No apologies have been received. In our first session today, from 12.30 p.m. to 1.30 p.m., we will have an engagement with witnesses on pre-legislative scrutiny of the general scheme of the heat (networks and miscellaneous provisions) Bill 2026. The stated goal of the Bill is to establish the State's first comprehensive regulatory and legislative framework for district and communal heating networks. We had previously agreed to undertake pre-legislative scrutiny and we plan to report to the Dáil by early November. The committee secretariat sought submissions on the issues from the public but none were received.

I welcome the following witnesses to the first session of the meeting: Mr. Brian Carroll, assistant secretary; Mr. Seán Kinsella, principal officer; and Mr. Martin O'Dwyer, assistant principal officer, Department of Climate, Energy and the Environment. I remind everybody in attendance to make sure their mobile phones are on silent mode or switched off.

Before I invite the witnesses to deliver their opening statement, I advise them of the following in relation to parliamentary privilege. Witnesses and members are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable, or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.

The format of the meeting is that I will invite Mr. Carroll to make an opening statement to a maximum of five minutes. Once that statement has been delivered, I will then call members of the committee, in the order they indicate to me, to put their questions. The committee operates a rota system which gives each member an initial five minutes to engage with our witnesses. It is important to note that the five minutes is for both questions and answers. Therefore, it is essential for members to put their questions succinctly and for witnesses to be succinct in their responses. The duration of this meeting is limited and, therefore, the times must be strictly adhered to. I ask everybody to be focused in their contributions.

I invite Mr. Carroll to make his opening statement on behalf of the Department.

I thank the Chair and the committee for the invitation to attend this meeting on pre-legislative scrutiny of the Bill. I am accompanied by Seán Kinsella, principal officer, who leads on renewable heat implementation, and Martin O’Dwyer, assistant principal officer, who had a central role in the drafting of the heads of the Bill.

Across the European Union, approximately 70 million customers are connected to district heating systems. In cities such as Copenhagen and Stockholm, efficient district heating systems provide over 90% of heating demand. The technology offers an affordable and scalable renewable heating solution for multiple customers simultaneously, while also enhancing energy security by reducing exposure to fossil fuel price volatility and geopolitical energy shocks.

In Ireland, the most significant district heating scheme is the Tallaght district heating network, which uses waste heat from a data centre to supply public buildings. In addition, approximately 11,000 customers are connected to smaller communal heating systems across the country. The SEAI's national heat study concluded that district heating could make a substantial contribution to Ireland's heat demand.

The district heating steering group, established by the Government, recommended a comprehensive framework to support the development of district heating in Ireland, including: Government support for public, private, and utility-sector investment in district heating; the establishment of a regulatory regime that protects consumers and supports a competitive and sustainable market; and a requirement for public bodies to connect to district heating networks where appropriate. These recommendations are reflected in the heads of Bill. The proposals have been informed by extensive engagement with stakeholders, including local authorities, private sector district heating providers, Departments, the Commission for Regulation of Utilities, CRU, the Sustainable Energy Authority of Ireland, SEAI, and representatives of established district heating sectors in Denmark, the Netherlands and the United Kingdom.

The primary objective of the Bill is to create a robust regulatory framework that enables the expansion of efficient, low-carbon district heating throughout Ireland, while ensuring consumer protection. The Bill provides for a licensing regime for district heating network operators and suppliers, to be administered by the CRU. It also requires that all new or substantially refurbished heat networks meet the definition of "efficient district heating and cooling" as set out in the energy efficiency directive. The legislation further provides for the establishment of a heat network authority, HNA. Pending the establishment of a permanent authority, the SEAI will function as the interim HNA. The HNA will have responsibility for overseeing the strategic development of district heating nationally.

The Bill also recognises district heating as strategic energy infrastructure and provides for the possibility of State acquisition of certain networks over the longer term. Under these provisions, the heat network authority, or another body designated by the Government, may signal its intention to acquire a strategic efficient district heating and cooling network after a period of 30 years. The legislation also provides for earlier acquisition where necessary, including in circumstances where a network operator exits the market.

To safeguard consumers, the Bill requires the designation of a supplier of last resort to ensure continuity of service in the event of supplier failure.

To support network growth and improve project viability, the Bill introduces a requirement for public buildings to connect to district heating networks where feasible and appropriate. The legislation also amends the Multi-Unit Developments Act 2011, enabling owners' management companies, OMCs, to enter into district heating contracts that extend beyond the current three-year limit that applies to contracts for goods and services.

Members will be aware that Cabinet approved a number of revisions to the previously published heads of Bill in July. These amendments were made following further engagement with stakeholders and addressed matters including aligning the funding model and regulatory powers of the CRU with arrangements in other utility sectors; the adoption of a principle-based step-in pricing methodology; streamlining of licensing procedures for district heat providers; the functions of the interim HNA pending establishment of the permanent body; arrangements relating to future State acquisition of strategic district heating networks; provisions governing access to roads for installation and maintenance of heat network infrastructure subject to the consent of roads authorities; and clarification of procurement requirements for public bodies assessing district heating opportunities. These revisions do not reflect any change in the policy intent of the legislation. We look forward to engaging with the committee.

I thank Mr. Carroll for his opening statement. We will now go to members.

I thank Mr. Carroll for the presentation. This is a welcome move. It is quite stark from the submission when one compares how advanced this is in Ireland with the rest of the Europe where 70 million people benefit from district heating. Will Mr. Carroll tell us why we have been so slow with this measure in particular when over the past number of years we have had energy shock after energy shock? This technology, which is widely used in the rest of Europe, is helping people to reduce their energy costs. Why are we so slow here? In 2023, the climate action plan committed to delivering in 0.8 TW by 2025. How much we have actually met? What is our current usage? Does the Department think we will be able to meet the 2.7 TW target by 2030 through this legislation?

I thank the Deputy for her question. I might start at the end. It will be very challenging in the period between now and 2030 to hit that target but the objective of the legislation and other policy measures being introduced by the Government, including grants for pre-construction of district heat networks and capital grants for their building are all looking to accelerate progress towards that target. That is certainly the intent of Government policy.

On why we are so far behind relative to other EU countries, energy systems evolved in different ways in different countries over time. The SEAI heat study indicated a role for heat pumps and the electrification of heat in the first instance to shift our heat demand to renewable sources but also a role for district heating. Following the commitments that have arisen in the context of the climate action plans and the programme for Government, this Bill and the other measures I referenced seek to accelerate and progress towards the target as rapidly as we can.

At the moment there is a lot of discussion about data centres, their role in Ireland, the impost they place on Irish energy prices and the grid but one area in which data centres play an important role is supporting district heating. In Tallaght there is a data centre connected to a district heating system but that is only for public buildings; it is not for households in the area. There is currently no requirement on data centres to participate. I imagine data centres would be one of the primary sources of industrial heat. Does Mr. Carroll think that is a gap? Should there be a condition in data centre licensing and planning permission to be part of a district heating system so that people living in the neighbourhood can benefit from the data centre there?

The district heating industry is in a nascent stage in Ireland. We are putting the framework in place to allow the market to start to operate and develop. I fully agree there are big opportunities in heat from data centres. The current framework will enable those opportunities to be realised if people want to develop projects associated with heat sources whether the public or private sector or some combination. There is nothing to prevent these heat sources being utilised in the legislation. The legislation aims to facilitate the market in tapping into these opportunities and building the infrastructure to service.

Mr. Carroll does not see any role in this legislation for putting an onus on data centres, large emitters of heat, to participate? It is more voluntary.

The energy efficiency directive does that through European law.

It is at times like this I am thankful we are in the European Union because we would not be doing a lot of this work unless we had the EU telling us. There was a real opportunity for the Department and the Minister to put an onus on these large energy users to participate and support people in their communities through district heating. That would have been really worthwhile. I am glad the EU will force us to do it.

I thank the witnesses for coming in. As a TD for the Tallaght area, we are really proud of the district heating centre. I had a tour of it with Codema. It heats the TUD campus. It is a very impressive system. Like others, we generally welcome this Bill. We would love to see further roll-out of district heating because we have plenty of data centres.

This version of the Bill removes the primacy of acquisition of heat networks that was in previous versions. Mr. Carroll said this was following stakeholder engagement and it could significantly discourage investment in district heating. Concern could be expressed about whether this gives the private market too much control and responsibility for a system that has been successful on a co-operative basis elsewhere. Will he explain the rationale behind this change and who the Department spoke to about it?

After the 30 years the State still has the right to acquire the network. In certain circumstances it can acquire it prior to the expiration of those 30 years, the first being if the developer chooses to sell it and the second being if there is a failure of the operators or suppliers using the network. The State can in those circumstances acquire the network.

On how we are drafting the legislation, being conscious that the industry is at a nascent stage in Ireland, it is about trying to get an appropriate balance between incentivising the private sector and protecting the public interest. The legislation allows for the public sector to step in and for local authorities to develop district heating networks. It allows for the private sector but it also allows for partnerships. It is trying to get a balance of incentive and having as open an approach in terms of whom might become actors in the market to allow the industry to start developing. As previously mentioned by Deputy Whitmore, we are playing catch-up so we want to find ways to accelerate.

Has the Department received expressions of interest? Have private companies and developers been in contact with the Department about this? Is there a queue of people waiting for this legislation to be passed?

