Professor Brian Vad Mathiesen:

I thank the Deputies for their questions. I have taken notes and will go through the points.

On the communal district heating systems that are in place, I highly recommend being careful in respect of how these things are worded. District heating is an infrastructure like the electricity grid. What is put into that grid is what defines the price. The committee may not be familiar with how those more expensive systems have been designed. In Denmark, systems with natural gas combined heat and power have experienced very low heating prices because the heating has been paid for by the electricity part. Natural gas has not only created high prices; it has also created low prices if it is like that. There is a vast number of sources that can be used. To call district heating one system and to base our discussion on one type of system would be a very bad situation. We need to transfer the current systems and build new systems. We have a lot of literature explaining how that can be done and I am happy to share it with the committee.

What we will need in the future is a flexible system that can integrate all of these renewable and waste heat sources.

With reference to the slide that is being shown, I will try to explain the heat pump situation. What I try to explain in respect of heat pumps is that if domestic consumers look at their bill, they will quickly realise they use far more heat than they do electricity for other purposes. When we start to focus only on heat pumps, the system becomes extremely vulnerable in the sense that, on average, two or three times the number of kilowatt hours are used for heating as are used for electricity. All that heat is placed in a few months during winter, with quite high peaks. This exposes and challenges the electricity grid but it also means we need power plants at the other end to make sure we are able to meet those demands. The heat pump community will say individual heat pumps are flexible. They are flexible, but not to the scale we need to integrate renewables. I am not against individual heat pumps. Obviously, it is an extremely important technology and we need to do that. Where it is possible to build district heating where we can also put in heat pumps and other sources, however, a much more robust system that also safeguards more against fluctuating prices is created.

On the price index for Danish energy consumers, the slide being displayed provides information on district heating during 2022. It shows the gas price, electricity price and some of the other smaller parts. As we have a district heating system that is based on a large variety of prices, district heating has been stable or reduced in price during this period rather than it having increased. It safeguards not only against energy poverty but also against inflation, against which we are all fighting in Europe.

As regards the question on of who drives the system, the Danish system was developed through many years but many countries in Europe are building their own regulation. In Denmark, it is built in a way that the local communities have to make heat plants. When they make the heat plants, the local utilities are able to build or expand the district heating plants. Who drives it? It is very locally driven. It is driven by the communities. My recommendation for Irish policy is to enable local communities to develop district heating grids with the ownership structure they prefer in those local communities. With a locally driven system, there is collaboration between utilities, if present, and the municipality. The municipality tries to kick-start issues. If there is a community that wants to build a new system, the local knowledge helps along the lines of building new pipelines. To build a new pipeline, you need to know the location of the local school, factory or hospital. Those are the units that would be connected when a new district heating grid is built.

The big consumers are identified in order to then gradually connect the smaller communities. In Denmark, our systems go all the way to the detached houses. It is really locally driven. There is a lot of regulation on how this is done to protect the consumers, not against high prices per se, because the prices are due to a lack of resources, but against too high profit-taking and loans at too high interest rates. Of course, Ireland has to find its own solutions. In the Danish system, the communities are not able to take any kind of dividend or profit when they build district heating. Having said that, those plants that supply district heating to a grid, that is a monopoly system, they might be able to take a profit if they sell electricity and then they sell the heat. There are rules about that.

Who pays? That is a good question. There is an energy crisis situation and a before-the-energy-crisis situation. Normally someone who builds a new house in a new area would pay somewhere around 50,000 kroner, which is equivalent to approximately €7,000. A new house would involve that. Then the homeowner is de facto a co-owner of the system. Their tariff and what they pay then also pays to expand the systems. The consumer pays. In a situation where prices are high, and in a situation in the Danish community where we want to allocate workforce to the area, there are subsidies to mitigate the very high cost of installation that we see right now, which we also see on individual solutions, by the way. There is no problem in having what was referred to as retrofit. I guess that question was about what the costs would be on an existing urban development. That is very different from community to community. It depends on what kind of urban setting it is and how big the costs are for the construction work. In Danish society at the moment, we are connecting around 60,000 homes to district heating in this energy crisis situation, hopefully up to 80,000 next year. These are not new houses but old houses that had natural gas before. It is really possible to do that.

On the policy side, that is a really long story. I refer to the concerns raised before about members' experience with high prices from these communal systems. Our system is based on what I would call trust. There are two kinds of trust that we need to build into this kind of system. One part of the trust is that consumers are not connecting to a monopoly where they can be exploited. There is a trust in how much they are going to pay and that if they pay a lot, it is due to high energy prices in general, not due to high profit-taking. The second part of this trust built into our system would be about who owns the system. People are sure when they connect their pipe that they are not going to be owned by a Swiss company, somebody abroad or somebody they do not trust. These two elements are really important and are built in. There is also a policy regarding the build-out.

Our policy is based on enabling the local community to carry out heat planning and create the processes that engage and release local investment. I hope that answered some questions. I will stay on the call for another 15 minutes in case members have more questions.