermal input >20 MW generating waste heat at a useful temperature level is
planned or substantially refurbished
- a new district H&C network is planned or substantially refurbished
The Article 14 is composed of 11 paragraphs which aim the Member
States to the promotion of efficiency in heating and cooling
11
• Member States shall ensure that a CBA1 is carried out when, after 5 June 2014:
- a new thermal electricity generation installation with a total thermal input >20 MW is planned
- an existing thermal electricity generation installation with a thermal input >20 MW is substantially refurbished
- an industrial installation with a total thermal input >20 MW generating waste heat at a useful temperature level is
planned or substantially refurbished
- a new district H&C network is planned or substantially refurbished
Note: 1 In accordance with Part 2 Annex IX
Source : Official Journal of the European Union Directive 2012/27/EU
Excluding from the CBA those peak load and back-up electricity installations, nuclear power
installations and installations placed near a geological storage site
• Member States may exempt from Paragraph 5: :
- those peak load and back-up electricity generating installations which are planned to operate under 1500 operating
hours per year as a rolling average over a period of five years
- nuclear power installations
- installations that need to be located close to a geological storage site approved under Directive 2009/31/EC
6
5

12. Adopting authorization criteria to take into account paragraphs 1 and 5
ARTICLE 14. CONTENT
7
• Members shall adopt authorization criteria or equivalent permit criteria to:
- take into account the outcome of the comprehensive assessment referred to in paragraph 1
- ensure that the requirements of paragraph 5 are fulfilled
- take into account the outcome of CBA referred to in paragraph 5
The Article 14 is composed of 11 paragraphs which aim the Member
States to the promotion of efficiency in heating and cooling
8
5
5
1
12
Source : Official Journal of the European Union Directive 2012/27/EU
Excluding specific individual installations from implement options whose benefits exceed their
costs for justified reasons
8
• Member States may exempt individual installations from being required to implement options whose
benefits exceed their costs, if there are imperative reasons of law, ownership or finance for so doing
• In these cases the Member State concerned shall submit a reasoned notification of its decision to the
Commission within three months

13. 10
ARTICLE 14. CONTENT
Ensuring that the origin of electricity produced from cogeneration can be guaranteed according to
objective, transparent and non-discriminatory criteria laid down by each Member State
• Member States shall ensure that the origin of electricity produced from high efficiency cogeneration can be
guaranteed according to objective, transparent and non-discriminatory criteria laid down by each Member
State
• Any refusal to recognize a guarantee of origin as such proof, must be based on objective, and transparent
criteria
Paragraphs 5, 6, 7 and 8 shall apply to installations covered by Directive 2010/75/EU
9
The Article 14 is composed of 11 paragraphs which aim the Member
States to the promotion of efficiency in heating and cooling
13
• Member States shall ensure that the origin of electricity produced from high efficiency cogeneration can be
guaranteed according to objective, transparent and non-discriminatory criteria laid down by each Member
State
• Any refusal to recognize a guarantee of origin as such proof, must be based on objective, and transparent
criteria
Ensuring that any support for cogeneration is used to achieve primary energy savings
11
• Member States shall ensure that any available support for cogeneration is subject to the electricity produced
originating from high-efficiency cogeneration and the waste heat being effectively used to achieve primary
energy savings
• Public support to cogeneration and district heating generation and networks shall be subject to State aid
rules, where applicable
Source : Official Journal of the European Union Directive 2012/27/EU

14. • History and context of the Article 14
• Main content of the Article 14
• Main impacts on European markets
- Assessment of the potential of CHP and DH
- Cost – benefit analysis
• Business opportunities
Agenda
• History and context of the Article 14
• Main content of the Article 14
• Main impacts on European markets
- Assessment of the potential of CHP and DH
- Cost – benefit analysis
• Business opportunities
14

15. • The comprehensive assessment of national H&C
potentials which is described in paragraph 1 can be
expressed as a whole with the national heat map
• The heat map is an interactive map of a national
territory that identifies the H&C demand points across
different segments (e.g., household, industry or tertiary
sector)
- It should also identify existing and planned district
H&C infrastructure and potential H&C supply points
• The Directive requires a high zoom level in the map
- Municipalities and conurbations with a plot ratio of at
least 0.3
- Industrial zones with a total annual H&C consumption
> 20 GWh
Paragraph 1 (a comprehensive assessment of the potential for CHP and
efficient district H&C) includes the main practical impacts that Article 14
may bring for the industry
ASSESSMENT OF THE POTENTIAL OF CHP AND DH
1
• The comprehensive assessment of national H&C
potentials which is described in paragraph 1 can be
expressed as a whole with the national heat map
• The heat map is an interactive map of a national
territory that identifies the H&C demand points across
different segments (e.g., household, industry or tertiary
sector)
- It should also identify existing and planned district
H&C infrastructure and potential H&C supply points
• The Directive requires a high zoom level in the map
- Municipalities and conurbations with a plot ratio of at
least 0.3
- Industrial zones with a total annual H&C consumption
> 20 GWh
15
Source : UK national Heat Map