There certainly is, and actually where we would have some data around that, which maybe I might bring Mr. Kinsella in to talk about at a higher level, is in terms of the level of interest in the grant schemes that the Government has brought forward, both the grant scheme to fund pre-construction activity and also capital grants to build networks. There has been a very big interest and it has shown a very healthy pipeline of potential projects.

To date we have supported South Dublin County Council on the Tallaght scheme. It has just submitted its business case for phase 2 of that scheme, which will also take in residential buildings. There is €50 million earmarked for the Dublin scheme from the Climate Action Fund.

Separate from those two, as Mr. Carroll mentioned, there has been €5 million made available for pre-construction funding to accelerate projects and get them ready for the capital funding. We had 40 expressions of interest for individual projects this year. These ranged from projects that are effectively ready and waiting for Government funding, all the way back to projects that are just concepts at this point. We whittled that down to 15 projects and invited them to apply for funding. We will be making an announcement on that in the coming days. Those projects are a mix of public and private.

Forty expressions of interest is good. The heat source is vital here. Are these proposals coming from people who control the heat source, such as the incinerator in Dublin Bay, or other data centres? Are these proposals coming from companies who control those or are they separate entities coming to the Department? How do those relationships work?

They certainly would not be controlling the heat source in every case. Mr. Kinsella may have detail on what proportion do control the heat source.

I would say none of them control the heat source. They are all individuals, whether it is a county council or a private developer, that would then be working in partnership with the heat source provider, whether it is the waste energy facility or a data centre, or they are taking a different approach, for example, heat pumps or biomass.

I thank the witnesses for their presentation. There is obviously a lot of public concern at the moment around the number of data centres and these monstrous data centres that are springing up all across the country. Is there a danger that the use of this waste heat could be used as some kind of a justification or sop for more data centres and that the waste heat recovery risk could become kind of a justification, like the Government trying to put a spin on this for more data centres? Could the witnesses give me a clear figure of how much of the heat demand these networks could realistically meet from data centres, rather than just the potential in theory? Are there data centres queuing up as this could be a huge sell for them?

I will come in on this and ask Mr. Kinsella if he has the figure the Deputy is looking for. I certainly have not seen evidence of renewable heat potentially being used as a justification for data centres, but in the earlier discussion we did sort of inform the committee that the EED does require that this heat be made available, so we are seeing it as an opportunity to provide heat for district heating networks. However, I have not seen it associated with any other sort of policy imperatives.

Of the projects coming forward, about a third of them are from waste heat. They are not all data centres, but the majority of that third would be data centres. We have figures in relation to that.

The majority of the third.

A third of the projects coming forward would use waste heat as their heat source and of that third the majority would probably be data centres.

What kind of a reduction in heat is this going to bring to customers? I know the CRU is going to have some say in this, but its protection of customers from increases in the price of electricity has not proven very good so far. I was at the launch of Lynn Boylan's report yesterday and the CRU has utterly failed consumers, according to that report. Does the CRU have the resources and the powers to genuinely protect consumers?

The legislation does set out quite extensively the role and powers of the CRU when it comes to regulating district heating networks, operators and suppliers, and puts in place some very significant protections for customers, including customer charters, codes of practice and a principles-based approach to pricing.

However, it is probably also worth saying that the approach to regulation of pricing will evolve over time, and again because the industry is at an early stage, the initial networks that are built are likely to be serving large anchor customers who will privately contract with the heat suppliers. We are talking about big entities getting their heat and contracting. It will be a little down the line before households start to be connected, but the legislation does put in place a framework for when that happens so that households can be protected in terms of price. In fact, that approach to regulation can evolve with the customer base.

It is probably also worth pointing out that, with the volatility in the global energy markets, as we move to more indigenous sources of energy we will be less exposed to the severe price shocks like the one we are experiencing at the moment and that are, as the Deputy said, making it very difficult for households.

Head 8 does say that it is going to equip the CRU with a broad range of powers to implement the regulatory regime. What kind of powers are we talking about? Is it really feasible that the CRU is going to be able to take on the added responsibility of regulation for this?

It is. The draft heads of Bill make provision for resourcing the CRU, and it has various options. They will evolve eventually into a levy on the heat sector, but because the heat sector is so small at the moment, Exchequer funding will be made available to the CRU to support its role. There is also provision so that it can levy wider energy undertakings, not just in terms of district heat. It has power as well to monitor the development of supplier competition.

What is the Department recommending about extra resources for the CRU? Are they going to be provided to it?

It is reflected in the Bill. There is provision in the Bill to give Exchequer funding to the CRU. There is also-----

Does Mr. Carroll have more detail than that?

What it suggests is that on an annual basis my own Minister can, in consultation with the Minister for public expenditure, as a matter of budgetary process, make an appropriate allocation to the CRU to fund its regulatory functions. The legislation also provides for levying across the broader energy sector, so that there is cross-utility levies to support CRU. Also, when the heat sector reaches a sufficient level of maturity it can be levied. There is ample provision to provide money to the CRU to resource it. The amounts of that money will be determined as required year on year.

My experience on Kerry County Council was that when it was regenerating the Mitchels area of Tralee, engineer Willie Moynihan and a few others quite innovatively developed a district heating system to cover the area. They won a number of awards. It was a powered by wood chip from local forestry sources. There have not really been systems like it developed. I would have thought there would have been expansion.

My other experience of something like this was when Gas Networks Ireland built a pipeline to facilitate the Kerry Group factory, Kerry ingredients, in Listowel. Promises were made at the time that local people in Listowel would also be able to access this gas.

Not one cubic metre of gas was ever provided to any local people and I am somewhat sceptical when I hear about anchor customers. One third of the heat would go to larger energy users.

I compliment the Oireachtas Library and Research Service on the document it provided for us. In this briefing note, they mention Denmark and its strong active municipal planning. Mr. Carroll stated that there is provision for local authorities to become involved. We have to move towards a just transition so that it is fair to people who are using the heat to heat their houses. Realistically, if it is private companies, they will want to make more profit the following year than this year and more profit the year after that. Does Mr. Carroll anticipate energy bills coming down, notwithstanding that we are moving away from international gas markets? In Denmark, according to the briefing note, local municipalities map the housing demand, the existing heat regime and the energy being used and then they make regional plans. They have consumer co-operatives and municipalities have 90% of the network. Pricing is heavily regulated. Excess profit is not permitted. Are we going to learn anything from what they have done and learn from the mistakes? It was a mistake to build a pipeline where not one local person can access it. It was a mistake not to develop on the work that was done by Kerry County Council. Are we just moving it towards a for-profit model here? I note there are no solar planning guidelines published. We can forget about onshore wind. Is there any mandating of local authorities to lead out on this and make the bills reduced for people? I do not see it happening otherwise.

In terms of what the Deputy talked about, strategic planning for district heating, mapping of heating sources and potential markets for heating, the proposed Bill provides for the establishment of the HNA. One of the things that authority is to do is to prepare a strategic plan, with all the things that the Deputy has mentioned being part of that plan. That will guide planning authorities, in particular, when permission is sought to develop a district heating network.

In terms of the initial phase where there may be a number of anchor customers, we would see that evolving into a situation where households over time start to become connected as well.

The proposed Bill certainly is not only about a focus on the private sector. It very much calls out the role of local authorities. Quite specifically, local authorities, on their own or in partnership with the private sector, or the private on its own, are over time potentially to see a heat utility being established. All of that is allowed for in the Bill. On top of that then, this principle-based approach to pricing will evolve as households are connected. The private sector is only one part of this. There is a very strong emphasis on the role of the public sector.

Has any local authority asked whether it can develop one itself?

Tallaght has been involved.

But into the future, once this comes in.

And Dublin City Council is involved in developing one as well.

What about in any rural counties?

On the pre-constructive funding we are providing, half of the projects being brought forward would be by local authorities.

Is it that they will develop and run it?

On the models I am not sure, but they will certainly develop it. For example, South Dublin County Council owns the Tallaght scheme. It owns a company that manages the scheme and a private service operator operates the scheme on its behalf. That is a model that we are likely to see. It could be that they go into a partnership with a private developer as well. The model is quite open at the moment but at least half of the projects are being brought forward by the local authority.

Would the Department prefer to see municipally-led and run heating systems?

The policy preference is to get district heating moving in Ireland. As I said, the proposed Bill does not prefer one approach over another. It facilitates the public sector and it facilitates the private sector, but it has the heat network authority in that role in strategic planning and mapping and it calls out the role of local authorities. It would facilitate the involvement of local authorities in the way the Deputy wants.

I welcome the witnesses. Adding to the point Deputy Daly has made, the first district heating system that I came across was in Camphill community in Ballytobin, County Kilkenny. It was initiated 27 or 28 years ago. It was taking in waste, agricultural slurries and food waste, pizzas and Coca Cola digestate. It was a facility that was heating approximately 20 residential units, a community hall and some greenhouses. It was a fantastic system. It is still operational, although the facility was shutdown a number of years ago. It was an innovative system in its time. As a farm-scale project, it is still replicable in many other settings.

