Amended proposal for a Directive of the European Parliament and of the Council on the promotion of cogeneration based on a useful heat demand in the internal energy market
Date: 2003-07-23
Institutions: European Commission
Subjects: administrative procedure, approximation of laws, electrical energy, energy policy, energy production, energy supply, heating, security of supply

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 23.7.2003
COM(2003) 416 final

2002/0185 (COD)

Amended proposal for a

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

on the promotion of cogeneration based on a useful heat demand in the internal energy
market

(presented by the Commission pursuant to Article 250 (2) of the EC Treaty)

EXPLANATORY MEMORANDUM

A. Principles

1.

2.

3.

4.

In July 2002, the Commission submitted a proposal for a Directive of the European
Parliament and the Council on the promotion of cogeneration based on a useful heat
demand in the internal energy market COM(2002) 415 – 2002/0185 for adoption by
the  co-decision  procedure  laid  down  in  Article  251  and  175(1)of  the  Treaty
establishing the European Community.

On 14 May 2003, the European Parliament adopted a series of amendments at its first
reading. The Commission gave its position on each of these amendments at that time,
indicating those amendments it could accept as they are, those that could be accepted
in principle and/or with redrafting, those that could be accepted in part and those that
could not be accepted.

In the light of this, the Commission has drafted this amended proposal.

The  Commission  has  made  three  types  of  amendments  with  the  following
justifications.

Firstly, a number of new provisions have been accepted from the first reading by the
European Parliament as they are. These amendments serve to improve the technical
and financial definitions or they add balance and clarity and elaborate and illustrate
points in the proposal.

Secondly,  the  Commission  has  accepted  some  amendments  in  principle,  although
with minor redrafting, e.g. to improve consistency with other parts of the proposal or
to define more clearly certain conditions, limits or exceptions.

Thirdly, the Commission has taken parts of amendments from the first reading when
these  specific  parts  were  deemed  consistent  with  the  purpose  of  the  proposal  and
provided substantial added value while for the amendment in its entirety this was not
the case.

B. Comments as regards the accepted amendments

Recitals

Recital 3

This change of the recital makes a reference to the resolution of the European Parliament on
the Green Paper in support for incentives for the creation of efficient energy production such
as cogeneration.

Recital 5

This change of the recital deletes one word. The message of the word “..correct ..” is covered
elsewhere and it makes no essential change to the text.

Recital 6

This change of the recital gives more focus on the objective of primary energy savings.

2

Recital 7

This  is  a  new  recital  providing  a  relevant  reference  to  Directive  2002/91/EC  on  the  energy
performance  of  buildings,  in  which  it  is  required  to  evaluate  installation  of  CHP  in  new
buildings above 1000 m2.

Recital 12

This change of the recital deletes the words referring to national reference values for separate
production. In the present proposal harmonised reference values are to be developed and as a
consequence the reference to national values is not relevant.

Recital 13

This  new  recital  stress  that  calculations  must  be  precise,  easy  to  follow,  harmonised  and
adjustable and must avoid unnecessary administrative efforts and market distortions.

Recital 18

This  change  of  the  recital  deletes  the  reference  to  the  50MW  threshold  for  Member  State
support.  The  threshold  has  been  criticised  heavily  in  the  European  Parliament  as  well  as  in
Council and the Commission has accepted to delete it.

Recital 23

This new recital makes it clear that also cogeneration produced and consumed by the by the
producer  himself  should  be  counted  into  the  statistics  in  order  to  give  the  full  picture  of
cogenerated energy.

Recital 24

This  change  of  the  recital  is  linked  to  the  deletion  of  the  three  categories  of  cogeneration
“industrial”, “heating” and agricultural cogeneration”.

Recital 25

The  change  of  this  recital  underlines  that  the  measures  taken  aim  to  increase  the  share  of
cogeneration in the Community’s total power production.

Articles

Article 3 Definitions

(a)

is changed to be consistent with the rest of the text.

The three categories of cogeneration are deleted as they were criticised as not needed
in the European Parliament as well as in the Council.