16. The heat map has already been developed by United Kingdom, Scotland
and The Netherlands
ASSESSMENT OF THE POTENTIAL OF CHP AND DH
Scotland heat map - Example
http://heatmap.scotland.gov.uk/
16
Source : Scotland national Heat Map

17. The heat map has already been developed by United Kingdom, Scotland
and The Netherlands
ASSESSMENT OF THE POTENTIAL OF CHP AND DH
The Netherlands heat map - Example
http://agentschapnl.kaartenbalie.nl/gisviewer/viewer.do?code=0f2d31b5cee824a43bf2ad238f41d101
17
Source : Agentschap NL, Ministerie van Economische Zaken

18. The heat map has already been developed by United Kingdom, Scotland
and The Netherlands
ASSESSMENT OF THE POTENTIAL OF CHP AND DH
UK heat map - Example
http://tools.decc.gov.uk/nationalheatmap/
18
Source : Department of Energy & Climate Change

19. National level
Paragraph 3, 4 and 5 include a cost-benefit analysis with an impact in 2
different levels: individual installations and national territory as a whole
COST – BENEFIT ANALYSIS
Individual installation level
• Paragraph 3: “…shall carry out a CBA covering their
territory based on climate conditions, economic
feasibility and technical suitability…”
- This analysis shall include an economic analysis
covering socio-economic and environmental factors
- The purpose is to establish not the most cost-
effective technology but the most beneficial one for
the territory
• Paragraph 4: “…shall take adequate measures for
[those infrastructures] to be developed”
• Paragraph 5: “a CBA [...] is carried out when: a)a
new thermal electricity generation installation …
b) an existing thermal electricity generation
installation… c)…”
- This analysis shall include an economic and
financial analysis reflecting actual cash flow
transactions from investing in and operating
individual installations
CBA levels
19
Source : Official Journal of the European Union Directive 2012/27/EU
• Paragraph 3: “…shall carry out a CBA covering their
territory based on climate conditions, economic
feasibility and technical suitability…”
- This analysis shall include an economic analysis
covering socio-economic and environmental factors
- The purpose is to establish not the most cost-
effective technology but the most beneficial one for
the territory
• Paragraph 4: “…shall take adequate measures for
[those infrastructures] to be developed”
• Paragraph 5: “a CBA [...] is carried out when: a)a
new thermal electricity generation installation …
b) an existing thermal electricity generation
installation… c)…”
- This analysis shall include an economic and
financial analysis reflecting actual cash flow
transactions from investing in and operating
individual installations
Is this specific installation (and
technology) attractive for the final
user?
Is this technology attractive
for the country?
Subsidies, technical
regulations, etc.

20. • History and context of the Article 14
• Main content of the Article 14
• Main impacts on European markets
• Business opportunities
Agenda
• History and context of the Article 14
• Main content of the Article 14
• Main impacts on European markets
• Business opportunities
20

21. BUSINESS OPPORTUNITIES
Individual user
H&C
infrastructure
developers
• Every user will be forced to evaluate the financial attractiveness of
efficient H&C system as an alternative of their first-choice installation
• If the financial analysis benefits the efficient H&C installation, the user
will implement that option (except authorized exceptions)
Increasing H&C
installation
demand
Making easier the
identification of
business
opportunities
• The heat map enables developers to identify attractive locations for
efficient H&C systems
- “Match between demand and supply”
- CHP, district heating, waste heat to be used, etc.
Although every European country will present differences in the
implementation of the Directive, Article 14 will foster the European H&C
market in 3 fronts: individual users, developers and authorities
21
Source : Creara analysis
H&C
infrastructure
developers
Governments
and authorities
Making easier the
identification of
business
opportunities
Increasing
governmental
support
• The heat map enables developers to identify attractive locations for
efficient H&C systems
- “Match between demand and supply”
- CHP, district heating, waste heat to be used, etc.
• National and regional authorities are compelled to analyze efficient H&C
technologies from a global point of view and to identify the advantages
that they can bring to the country (financial, technical, environmental
and social perspectives)
• New regulations and support schemes may be expected throughout
Europe:
- Specific tenders for CHP generation, subsidies, etc.

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