Taking up on that point around enabling the local authorities to establish energy supply companies, ESCs, and that, in itself, being a means of income for local authorities because we see the revenue base for local government being eroded constantly through loss of rates and through other services as well, is there an opportunity there and does that opportunity need to be mandated to local authorities to formally set up energy supply companies and move this to scale? They are delivering, either through the enablement of private developments or through supporting AHBs or direct construction of local authority housing. There is a huge development pool going on in the country at the moment and we are missing a trick here that we are not putting district heating into these schemes from the off. Do local authorities need to be mandated to include these and design district heating systems into schemes?

I thank the Deputy for the question. At the moment, the proposed Bill does not do that. However, it highlights the role local authorities can play in developing district heating should they choose to do so.

Is that perhaps not for the proposed Bill? Is it something that perhaps should come through the local government side, even in the notion of retrofitting housing developments or looking at mixed schemes in which the local authority has an involvement so that there could be a mix of certain developments? It could be a municipal pool. It could residential. It could be some retail. If Mr. Carroll will excuse the pun, there does not seem to be energy within the local government system to do this, for a start, thinking differently and looking at where it could see an opportunity for generating revenue. Would it be the purpose of the proposed Bill to do that or should it be something that perhaps should be brought through the local government side?

Given it relates to local authority, it could certainly be a matter for the Department of Housing, Local Government and Heritage to consider as a policy proposal. As I say, it is not included in this proposed Bill but there is a role for local authorities in developing district heating. Recently, Dublin City Council, as the members probably saw, put in for planning permission, for north and south of the Liffey, for quite an extensive district heating system. The legislation is trying to facilitate this and we are starting to see it happening. As of now, we have Tallaght and we have Dublin City Council.

I thank Mr. Carroll. My second question is around the significant challenge we face across the various sectors in terms of meeting climate targets.

Is there an estimated target for the role that district heating can play in meeting the climate targets for the residential and building sector?

We set a target in the climate action plan. As indicated earlier, we are trying to progress as rapidly as we can to trying to hit that target. The SEAI recently produced a study. I think it estimates 17%. It is cost effective.

I thank the witnesses for joining us. Regarding how they see this evolving over time, have they any insight into whether it will be a rural-urban divide? If so, what will be the proportion on each side?

I would not necessarily characterise it as an urban-rural divide. The key thing to develop a district heat network is a heat source and then a set of customers of sufficient scale to justify the investment.

And density.

Yes. It is not simply a matter of urban versus rural.

What proportion of the country, towns and villages or population will actually have the scale and density for this to be effective, all things considered? How much of the State's population would Mr. Carroll envisage could be serviced?

The figure we gave earlier was that 17% of our renewable heat target could be met from district heating.

Mr. Carroll mentioned large energy users with regard to waste energy and how it can be circulated in communities. It has been questioned in relation to other commercial users and how they have used their energy. What would a data centre or any other large energy user do if they are not going to provide it through a district heating system? Is the Department looking at this being built in to the planning application?

As we said earlier in the discussion, the energy efficiency directive mandates, under certain conditions, data centres to provide that heat for district heating. To do that, it needs to be technically and economically feasible to do so. You need to be within a reasonable distance of a dense enough configuration of customers to justify the requirement to have data centres supply the heat for district heating, but there is a requirement under the energy efficiency directive.

From an efficiency perspective and disruption during delivery of this on the ground, there is a concern that if we retrofit towns with district heating systems, we will be pulling up footpaths and roads and so on. Does Mr. Carroll believe that technology and civil construction methods are advanced significantly enough to allow for minimal disruption?

Mr. Kinsella might be in a position to comment further on that but those intending to develop a district heating system will have to get planning permission and a road opening licence. The roads authority will be in a position to impose whatever conditions it thinks are necessary on that. I imagine it will be done in a way to minimise the type of disruption that the Deputy is talking about. It would have to be phased, with particular roads closed for a period while the pipework is laid and then reopened again.

Although a nascent sector here in Ireland, this is a well established sector throughout Europe and the world. Although the pipes tend to be a little bit bigger than, for example, the gas network, we do not see any issue for expertise or laying pipes in the ground as long as it is done in accordance with current regulations and standards. We do not have any concern.

We have many different utility providers in the country, such as Uisce Éireann and so on. Is there ever a conversation about how they can work together or possibly complement a service utilities corridor? It is maybe a question more for infrastructure than for here, but do the witnesses envisage any discussions in that regard?

In the groups looking centrally at issues around infrastructure, these matters are being considered. If there is a way to co-ordinate better across utilities in these sort of circumstances, it is obviously a good thing to do. With regard to bringing forward projects, timing and needs, it is probably quite challenging to actually execute, in a way. To the extent that disruption can be minimised, I think where infrastructure is being looked at centrally, these types of issues are being addressed.

Who will the planning authority be for district heating?

For getting planning permission, it is the local authority. There is the heat network authority to be established as well, but that is more about setting out the strategic plan, the mapping of the heat sources in the country and the mapping of the dense areas of development that could be served by a heat source. That will be used to inform planning decisions.

If I want to build a network tomorrow, I go to the local authority for planning permission. How does this heat network authority tie in with the local authority? Is there a risk that this will be a passive planning exercise whereby applications will be coming in to the local authority and will be dealt with case by case? How will that all tie together? Does Mr. Carroll understand what I am asking? Will there be an active planning role to build out and design the planning system for district heating to make it active? How will that work?

It is envisaged that the heat network authority will produce that sort of strategic plan which will have spatial dimensions and that will be available to the local authorities making decisions, so if an application comes in, it can see if it makes sense. Pending that, applications can still go ahead now.

So the spatial planning will be done by the heat network authority.

It would have that strategic overview.

How long does Mr. Carroll envisage it would take the authority to do that? That is important.

We need to enact the legislation. It needs to be established. The SEAI will act as the interim heat network authority and will be working to produce that. Do we have a timeline on when it may have that?

I do not have an exact timeline but there are two points here. Work to underpin this has already started. The SEAI's district heating centre of excellence is working on the national level assessment, which is effectively already mapping out where the most appropriate areas for district heating are in Ireland. It is looking, at a really granular level, at where the waste heat and renewable heat sources are, on one side, and on the other, where is the offtake and the heat density, all the way down to the building level. That work has already commenced. Another important element in planning these networks that will feed in or an important part of the jigsaw will be the heating and cooling plans that local authorities will have to develop as per the energy efficiency directive from 2028. We see district heating playing an important role in those plans.

Will the development plans for local authorities have to be changed to take account of the heat network authority, whatever it develops out of? Will that process happen? How will that happen? Do the witnesses understand my question? The local authority has a development plan. There is a spatial plan now from the heat network authority. How will those two be integrated?

The overriding point is that they will have to take account of the spatial plan, now whether they want to reflect that in their local development plan or take account of it as a national policy. They will probably have their own objectives and targets around renewable heating. It is probably also important to say that pending the arrival of this plan, applications can still go ahead, as in the case of Dublin district heating.

The putting in place of this strategic spatial plan is not in any way impeding progress at the moment on projects like the Dublin district heating project.

Heat travels in water, probably hot water or steam but who owns the heat? What is envisaged under the legislation?

I might ask one of my colleagues who has maybe better technical knowledge than me. My understanding is that there is a heat source and either the heat from that source is free or somebody who produces the heat owns the heat. Then you have a network of pipes that someone owns and operates. Then, you have a supplier who takes the heat from the heat source and supplies it through to the customers. My understanding is that, in the first instance, if someone owns the heat source, they own the heat but a supplier can potentially access the heat and supply it on through the network.

Yes, I think that is exactly it. There are various different models. There are three key elements. There is the heat source, the network and the end consumer or the retailer that is supplying the heat and that could be a vertically integrated company where there is one company that owns all three. There could be, and which is more likely, a network operator that will also be a supplier and that will have a contract with a heat provider. Different models can be used. At the moment we are probably seeing the vertically integrated companies where one company will own all-----

All three components.

Yes.

The CRU has been mentioned. The regulator has an issue. Price regulation and energy pricing are issues that arise here a lot. Is Mr. Carroll satisfied that there is sufficient teeth in what is proposed or envisaged in terms of CRU being able to regulate effectively?

Absolutely, and particularly for the stage we are at in the development of the industry. As mentioned earlier, the initial customers will probably be big entities contracting directly. There will be private contracts between the heat supplier and the entity taking the heat. There are an awful lot of powers already set out in the legislation for when households start to become customers and they can be augmented but there are enforcement powers, customer charters and codes of practice. There is an awful lot in there already and it will be further developed as households start to become customers.

I have another question but I will do round two with three minutes each and come back.

I will follow up on what has been said. There are 40 expressions of interest or projects around the country. Was it mentioned that one third of the projects will use waste heat? What will the remaining two thirds use? I thought the use of waste heat was the whole point and would make the projects more efficient.

A whole host of heat sources can be used. Heat pumps are the next largest. Biomass is also an important heat source. Ultimately, what we would like to see is citywide district heating systems with multiple heat sources of, say, four or five different sources. It could be biomass, solar and waste heat. That is the ideal scenario. There is a wide variety as long as it is from a renewable source.

Is it not the case that the district heating system in Tallaght is essentially a big heat pump? It takes water of a certain temperature from the data centre, warms it up and sends it around the system. Does Mr. Kinsella consider that a heat pump or waste heat?