(b)

(c)

is  a  new  definition  of  “micro-cogeneration”  as  units  below  50kWe.  This  definition
also covers a part of amendment 34.

is a new definition saying that micro-cogeneration with an overall efficiency  above
80%  shall  be  regarded  as  high  efficiency  cogeneration.  Thereby  the  route  for
approval  as  high  efficiency  cogeneration  is  eased  because  once  proved  above  this

3

threshold no further calculations for each unit is needed. This definition also covers a
part of amendment 34.

(d)

is changed to give clarification and to include amendment 65 to Annex I. Inclusion of
“trigeneration” into the list of cogeneration technologies in Annex I is not consistent
because  trigeneration  is  not  a  cogeneration  technology  but  an  application  of  the
cogeneration output.

(e)

is changed to clarify the definition.

The  previous  definitions  of  “district  heating”  and  “district  cooling”  are  deleted
because these terms are not used in the directive.

this  change  clarifies  that  the  heat  losses  in  the  district  heating  distribution  system
shall not be taken into account in the assessment of the heat efficiency.

is changed to clarify the wording according to amendment 79, however the last part
of this amendment is not introduced because it is covered by amendment 68 (Annex
II)

is changed in accordance with amendment 32 but modified because the amendment
is closely linked to the not accepted amendment 70. To make the text consistent the
definition is only including the capacity related power to heat ratio.

is changed to clarify the wording.

is changed to clarify the wording.

(h)

(k)

(n)

(o)

(p)

Article 4

The  timeframe  in  paragraph  1  is  changed  from  two  to  one  year  in  order  to  speed  up  the
implementation process.

Likewise the timeframe in paragraph 2 is changed from one year to six month.

The  Commission  can  in  principle  accept  these  changes,  but  it  must  be  noted  that  Member
States most likely will be opposed to these changes.

Article 5

The article is amended to introduce harmonised reference values for separate production to be
used  instead  of  national  values  (amendment  42).  Using  harmonised  reference  values  will
reduce  market  distortions  and  contribute  to  the  creation  of  a  level  playing  field.  The
harmonised  values  must  be  established  based  on  comprehensive  studies  and  including
consultations with the sector. The study must be established by the Commission and finally
adopted in accordance with a procedure including establishment of a Committee (see Article
12).

As a consequence of introducing the harmonised reference values the paragraphs dealing with
national reference values are deleted.

4

Article 6

Paragraph 1 is amended in order to specify that the analysis shall include specific analysis of
the potentials for efficient micro-cogeneration.

The amendments in paragraph 2, 3 and 5 are a consequence of introducing the text originally
proposed by the Commission in annex IV into the Article.

The  timeframe  in  paragraph  5  is  changed  from  two  years  to  18  months,  respectively  from
three years to two years. The Commission can in principle accept these changes, but it must
be noted that Member States most likely will be opposed to these changes.

Article 7

A new paragraph 4 is added to clarify that Member States’ support programmes must be non-
discriminatory.

Article 8

It was proposed in amendment 40 – and accepted by the Commission - to bring forward this
Article as a  new Article 5. This change  has  however  not  yet  been  made  as  the  order  of  the
articles may be changed at a later stage.

In  paragraph  8  it  is  added,  as  proposed  in  part  of  amendment  54,  that  transmission  and
distribution  system  operators  are  not  allowed  to  impose  unrealistic  connection  fees  for
connecting cogeneration units below 1 MWe just as costs and administrative burdens must be
reduced  to  an  absolute  minimum.  Furthermore  the  production  from  these  units  must  be
guaranteed a fair price for electricity sold to the grid. This amendment contribute to establish
and safeguard reasonable conditions for the small scale producers.

Article 9

In  paragraph  1  (a)  the  wording  is  changed  in  order  to  reflect  amendment  55  and  thereby
underlining  that  the  aim  is  to  obtain  energy  savings.  To  keep  also  the  original  message  the
amendment  is  adapted,  because  it  is  prerequisite  to  energy  savings  that  an  increase  in  heat
consumption is avoided.

Article 10

The timeframes  for  Member  States’ reporting are shortened  in  the  changes  in  this  article  in
order to speed up the implementation. The Commission can in principle accept these changes,
but it must be noted that Member States most likely will be opposed to these changes.