It is a combination. The waste heat coming out of the data centre comes out at about 30°C. The temperature needs to be increased to 60°C or 70°C and the heat pump does that job.

That is very interesting. I welcome the consumer protection aspects of the proposed legislation. My understanding is that the heat in this sector is very pretty much unregulated now. There are private district heat networks around the country where consumers do not get the same protections as they would if they were in an ordinary heat network. I believe that there were issues in a place in Sandymount last Christmas when the heat did not work in a new build and the consumers had very little recourse. I want to put it on the record that we definitely welcome the consumer protection elements of the Bill and the register of vulnerable customers and things like that.

In terms of timelines, the aim is to get 17% of our heating catered for by these district heating schemes. Do the witnesses have any sense of how long it takes to construct a district heating scheme such as Poolbeg?

They have put in planning. They are at the stage where they have their business case, they have their planning in, they have the detailed design done and they will get a decision from their council in December, I think, on whether the scheme will go ahead. From there, they are aiming to have heat on for their first customers by 2029. At that point it can move quite quickly. There is quite a long lead-in period as well. I will also say about the DCC project that a lot of the infrastructure is already in the ground such as the trunk main going through the glass bottle site and the service tunnel going under the River Liffey.

On the sources of waste heat, the SEAI has estimated that with the 1.6 million homes in Dublin, there is enough waste and renewal heat to cover them. Where does that waste heat come from?

If you are going to roll out district heating for the whole of Dublin, it is likely that there will be various heat sources. The key one will be the waste energy facility in Poolbeg. It will likely be that there will be additional heat sources on different occasions whether it is biomass, heat pumps, solar or, maybe, geothermal because there is a lot of work going into geothermal as well at the moment.

As we have a large concentration of data centres, particularly in Dublin, would they not be the largest source of waste heat?

That is likely, yes. Data centres would be a notable one. The key one will be the heat from the waste energy facility.

I am concerned about the reply to the Cathaoirleach when he asked who owned the energy. It struck me that we could have a situation whereby data centres that are paying a lot less for their electricity than domestic users can create excess heat and then make a profit by being able to sell that back to consumers. Is it envisaged that people will be sold their energy at a profit for these private organisations if there is not a huge amount of public involvement? Mr. Kinsella mentioned that one entity would probably own it. Theoretically, a data centre could supply the energy, set up the waste system and then charge local households for their energy thus getting two bites of the energy cherry.

I will add some initial comments and Mr. Kinsella might want to comment after me. In terms of supplying district heating to households, there is a role for the regulator and, again, that is set out in the legislation. It will involve ensuring the returns being made by any supplier are reasonable returns and reflective of the costs incurred in providing the service. That will be regulated. On the issue of whether companies do that and make a fair return on it, they can but they cannot charge unfair prices. They will be regulated not to.

That is something.

It is a difficult sell.

Yes. The heads of the Bill drafted by the Department has the CRU as the regulator. However, it will be a very difficult message for people to get that we have the CRU regulating energy prices, which means that these large energy users are getting their energy at half the price charged to domestic users, and now they will have an opportunity to sell that back again to them at a certain amount. That will be a difficult idea to sell. It will be necessary to have more public involvement in the ownership and distribution.

The Deputy has suggested a model where a data centre would produce the heat, develop the networks and then supply the heat. We have not seen that at all. To be fair, it is highly unlikely that it would go forward using that type of model. There will always be either a local authority that will take the heat from the data centre or a private company.

The data centre will be paid for that heat whether it goes to a local authority. Data centres will not give heat for free if they do not have to.

That is a commercial arrangement. It is my understanding, and I would have to double-check, that the Tallaght scheme is receiving that heat free at the moment.

The issue of the regulator being able to take effective action on energy costs is a topic that has arisen here quite a bit.

That is where the committee is coming from. The same regulator is taking on this responsibility and it is probably even harder, because of the assets, the heat and everything else involved, to make sure the pricing is fair. That is a real concern.

Mr. Kinsella said the Tallaght district heating system provides that heat. Will he check that and write to the committee to let us know? Part 4 of the Bill addresses ownership of the heat network assets and transfer to the State of heat network assets initially owned by private developers. How long does the Department think that will take? Who ultimately owns the network? Will it be the State or will they be all privately owned, or local authorities or-----

The Bill allows public-private sector utilities or partnership approaches to developing them. Where a network is in private ownership, if it is considered to be a strategic network, the section the Deputy is talking about allows the State to purchase it back after 30 years. There are circumstances where the State can buy within a shorter period. First, if the developer chooses to sell before the expiration of 30 years, the State can step into the market and buy it. Second, the State can buy it if the developer, operator or supplier fails and goes out of business. In those two circumstances, the State can step in to buy, and it has a right to buy it after 30 years.

On Deputy Clendennen's point on urban versus rural, 17% was mentioned as a top-down figure as the percentage of energy use that could be covered by this. What are we talking about in terms of a village? Is there an informal metric for, say, a village of 1,000 people or a town of 10,000 people? What is the floor? Where does district heating kick in?

In the portfolio of projects we are bringing forward, the smallest town is probably Monaghan town.

What is the population of Monaghan town? Does anybody know?

I am not 100% sure.

The witnesses' document states Government may signal its intention to acquire a heat system or components of it after 30 years. Who sets the price for that acquisition?

It is set out in the Act that there will be a methodology determined to settle a fair price at that time.

Okay, so the methodology is not defined but there will be some process. Effectively, there will be a negotiation.

The Bill enables a methodology to be developed at the time.

What happens to the waste at the moment?

The waste from the energy facility in Poolbeg is being cooled. Actually, there is co-generation. Some of it is going towards electricity but I understand a lot of the heat is being cooled in the bay.

I assume there is pollution and licensing issues, and so there would be a cost to those organisations to get rid of this waste.

I am not 100% sure. It is purely heat; there is no pollution other than that. A lot of it would be vented up into the air or cooled in the Liffey or the bay.

There would be considerations from a heat pollution perspective if it is going into water. I am just wondering is there a cost incurred.

It would probably make commercial sense for them to link up to a district heating network rather than it being cooled elsewhere.

According to AI and Wikipedia, the population of Monaghan town was 7,894. That was four years ago. That is the smallest town. Do the witnesses not see it going to places with smaller populations?

It is unlikely. It all comes down to heat density. If it is too spread out, the economics do not stack up. You would be spreading pipes over a large geographical area and you cannot make it work. It has to be cities or reasonably sized towns for district heating to stack up and work.

Right, so the economics for a private developer to develop it is-----

Or a local authority.

Great, thank you. We are coming to the end of the first part of the session. We will publish the opening statement on the committee's website. Is that okay? Great, thank you. On behalf of both committees, I thank the witnesses for taking part in our meeting on this important matter.

I welcome the following witnesses to the second session of the meeting: from the Irish District Energy Association, Ms Pauline O'Reilly, CEO, and Dr. David Connolly, chair; and Mr. Neil O'Leary, senior engineer in district heating with Codema. You are all very welcome.

I again remind people in attendance to make sure their phones are on silent mode or switched off.

Once again, I will read out the statement on privilege. Witnesses and members are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.

I will invite the witnesses to make an opening statement to a maximum of five minutes. Once that is delivered, I will call on members in the order in which they indicate to me to put their questions. They know the drill with the five minutes, so I will not read out all that. Please note that the duration of this meeting is limited and, therefore, times must be strictly adhered to, so please be focused in your contributions.

I now invite Ms O'Reilly to make her opening statement on behalf of IrDEA.

I thank the committee for inviting us here. I am here representing the Irish District Energy Association with my colleagues, and members of IrDEA, Dr. David Connolly and Mr. Neil O'Leary, who will be happy to answer members' questions. They will introduce themselves but I will read the opening statement.

IrDEA is a membership-based organisation. We represent the interests of the district heating and cooling industry in Ireland. It is fair to say we are a broad church: our members include everyone from local authorities and academic institutions to installers, product suppliers and technical specialists. Many are leading actors in the district heating sector in Ireland and internationally. We are a relatively small but ambitious organisation, with 40 member organisations. Our mission is to support district heating to grow in Ireland in order that 30% of the heat demand of the country is supplied with district heating by 2050, and we believe we can do it.

In 2024 we published a suggested road map for delivery of district heating in Ireland. I am pleased to report that the pieces of the district heating puzzle are slowly fitting into place. The scale of delivery of those pieces will have to ramp up rapidly to give Ireland the opportunity to develop secure, clean heat alongside an expansion of the housing stock. This Bill is one very important piece of the puzzle, and I ask the members of the committee to support its passage through the Oireachtas and into law as swiftly as possible. The Bill has many important elements, which I know the Department has gone into. It will introduce a licensing process in order that pipes can be laid in the ground and projects can become operational. This is essential. It will ensure consumer protection. We very much welcome this and support the extension of the powers of the Commission for Regulation of Utilities to provide regulatory oversight and to ensure fairness for customers. The CRU needs to be given space to develop its remit over time as the market grows. Crucially, it will provide certainty to the market in order that the market can get moving here in Ireland and start delivering renewable heat very efficiently to Irish homes and businesses.

I assure the committee that right now the market internationally for district energy is delivering. As many as 80 million customers are receiving 500 TWh of heat through district heat energy networks all across Europe. This is important to point out because, as things stand, Ireland is at the bottom of the table when it comes to climate-resilient and secure heating precisely because it has not invested in district heating. The countries with the highest levels of district heating have the highest levels of renewable heating. We import expensive, climate-polluting and volatile fossil fuels, supplying over 90% of the heat we use in this country. The vast majority, 80%, of this fossil fuel is imported. People are crippled with the price of energy bills. The eye-wateringly high prices for a tank of home heating oil should act as a sharp reminder of what happens when external forces control our heat. Despite years of effort, and really great work to decarbonise heat in Ireland and reduce emissions from the built environment, Ireland is at a place where the built environment remains largely dependent on fossil fuels for heat going into the next decade. District heating can add choice to the energy mix, giving an option of an affordable, low-carbon heating system to consumers, one which places fewer demands on the electricity grid than individual solutions.

Ireland's climate action plan establishes the national target of delivering up to 2.7 TWh of district heating annually by 2030. That is only about 10% of the heat demand today. Ireland's interim target of 800 GWh by 2025, sadly, has passed unmet. Both SEAI and the Climate Change Advisory Committee have recently advised that district energy is essential to the achievement of our climate objectives going forward.

A district heating system is quite simple. It delivers heat from a central energy source through a series of highly insulated underground pipes to multiple homes, businesses, schools, hospitals and other buildings. Effectively, instead of every building having its own boiler, heat is produced more efficiently and shared through the network. IrDEA is agnostic when it comes to the heat supply, but I will point out that modelling from SEAI demonstrates that district heating can meet 4.6 TWh of building heat demand more cost effectively than individual heat pumps. Codema, one of our member organisations, represented here by Mr. Neil O'Leary, reports that there is enough waste heat in Dublin to heat 1.75 times the heat demand in the city. The reality, however, is that district heating supplies less than 1% of Irish heat.

We have one very successful project in operation at the moment, the Tallaght district heating network, which was referred to earlier. This network supplies waste heat from a data centre to the County Hall and the TUD Tallaght campus. TUD is also a member of ours, I should point out. District heating from the Poolbeg incinerator will soon become a second major project in Dublin. Dublin City Council - another member of ours - recently applied for planning permission to connect up the network here, to allow waste heat from the incinerator to flow into the north and south docklands area, and will include homes in the nearby Irish Glass Bottle development. A third project, a district heating system for the east side of Galway city has also recently received planning permission, with a project in Waterford having put in a planning application this week. There are other projects scattered across the country where renewable heat could be supplying nearby buildings, and thanks to some essential seed funding, which we will hopefully hear about in the coming weeks, these projects can move forward. I therefore anticipate that we will have a number of realistic projects getting ready to go here in Ireland. These will be essential catalysts to unlock the industry, and we will see it grow.

As well as legislation, funding and financing will be essential to ensure that district energy develops as a viable industry here. I commend the SEAI on its ongoing development of a grant scheme for district heating and acknowledge the good news that district energy infrastructure will be funded through the Infrastructure, Climate and Nature Fund. That said, the current provisions of €50 million for the Dublin project and up to €100 million for the remaining projects will fall far short of the funding required to reach the targets in Ireland. It is, however, an important first step.

Dr. Connolly and Mr. O'Leary might introduce themselves, and we are happy to take questions.

I thank members for having me. I am chairperson of the Irish District Energy Association, which I co-founded in 2017, so I have been around for quite a number of years in this space. Before that, I was an associate professor in one of the world's leading research institutes on district heating, Aalborg University in Copenhagen. Day to day, outside of IrDEA, which I am a member of and part of the board as a member, I am CEO of a company called HeatGrid Ireland, which is the company that has been successfully granted planning permission for the project in Galway, which is now the largest district heating scheme with planning permission in Ireland. I can probably answer questions with those various perspectives.

I lead the district heating team at Codema. Codema is Dublin's energy agency. We work on behalf of the four Dublin local authorities primarily. Part of our remit is developing district heating schemes specifically. Codema was involved in the development of the Tallaght district heating system and we continue to provide technical operational support to South Dublin County Council and Heat Works, which is the not-for-profit energy utility. We are also involved in the development of the Blanchardstown district heating scheme with Fingal County Council. We work with several other local authorities outside of Dublin as well, developing feasibility studies for district heating.

I thank all the witnesses for coming in.

I will start with Mr. O'Leary in relation to Tallaght.

It was raised at the previous hearing – Mr. O'Leary might have heard it – that there is an arrangement whereby the heat provider provides heat free of charge. Is that Mr. O'Leary’s understanding?

Yes, that is correct. Amazon is the data centre in question that is linked to the Tallaght district heating system. It provides heat free of charge. It also provided the investment and the heat recovery infrastructure on its data centre side.

What is the basis is for that agreement? Is it simply a matter of goodwill? Was it a pilot project? Is this something we could or should be legislating for?

What probably was not mentioned is that there is a direct benefit to the data centres because additional cooling is provided by the district heating network. It reduces the amount of electricity required for the data centre to provide cooling. It is a doubled-edged sword. It reduces emissions on the heat network side but it also reduces emissions on the data centre side.

Would it have a serious deterrent effect or impact if we were to try to impose some sort of regulations around the provision of heat towards a district heating network?

I will come in on that. Is the Deputy asking whether it would impact data centres if more regulations were imposed on them?

Yes. Would it impact their willingness to engage in projects?

We cannot speak for the data centres. Certainly, more needs to be done to ensure waste heat is not going into the atmosphere and our rivers. In my opening statement, I mentioned that there is enough waste heat, a significant portion of which comes from data centres in Dublin, to heat every building in Dublin almost two times over. There is potential in this regard. There is a social dividend that is not being utilised. Some areas of Dublin have a lot of data centres, such as Fingal, for example. Fingal County Council is one of our members.

It is important to mention the good reason other countries, like those in Scandinavia, heavily invested in district heating. In times of global uncertainty, such as during the oil crisis, the flexibility over how heat is used is brought home. Such countries are not reliant on those international markets. Likewise, with district heating, one is not reliant on one heat source.

I note the Deputy asked whether it is only waste heat. It is across the board. Geothermal and air source are other projects our members are engaged in.

Is it fair to presume that waste heat is the one most immediately available? Geothermal seems to be in quite an experimental phase at this point.

Dr. Connolly can come in on that. They are not using waste heat in their projects.

Some of them are. We have waste heat in some projects, while in others we do not. When getting started - it is important to flag that we are in the "getting started" phase – the most amenable and flexible things that can be used as a heat source are typically air source heat pumps or a biomass source. They are things that we can build ourselves over which we have full control. They can be used whenever the customer needs the heat. However, it is typically far more cost effective to take a waste heat source because it is currently being thrown away for nothing and that is a fairly good position to start any commercial conversation. Not only is the waste heat being thrown away for free and being lost but, as Mr. O’Leary said, benefits can be brought to the companies whose waste heat source will be used because it might save cost on their side. In any project, therefore, if waste heat can be found, it should absolutely be tried to be used as much as possible. At the start, however, we do not always have control as to whether those with the waste heat will be willing to offer it to the network.

The key part is that Ireland is at the "nothing-in-the-ground phase". We need to rely on sources we can control, such as air source heat pumps or biomass. Every single country that has expanded district heating over time has demonstrated that as they scale, it becomes easier and easier to access these waste heat sources. In fact, it often flips that they will start to come to the networks. For example, if I were to show this committee a map of Denmark, members would see waste heat sources purposely locating themselves beside district heating networks because they see that as a way to provide heat to a system. It is important to provide the context of the different stages as we start from zero and grow. The context behind that is that we may have to rely on our own heat source initially but the objective is always to try to get some form of waste heat over time because it is usually the lowest cost.

I will pick up on some of the points made. District heating is a positive development. It needs to be rolled out a lot quicker. I am all for it. We need to move away fossil fuels. The witnesses are absolutely correct in respect of the global energy shocks we have seen. We have not built any resilience into our system, and this is one way of doing it. However, we must not look at this from an emissions, renewables or climate perspective alone; we must also look at energy affordability. We need to ensure that, as this system is developed, we are instilling affordability into the process. What I heard from the Department earlier has worried me a little bit. If we have a system that is being developed for private entities, essentially, they will control the energy. Currently, we have a system where foreign, international, private entities control fossil fuels. When it comes to district heating, if it becomes a fully private system, there is a risk that we will have private entities controlling the source of energy in Ireland.

Dr. Connolly worked in Copenhagen. I understand that, at one stage, a cap was imposed on the amount of money that could be made from this but that it was subsequently removed because private entities were not getting involved in the market. Is there a similar such mechanism, such as a cap on what can be charged? Something has to be built into this so that we can ensure the people receiving it are getting cheap energy and that this does not simply become a secondary mechanism for large corporates to make a lot of money.

Some 80 million people have district heating in Europe. There is no question that the Deputy likely has which has not already been answered by someone. Denmark has probably one of the most unusual structures for district heating across all of those 80 million people. How district heating was developed there is unique. It has a heat Bill, which is similar to what we have in this proposed heat Bill, that states that the cost charged to customers has to be based on the cost of producing the heat. That is similar to the principle-based approach but it is not at all similar to how Denmark rolled out district heating. Denmark rolled out district heating primarily through municipal-led schemes. If the committee ever wishes to understand how it was able to do so, I highly suggest it looks at Denmark’s tradition of building infrastructure through municipalities. It is of a totally different scale than what we are familiar with here.