The sections dealing with national reference values are deleted in order to be consistent with
the changes in Article 5.

Article 11

In paragraph 1 the former (a) is deleted in order to be consistent with the changes in Article 5.

5

Article 13

This  new  article  introduces  a  Committee  as  an  efficient  way  of  dealing  with  the  detailed
technical aspects of the establishment of harmonised reference values as outlined in Article 5.

Annexes

Annex I

It  is  clarified  that  this  Directive  does  not  include  any  nuclear  production  as  proposed  in
amendment  64  and  66.  In  amendment  65  it  is  proposed  to  include  a  new  technology
“trigeneration”.  However  “trigeneration”  is  not  a  genuine  technology  but  a  more  refined
application of cogeneration, but the amendment is reflected in the changes of Article 3 (d).

Annex II

The changes of Annex II reflect amendment 67, however since the Commission cannot accept
amendment 70 containing the detailed calculation method with new notations for all factors it
is necessary to modify the text to reach a consistent proposal. This modification includes that
the original notations (ECHP, Qnet, C) are maintained and that the power to heat ratio is defined
as the capacity related power to heat ratio.

A new section  c)  is introduced  according to  amendment 68 reflecting special conditions for
some industrial units, however the text is modified to be consistent with the rest of the text.

A new section d) is introduced as proposed in amendment 69. The text is modified in order to
clarify that the outcome of a standardisation process in CEN or CENELEC must be approved
in the committee (Article 12) before Member States are allowed to use such a methodology. It
is  important  for  the  Commission  that  it  is  possible  to  take  in  a  fruitful  product  of  the
standardisation  process,  but  also  to  ensure  that  this  is  not  the  case  if  the  result  of  the
standardisation process is unsatisfactory.

Annex III

This annex is changed in order to reflect amendment 71. The Commission welcomes that this
amendment maintains the principle of calculation of primary energy savings as important for
determination of high efficiency cogeneration. However the Commission has reservations on
the formula proposed in this amendment and it is as a consequence proposed to maintain the
original formula. It is also taken onboard that the avoided grid losses obtained by distributed
cogeneration units should be taken into consideration.

Annex IV

This annex is deleted because the content is introduced directly into Article 6.

6

2002/0185 (COD)

Amended proposal for a

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

on the promotion of cogeneration based on a useful heat demand in the internal
energy market

THE  EUROPEAN  PARLIAMENT  AND  THE  COUNCIL  OF  THE  EUROPEAN
UNION,

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular
Article 175 thereof,

Having regard to the proposal from the Commission1

Having regard to the opinion of the European Economic and Social Committee2

Having regard to the opinion of the Committee of the Regions3

Acting in accordance with the procedure laid down in Article 251 of the Treaty4

Whereas:

(1)

The potential for use of cogeneration as a measure to save energy is underused in
the Community at present. Promotion of high-efficiency cogeneration based on a
useful  heat  demand  is  a  Community  priority  given  the  potential  benefits  of
cogeneration  with  regard  to  saving  primary  energy  and  reducing  emissions,  in
particular  of  greenhouse  gases.  In  addition,  efficient  use  of  energy  by
cogeneration can also contribute positively to the security of energy supply and to
the  competitive  situation  of  the  European  Union  and  its  Member  States.  It  is
therefore necessary to take measures to ensure that the potential is better exploited
within the framework of the internal energy market.

(2)

Directive  96/92/EC  of  the  European  Parliament  and  of  the  Council  of  19
December  1996  concerning  common  rules  for  the  internal  market  in  electricity5
provides  for  an  important  step  in  the  completion  of  the  internal  market  in

1

2

3

4

5

OJ C….,…., p.
OJ C….,…., p.
OJ C….,…., p.
OJ C….,…., p.
OJ L 27, 30.1.1997, p.20.

7

                                                
electricity.  At  its  meeting  in  Lisbon  on  23  and  24  March  2000,  the  European
Council called for rapid work to be undertaken to complete the internal market in
both electricity and gas and to speed up liberalisation in these sectors with a view
to  achieving  a  fully  operational  internal  market.  In  response,  the  Commission
adopted  on  13  March  2001  a  package  of  measures  on  completing  the  internal
energy market, including a proposal for a Directive amending Directives 96/92/EC
and 98/30/EC concerning common rules for the internal market in electricity and
natural gas6.