Outside of that unique ownership structure, there are some 75 million to 80 million other people who have district heating across Europe. It is important this committee is aware that it is regular to have different ownership structures within the same country across different cities. It is unlike electricity and gas, which almost have a regulated asset-based structure and uniformity across Europe whereby the likes of the CRU set tariffs for a national-wide system operator. District heating is not like that at all because of its local nature. It is all driven by the fact that district heating networks are nearly always a local utility, rather than a national one. For example, I could bring this committee to one part or city of Sweden which has an entirely private-led network of 300,000 people. Five minutes up the road, however, there will be a 60,000-person scheme that is completely municipal-led. It is useful for the committee to be aware that what is being proposed in the heat Bill is completely in line with what is normality for the vast majority of the 80 million people who have district heating.

When it comes to the Deputy’s point about price, the most important person I expect any developer of district heating to think about morning, noon and night in Ireland for the next five to ten years as we try to start products is the customer. If we cannot convince the customer to buy the heat from our network, we have no project. The only way we can convince the customer to sign up to a network is if we can offer value. It does not matter whether it is a public, private or joint venture.

That is the fundamental barrier we will come up against right now, that we have to try to do that.

With a new technology, it will be challenging. Is it anticipated that there will be multiple district heating schemes in any given area? I would imagine that having multiple schemes would not be cost effective. I cannot imagine it happening. If there is only one district heating scheme, essentially there will be a monopoly. Once people sign up to that scheme and get used to having it, then that entity will have a monopoly. I am concerned about how we regulate to ensure the customers remain central to the pricing mechanism, not just in the first year or two years while people get used to the system and sign up to it.

It might be useful to give a picture of how there is only so much anyone can bite in the first step. A typical project which we have seen in countries that are starting from greenfield would be in the region of 5 km to 10 km of pipework. That would be a first-mover project of scale. Beyond that it tends to be too big but people need it to be that big to justify doing the project. To put that in context, Copenhagen, a similar size city to Dublin, has 3,000 km of pipework. A city the size of Galway, Waterford or Limerick might have 300 km to 600 km of pipework. Initial projects will likely do a portion of a city or a large town in a rural area. There are many examples where if it was a particularly large city, the size of Galway, Limerick, Waterford or Dublin, they might have different parts. I could not envisage it being more than two or three different operators. We do not know yet if that is likely because we do not know how it will evolve. It is very normal for those different operators then to trade across each other and buy and sell heat from one another if they do exist as neighbours.

In terms of ownership of the heat and offering value over time, it will be absolutely at the choice of the customer to leave the network if they wish to do so. They can always change their heating system to something else. They could decide they are not getting value, and that has happened. I have seen it happen where a network can no longer offer the value that something else that became available in a city or town has offered. An operator will, to some degree, have the monopoly, if we put it that way, on the customers it started to supply on day one. However, it will have nothing to keep customers connected to its network if it does not continue to offer value and quality of service.

I will keep on that point and refer to the question I put to Brian Carroll in the previous session. It is frustrating that local authorities are not seeing the opportunity here to set up energy supply companies of their own. Particularly in smaller local authorities, the revenue base of councils has been eroded and undermined from all sectors. In Dr. Connolly's experience from Copenhagen, is there a significant opportunity for local authorities, given the scale of development happening at local council level, and for sustainable energy communities to become owners or custodians of district heating systems in the same way as the group water schemes, for instance? Is that something that should be given more active consideration?

The beauty of the current Bill is that it allows for all options. Ireland needs to accelerate this sector as fast as possible. I will give a bit of background as to why I fundamentally believe that. To do that, we need to allow all options to progress. This goes back to my Swedish example. One city has a complete private network because that was the way that city found it fastest to develop something. The city right beside it has a completely municipal-led network. There is no perfect science as to why it happens in different places in certain way, or why it happens in this way in these cities and in that way in those cities. It typically comes down to who identifies an opportunity, and what capability and resourcing is available to do it. In answer to the Senator's question, there is definitely an opportunity but it should not be the only opportunity. If it is the only opportunity, we will be taking all of the other opportunities that are equally available to us to get this sector started. The Bill has found a very nice balance between facilitating everyone getting started and leaving the provision for the State to potentially take the asset in the future if that is what the State decides to do over time. There we have a perfect balance of facilitating everything getting started with the safeguard down the road that it can be managed.

On the changes around head 29, public buildings are not required to wait for new public procurement methodologies to come into being before assessing the technical and economic feasibility of connecting to a district heating network. What are the complexities around retrofitting district heating networks into a complex of schemes? For example, that might be a municipal building coupled with housing and maybe a church, which may be located together in a town. What would be the complexities around retrofitting a district, say, in a town centre?

Without those public sector anchors, we will really struggle to get district heating in any city or town in Ireland. Public sector buildings will be the backbone of these future networks because typically they are the largest heat users within a city. Most projects around the country will be dependent on a hospital, a university or an OPW building to offer that first customer opportunity or else we will miss it. It is really important to flag that because if we start putting individual solutions like heat pumps into these buildings, it is not just that building we have lost, we have actually lost the entire opportunity for district heating in that town or city. If they are not there as an initial anchor, it will be incredibly challenging to roll something out.

The clarity in the Bill is really welcome that these public sector entities can progress and connect to networks using existing public procurement rules. Most of these buildings have a central plant room where they produce their heat and send it around to all their larger buildings. A university would often have a central plant room somewhere within the campus or the building which distributes heat, often to many buildings or sometimes one large building. A district heating network comes to that plant room, takes out the boiler and puts in a very small plate heat exchanger. That becomes the way their heat is provided. In Tallaght there is a fantastic plant room, in TU Dublin, displaying a huge steam boiler from the old days that is now decommissioned, a medium-sized hot water boiler that used to use gas and is also now decommissioned, and a tiny plate heat exchanger that now supplies the heat from the Tallaght network. And it gives a sense of evolution over time of how heat can be provided in this way.

Chair, it would be worthwhile visiting the Tallaght project at some point. It might be useful from the committee's perspective.

The witnesses probably heard what the Department was saying about Monaghan town, that it is unlikely to have any economic viability for a town with a population of less than 7,800. Would they agree with that?

I might just come in to clarify some of the figures around the 17% versus the 10% and that confusion over how much district heating we can have in the country. If we look at any of the European countries, they start at a certain level, obviously there is density in that, and then it goes on. Technically, it is feasible to do anything; it is a matter of whether it is commercially viable or not. The SEAI would say that 54% of buildings in Ireland could be supplied with district heating. Its most recent study on the heating and cooling assessment found, however, that at the moment, if no policies change and no funding changes, it is more economical for 17% of the buildings in the country right now to be on district heating than to be on an individual solution or any other form of heating. That was what that study showed. We would say that it would be great if every place could be connected but, at the outset, we are absolutely going to have to have a density. It is probably not a question of whether there are 5,000 or 10,000 people in a town. It is about where there is a concentration. For example, there are only some parts of Galway city that have a university, a hospital or a Garda station. In the case of Galway, it makes most sense to start it in the east of the city, and to start filling in the gaps after that.

To go back to some of the other points, it is technically possible to do it anywhere there is a concentration of buildings. However, it is really important to say that very few people are making much money out of district heating because, in comparison to something like oil or gas, it comes down to electricity at the end of the day.

This is giving people another option. At the moment, they do not have any choice. For those in certain parts of the country, gas is the only option; for those in other parts, there is really only oil and nothing else. This is allowing people to have another choice.

If the municipal districts decided to run this themselves, would they break even with a town of 7,500 people, for example?

I will let one of my colleagues come in on that. Codema has done feasibility studies for many of the councils.

If I may, I have one more question for Ms O'Reilly. In the paper she sent to the committee, she said the SEAI estimates that district heating was the most cost-effective solution for 17% of housing. Other studies show it could save more than €600 per year for a standard Irish household. Do those other studies reflect the situation in Denmark, for instance, where the systems are run by the municipalities, or do they relate to privately owned systems? How can households make savings of €600 or even more?

It is down to the policies at play in a particular country in terms of what they are supporting. Are they supporting fossil fuels? Are they supporting electricity? There absolutely is a problem for electricity generally in terms of what we call the spark gap. That issue has to be addressed, not just for district heating but across the board. If we are to move people from fossil fuels onto electricity, there must be further support for customers. I might ask Dr. Connolly to come in on that.

I do not think there is a price differential when it comes to operators. Looking at Sweden, for instance, we see there is no real price differential, whether the system is operated by a municipality or by a private company. In fact, throughout the Ukrainian crisis, there has been a stability in the price for customers with district heating in Sweden. That was not dependent on whether the system was municipal.

To pick up on the last point Ms O'Reilly was making, if members remember nothing else I have said today, I ask that they take on board what is factually proven by district heating as opposed to what is an idea. What is factually proven, and this is very important to relay, is that, in my view, the single biggest driver of district heating in Europe for the past 30 or 40 years was all wrapped around the drive for security of supply and more control over pricing. That, to me, is the backbone of why this has all happened over the past 30 or 40 years. Whether it has been done through joint ventures, privately delivered development or public-led delivery has not changed what has been delivered.

At this particular point in time, it is very apt to note that a lot of the district heating in Europe was born out of the oil crisis in the sixties. A lot of countries were depending on oil for their heating, which meant they were exposed to the exact kinds of price shocks we in Ireland have been exposed to in the past four or five years. Many of those countries decided that this could not be allowed to happen again. In the case of the heat sector, they found that district heating offered two things. One was control of the heat source and the other was clean heat. It kind of caught those two requirements together. It provided the ability to supply heat from a source that was controllable, indigenous and came from many different sources. I can elaborate on all those different sources if it is helpful. They also found district heating to be very climate friendly because it typically involved waste heat sources or renewable heat sources.

Thirty to 40 years later, from 2022 to 2026, we are at the end of another period of war and price shocks. The pricing district heating offered its consumers over the past four or five years has been almost flat. In other words, district heating worked. Thirty to 40 years ago, those countries were at the end of the exact same shocks we are now facing. They had to respond with all sorts of punitive and difficult measures to try to put patches on top of that. It took 30 to 40 years of steady planning and steady roll-out to then be in the position, 40 or 50 years later, of not being on the end of those shocks.

I thank the witnesses for their very interesting input. I have friends working in this area in Copenhagen. I have seen some of what is possible. Some of my concerns, not so much around district heating but around how we bring it forward, are to do with how it is done and who gets to lead it. In my view, there is quite a difference, not just in Denmark but also in Sweden, when there is a municipal-led approach. As has been noted, there is quite a hands-off approach in the legislation in terms of what model goes forward.

I am a little concerned that, looking to another area of transition, Ireland, uniquely, has had the twin transition narrative, whereas in most of the rest of Europe, the narrative has been that there must be a switch to renewable energy and the discussion has been about how to do that and what the focus should be within that. Ireland may be the only country that has taken the line that we can only move forward on renewable energy if data centres are dragged along. The narrative is that what will make the transition to renewable energy possible is having big data centres as customers, even though every other country is just straight-up investing in renewable energy because it is a good idea. This is a concern I have, which is not around district heating itself. I am concerned about this very hands-off model of just waiting to see who emerges. We know our municipalities are not really set up and have not been encouraged to set up structures such as the energy companies and all of that, which would be a great initiative. That becomes part of the rationale for this idea that the way we will get district heating is by tying it to data centres. It feeds into that narrative, which then becomes a bit of a hostage to fortune. I am concerned about that.

I also have a couple of other specific concerns. One is to do with the EU energy efficiency directive. Any new heat system is meant to be fully renewable. However, if that heat is coming from data centres that are operating with 20% fossil fuels, is there a little danger of someone laundering things through such that the heat system is coming from something that is 20% fossil fuels and only 80% renewable? I ask that only with a view to trying to drive the renewability agenda forward. I have concerns in that regard. Another concern is that I would like to know how this intersects with private wires on the way in. I am worried about us ending up in quite closed loops.

I would like to hear a little more about the licensing aspect. The CRU has made some comments to the effect that it is not appropriate for it to engage in licensing. It has almost pulled back on the issue of licensing and the public takeover. I am worried that the energy charter may still be lingering as a bit of a threat in relation to the public takeover we might want to happen. I am also worried about things like compulsory purchase orders, CPOs, and where they fit in terms of road access.

These are obstacles I hope can be overcome. I would love to see district energy moving forward. I just want to make sure we do not tie ourselves to an overly commercial model.

It is not a commercial model at all. As I said, nobody is making much money out of district heating. It is really about just getting something started. Every country had to make a start and that is the position Ireland is in right now. We are bottom of the league table for district heating and also bottom of the table when it comes to renewable heat. We are at 93% fossil fuels, including 80% imported fossil fuels. That is way more than is the case in any other country. How did other countries do it? District heating is how they did it. How did they maintain price stability during crashes? They did it through district heating. It is really about trying to facilitate that.

On the data centres, I totally understand the concerns expressed by the Senator. We are talking about data centres and we are talking about district heating. Those centres do not own the district heat and they do not own any of these facilities. My experience is that this is absolutely not a money winner. It is not a cash cow at all. It absolutely is not where the money is to be made. The data centre sector needs to be facilitated and directed down the route of having to give their waste energy, which is going nowhere at the moment and is not helping anybody.

We are involved, with Codema, in the Tallaght research project. A question came up about retrofitting houses. A great thing is that people use the same pipes in their houses whether they have a gas boiler, district heating or an individual electric heat pump. It is all the same. It is almost just a question of what one decides to plug it into. As part of the Tallaght project, we are now looking at geothermal for Tallaght and also at thermal storage.

It allows a lot of flexibility with regard to many of these facilities. Things are changing all the time in Scandinavian countries. Sometimes it is thermal storage, while at other times it is geothermal and waste. It is whatever is available, which is the most efficient and climate-responsible thing to do. One uses whatever one has.

I was going to make the very brief point that using data centres as a source of heat for district heating did not exist until about five or six years ago - maybe ten years maximum - so all of the networks that have been developed in Europe for these 80 million people never thought or knew that district data centres would come down the road. They would have relied on waste heat from power stations, waste energy plants, wastewater treatment plants, industrial facilities or cement plants. These are enormous sources of waste heat. Data centres are now another sector that is throwing away its heat. In countries with district heating, it gets captured, while in countries like Ireland, it gets lost. Data centres would just be another thing where heat is being lost into the sky while buying fossil fuels from around the world to heat our homes and businesses.

Offaly County Council is leading in this space. It has been quite proactive in the county's climate action plan and has designated Tullamore as an area where it is not just looking at district heating but solar power and all types of alternative renewable energy. The likes of John McNally, Mark Mahon and Aisling Lambe are doing great work down there so I acknowledge them because sometimes we lose sight of the people behind these projects.

There has been a good bit of discussion about data centres in particular and the level of energy. Correct me if I am wrong but there are examples of large energy users providing this for district heating. Are they charging? What is the general rule of thumb?

Amazon is providing the heat for free in the case of the Tallaght district heating scheme.

Are there any examples at present where large energy users are providing or exploiting this?

There are some scenarios where it might be a cost to put in the heat recovery infrastructure into a particular waste source and then there might be a mechanism where one might pay the provider of the waste heat but in most cases, that waste heat is provided for free.

But at the moment, there are no examples where it is being exploited in terms of charges. Is this a pressing issue from a CRU perspective?

One might charge for something that might cost one something but one is not getting something more than the cost in return so there is no exploitation.

I touched on the next topic when the Department appeared before us. What is the level of disruption caused by this? The witnesses spoke about Galway, I am talking about Tullamore and between the public realm and Uisce Éireann upgrades, we never seem to be off the road with bulldozers and disruption to towns. How do we get peace of mind that this will be easy to install?

To take a typical project 5 km to 10 km long, the first thing to flag is that on the network side, that would typically take about 18 months to build but when one is building it over that 18-month period, one is typically doing it in stretches of 50 m to 100 m at a time in what we call gangs. Installation takes place for maybe a 50 m or 100 m length of whatever one is working on at that time. Sometimes when people hear that the full project is 5 km long, they get the impression that this could cause significant disruption because there is such a long network but it is typically done piece by piece over the 18-month period. Typically, it is a 50 m to 100 m stretch of works that is happening at any point in time.

What is diameter of the average pipe?

It varies enormously but if one took a starter project with typical numbers rather than factual, one might be looking at a trench about 1 m wide and 1 m deep.

So it is not the case that one can get some kind of underground bore that-----

Sometimes if one reaches a particularly congested part of a road with utilities or a crossing that one cannot open up as an open trench, one may have do a horizontal directional drill or a tunnel but one typically tries to avoid it like any utility would purely from a cost perspective. Now one is back to what keeps us awake at night all the time, which is keeping costs as low as possible so that the heat we can offer to the customer is as good value as possible. The driver for that is always keeping costs as low as possible so one will try to open trench just to keep costs as low as possible as much as one can but there are times when one may have to do an underground drill or some way to bypass a congested area.

I thank Ms O'Reilly, Dr. Connolly and Mr. O'Leary for being here and for all their work on this. I want to get their take on what the low-hanging fruit is. What are the easiest wins that could be had early to give momentum? Does it involve new build areas potentially working with the LDA on new large-scale developments or does it involve smaller geothermal projects? Senator Noonan mentioned ones that have small community benefit. It could involve community build-ins or smaller-scale projects.

A follow-on question that is linked concerns retrofitting. Now we have homes where the journey is towards making them better insulated and the heat pump model. How would the district heating model complement or interact with the heat pump system? Does it make the heat pump redundant?

In respect of the Senator's first point, we need a mix. That is the reality. If we only have a large scheme then we are not bringing people on the journey of what district heating can do. For district heating to take off will require some projects and people saying, "Look at this fantastic project in Ballina. We'd love one in our community." People say that about the Tallaght project. Anybody who visits the Tallaght project says, "Wow, look at the boiler room," and talks about how they used to have a gas boiler and now have district heating. It is storytelling that will make this take off. We will hear from the Minister in due course but my understanding is that this is the reason some of this small seed funding will go to a variety of sizes so that we can see how that works.

I might ask Mr. O'Leary to answer the Deputy's second question. The opportunity is there. The Bill will open up those opportunities.