The Green Paper7 on security of energy supply points out that the European Union
is  extremely  dependent  on  its  external  energy  supplies  currently  accounting  for
50%  of  requirements  and  projected  to  rise  to  70%  by  2030  if  current  trends
persists.  Import  dependency  and  rising  import  ratios  may  lead  to  concern  about
heightens the risk of interruption to or difficulties in supply. However,  it  would
be  simplistic  and  wrong  to  conceive  security  of  supply  as  merely  a  question  of
reducing  import  dependency  and  boosting  domestic  production.  Security  of
supply  calls  for  a  wide  range  of  policy  initiatives  aimed  at,  inter  alia,
diversification  of  sources  and  technologies  and  improved  international  relations.
The  Green  Paper  emphasised  furthermore  that  security  of  energy  supply  is
essential for a future sustainable development. The Green Paper concludes that the
adoption of new measures to reduce energy demand is essential both in terms of
reducing  the  import  dependence and  in order  to limit greenhouse  gas  emissions.
In  its  resolution  of  15  November  20018  on  the  Green  Paper,  the  European
Parliament calls for incentives for the creation of efficient energy production
plants, including cogenerations plants.

The Commission’s Communication “A Sustainable Europe for a better world – A
European  Union  Strategy  for  Sustainable  Development”9  presented  at  the
Gothenburg European Council on 15 and 16 June 2001 identified climate change
as  one  of  the  principal  barriers  to  sustainable  development  and  emphasised  the
need for increased use of clean energy and clear action to reduce energy demand.

The  increased  correct  use  of  cogeneration  constitutes  an  important  part  of  the
package  of  measures  needed  to  comply  with  the  Kyoto  Protocol  to  the  United
Nations Framework Convention on Climate Change, and of any policy package to
met  further  commitments.  The  Commission  in  its  Communication  on  the
implementation of the first phase of the European Climate Change Programme10
identified promotion of cogeneration as one of the measures needed to reduce the
greenhouse  gas emissions from  the  energy sector  and  announced  its  intention  to
present a proposal for a Directive on the promotion of cogeneration in 2002.

(3)

(4)

(5)

6

7

COM(2001) 125 final.
COM(2000) 769 final
8             OJ C 140 E, 13.6.2002, p. 543.
9
COM(2001) 264 final
COM(2001) 580 final

10

8

                                                
(6)

(7)

The  increased  correct  use  of  cogeneration  geared  towards  making  primary
energy  savings  is  a  priority  as  outlined  in  the  Communication  “A  Community
strategy to promote combined heat and power (CHP) and to dismantle barriers to
its  development”11.  This  was  endorsed  by  the  Council  in  its  resolution  of  18
December 1997 on a Community strategy to promote combined heat and power12,
and  by  the  European  Parliament  in  its  resolution  of  23  April  1998  on  the
Community strategy to promote combined heat and power13.

Directive  2002/91/EC  of  the  European  Parliament  and  of  the  Council  of  16
December  2002  on  the  energy  performance  of  buildings14  requires  Member
States to ensure that for new buildings with a total surface area of over 1000
m2,  the  technical,  environmental  and  economic  feasibility  of  alternative
systems,  such  as  CHP,  is  considered  and  taken  into  account  before
construction starts.

(7)(8) The  Council  in  its  Conclusions  of  30  May  2000  and  of  5  December  200015
endorsed  the  Commission’s  Action  Plan  on  energy  efficiency16  and  identified
promotion of cogeneration as one of the short-term priority  areas. The European
Parliament  in  its  resolution  of  7  February  200117  on  the  Action  Plan  on  energy
efficiency  called  on  the  Commission  to  submit  proposals  establishing  common
rules for the promotion of cogeneration, where this makes environmental sense.