Regarding the point about low-hanging fruit, our country is developing a significant amount of future housing and there is an opportunity there to put in district heating infrastructure as part of those developments. Certainly with the Blanchardstown district heating system, we are looking at the Dunsink development, which is a development of up to 18,000 homes. There would be a significant benefit to putting in district heating infrastructure as part of those developments.

One of the big pieces that has not been discussed is around electrical requirements. If every one of those homes puts in an individual heat pump, one can imagine what the electricity requirements will be. That would put a significant strain on our national electricity-----

And the grant cost as well to the State.

Exactly. There is a huge benefit to putting in district heating there because it provides flexibility on the electricity grid, which is another point about this. Ms O'Reilly spoke about the thermal storage piece where one can be flexible with one's demand. That is going to be really crucial with an electrical system with lots of renewables on it.

The Senator asked about the redundancy of those individual heat pumps. This is why this is so critical and why we are really trying to get this over the line. This Bill has been hanging around for a couple of years in order to get to this point. Public bodies in particular have a timeline to meet their climate obligations. Do we put in individual heat pumps in our buildings or do we put in a heat network? If we are offering a grant for individual heat pumps and are not-----

So it ultimately makes the individual heat pump redundant.

It does.

That would be great because the cost per house is obviously distorted.

It is much higher.

It even involves the maintenance and the difficulty in trying to get the expertise for maintenance.

We are in this crazy situation in Ireland where we are all meant to maintain our own heat pumps. That does not make any sense.

Totally.

I met Ms O'Reilly previously. I did my thesis on district heating systems and waste heat utilisation. John O'Shea from Codema did not know when he was giving me an extra hour or two that I would be criticising and also maybe complimenting district heating systems so maybe it is some karma for him. I might reach out to him in an email. Sadly, my thesis did not really come to a conclusion of supporting waste heat utilisation. I think it was due to the constraints of the data I could get and the cost per unit of electricity for a unit of heat output.

We have mentioned the Nordic countries, including Denmark and the city of Copenhagen. One of the main things I found, and one of the conclusions in terms of overall carbon emissions in Ireland, was that if we were to install the systems, the process would take a lot longer because, as already mentioned, the Nordic countries already have these systems installed. Once a district heating system is in place, things are easier because you can just add to it. Has research already been done on new-build towns, such as Dunsink, which was mentioned? What about other industries? What industry in Ireland, be it production or otherwise, would have the highest heat output and be ideal to put an apartment block with combined heat and power, CHP, beside it?

I will let one of the others come in after me. There is a significant amount. When the SEAI did heat mapping to ascertain where the heat was, it found that it was not all at data centres, which is why there is a spread all over the country.

That is the key point. There is a lot of variation. Any large industrial user typically has lots of waste heat. If you walk around a large industrial plant in any IDA park in Ireland, you will see cooling towers everywhere. This basically means people are paying to get rid of heat into the sky. Processes in large industrial factories typically produce heat and they need to get rid of it.

Cement plants would be a huge opportunity for district heating. In some of the places I have been, district heating systems might get a third to half of their heat every year from heat that a cement plant does not use because it needs high temperatures. Power stations are another example. When we did an analysis, we found there was more heat going into the River Liffey than was needed to heat all of Dublin. That was typically from power generation at the time. It might become less over time as we get more wind and solar energy, but it will still be significant. Every town has a wastewater treatment plant. There is a discharge of heat out of all of those that typically just gets put into the local river and is lost.

There are all these opportunities to use heat from plants, depending, as Ms O'Reilly and Mr. O'Leary have flagged, on how close they are located to buildings. What is key to all of them is that they are all indigenously sourced and available for us to use.

I appreciate the answer. In terms of the overall economic and carbon benefits and general efficiency, would waste heat utilisation from industry be the best option going forward as a country, or would the geothermal investigations Senator Duffy mentioned be better?

Really, everything is the answer. I will let Mr O'Leary come in on this.

I mean the overall economic return on investment for the Irish public.

In the long term, it is about diversification of sources. Having as many sources as possible on the network provides security. There is a huge energy security issue at the moment, so it is about using as much indigenous energy as possible, whether that is waste heat or ambient heat.

The witnesses are saying everything, but I want to know what gives taxpayers the best bang for their buck.

To give a typical answer rather than a specific one, the most useful metric relates to the temperature at which the waste heat is available from its source. That is usually a good barometer. There are many other factors in deciding, but typically the lowest temperature heat comes from wastewater treatment plants, at 10°C to 20°C.

Is the figure for a data centre 28°C?

A data centre may have a figure of 20°C to 40°C, so it is in the medium bracket. Power stations, waste-to-energy plants and industrial heat recovery typically go up to 80°C or 90°C of readily available heat. If you can find one of those plants near a town or city, you are in a very good place. As a rule of thumb, the higher the temperature at which heat is being thrown away, the lower the cost of using it in a network. If a lower price can be offered to customers, they will sign up faster.

The Chair will probably be supportive of my next point. The waste-to-energy plant in Dublin, which I have been to, has the district heating system ready to go. Would there be a possibility of extending that to my constituency and that of the Chair, or is something else planned for Dublin Bay North regarding district heating? Does it involve the Northside Shopping Centre?

There is no reason it cannot be extended. Technically, it is absolutely feasible but it is not economically viable for the council at present. The council is over that project and is a member of our organisation. The council is going to have to start with something closer, which is why the Glass Bottle site works. There are many OPW buildings in the vicinity. Many public buildings are going to be the anchors in bringing things forward and the network can then be fitted in around them.

There were questions earlier, perhaps from Senator Duffy, about retrofitting. Old Dublin is very difficult to retrofit and, therefore, it is very difficult to move on to other sources of heat such as individual heat pumps. The same level of retrofitting is not needed with district heating because the heat source is not in the building. We are still some way down the line from reaching individual houses, but it is certainly a benefit for the future.

I have a couple of quick questions. Based on what we heard earlier about the proposed planning structure, there seems to be a national agency and then interaction with the local authorities. What is the witnesses' view of that as a planning structure for the delivery of district heating?

District heating has to be considered in two strands. One involves getting a few projects up and running in the short term, because something needs to be built around those, and the other strand involves the long term. Other countries have considered measures such as zoning, for instance. There could be certain zones that would be district heating zones and there might be preferential policies in those areas. There is going to be an advisory role for the heat network authority. It will ultimately come down to a local council giving planning permission. Local development plans will probably have to change to take district heating into consideration. Many of them already do, in fact. There are already conditions in Dublin and Cork whereby, if an apartment block, for instance, has a certain density, district heating should be considered. Some of these things already exist. I totally understand the Chair’s perspective and heard the question he asked earlier. It is something that will probably evolve over time.

We have just come through a planning application in Galway, so in many ways we have demonstrated how that can be done under the existing regime. One of the things I am keen to see happen with the implementation of this heat legislation is greater clarity for people on the roles they play. Even though this can be achieved under the existing regimes, there is a lot of uncertainty about what people should do.

Step-in was mentioned earlier. In Dr. Connolly's experience on the European front, how often does a requirement to step in arise in real terms?

Very rarely. These are all typical numbers and will not apply to every project, but projects typically take between €40 million and €80 million to get off the ground. If that level of commitment has been made to a project, there is a high motivation not to mess it up. I can assure the Chair that stepping in is rare, but it is an important safeguard.

My third question is on price, which was mentioned. Can district heating be expected to be more economical per kilowatt hour for the consumer? How does it compare with natural gas?

I will give the shortest answer I can, but with a caveat. The answer is very much linked to timing. If a project were built from scratch today, starting with a blank sheet and taking on the cost of a new energy centre, a new network and new connections, it would typically be the lowest-cost way of providing zero-carbon heat. It is the lowest-cost way to provide decarbonised heat. At present, however, fossil fuels are very low cost compared with decarbonised heat. District heating is typically the cheapest form of low-carbon heat, but low-carbon heat is currently more expensive than fossil fuels.

The reason I flag the timing element is that the trajectory for fossil fuels is to continue increasing, with many things driving that, and we are seeing more and more price shocks. The trajectory for district heating is that as it scales, costs come down substantially because it gets access to more waste heat sources and more customers and can diversify its cost base over a wider number of people. The answer is almost a paradox. District heating is likely to be more expensive today than fossil fuels, but it has a trajectory to be cheaper over time. All you have to do is look at the price statistics. What I paid as a typical consumer in Copenhagen was lower than what I would typically pay here for a fossil fuel connection, but that cannot happen on day one. It has to happen over time.

There is no maintenance cost for households.

It is a very unusual world: you turn on your hot water tap and hot water comes out.

You turn on your radiator, it gets hot and you have no idea how.

I only want to make one comment. I thank the Chair for allowing it because I am juggling between committees. I am a strong supporter of district heating systems. When we look at the future of our digital infrastructure, much of the focus has been on energy consumption. We need to examine how our digital infrastructure can create energy in our communities and its role in the grid. I particularly look forward to development of the Echelon plant in Arklow. It is a green energy plant that will commit to the district heating model. In the debate we have been having, the contribution here is critically important.

Thank you. That is it. We will publish the witnesses' opening statement on the committee's website. Is that okay? Great. On behalf of the committee, I thank the witnesses for taking part in the meeting.