(8)(9) Council  Directive  96/61/EC  of  24  September  1996  concerning  integrated
pollution  prevention  and  control18,  Directive  2001/80/EC  of  the  European
Parliament and of the Council on the limitation of emissions of certain pollutants
into  the  air  from  large  combustion  plants19  and  Directive  2000/76/EC  of  the
European Parliament and  of  the Council on the incineration of waste20  all  recite
the need to evaluate the potential for cogeneration in new installations.

(9)(10) High  efficiency  cogeneration  is  in  this  directive  defined  by  the  energy  savings
obtained  by  combined  production  in  stead  of  separate  production  of  heat  and
electricity. For existing plants energy savings of more than 5%, and for new plants
energy  savings  of  more  than  10%  qualify  for  the  term  ‘high  efficiency
cogeneration’. To maximise the energy savings and to  avoid that energy savings
are  lost  through  incorrect  operation  of  the  cogeneration  plants  the  greatest

11

12

13

14

15

16

17

18

19

20

COM(97) 514 final
OJ C 4, 8.1.1998, p. 1
A4-0145/98
OJ L 1, 4.1.2003, p. 65.
Council  Conclusions  8835/00  (30  May  2000)  and  Council  Conclusions  1400/00  (5  December
2000).
COM(2000) 247 final
A5-0054/2001.
OJ L 257, 10.10.1996, p. 26
OJ L 309, 27.11.2001, p. 1
OJ L 332, 28.12.2000, p. 91

9

                                                
attention  must  be  paid  to  the  functioning  conditions  of  these  plants,  mainly  to
ensure that the heat production is being properly used.

(10)(11)

It is important for monitoring purposes and for reasons of transparency to
adopt  a  harmonised  basic  definition  of  cogeneration.  Where  cogeneration
installations are equipped to generate separate electricity or heat production, such
production should be excluded from the definition of cogeneration.

(11)(12)

To  ensure  that  only  cogeneration  that  provides  benefits  in  terms  of
primary energy savings is promoted, it is necessary to develop additional criteria
to  determine  and  quantify  assess  the  energy  efficiency  of  the  cogeneration
production  identified  under  the  basic  definition.  To  avoid  distortions  of  the
internal  energy market, national efficiency reference values used  to  define  high-
the  basis  of  a  common
efficiency  cogeneration  should  be  adopted  on 
methodology.

(13) The  methods  used  to  calculate  energy  produced  from  cogeneration  and
energy  savings  through  cogeneration  must  be  sufficiently  precise,  easy  to
follow,  harmonised  at  European  level  and  adjustable  to  take  account  of
technical  progress,  and  must  avoid  unnecessary  administrative  effort  and
distortions on the internal energy market.

(12)(14)

The definitions  of  cogeneration and  of high-efficiency  cogeneration used
in  this  Directive  do  not  prejudge  the  use  of  different  definitions  in  national
legislation, for purposes other than those set out in this Directive. It is appropriate
to  borrow  the  definitions  contained  in  Directive  96/92/EC  of  the  European
Parliament and of the Council of 19 December 1996 concerning common rules for
the  internal  market of electricity21 and in Directive  2001/77/EC  of  the  European
Parliament  and  of  the  Council  of  27  September  2001  on  the  promotion  of
electricity  produced  from  renewable  energy  sources  in  the  internal  electricity
market.22

(13)(15)

To  increase  transparency  for  the  consumer’s  choice  between  electricity
from  cogeneration  and  electricity  produced  on  the  basis  of  other  techniques,
guarantee of origin of high efficiency cogeneration is necessary.

(14)(16)

To  ensure  increased  market  penetration  of  cogeneration  in  the  medium
term, it is appropriate to require all Member States to adopt and publish a report
analysing the national potential for high-efficiency cogeneration and to include a
separate  analysis  of  barriers  to  cogeneration  in  the  report.  The  Commission,  on
the basis of these reports and the progress made in achieving the global indicative
Community target of 18% of electricity consumption from cogeneration by 2010,
should  consider  whether  it  is  appropriate  to  establish  indicative  objectives  for
each Member State. Special considerations should be given to analysing the scope

21
22

OJ L 27, 30.01.1997, p.20
OJ L 283, 27.10.2001, p.33

10

                                                
for  increased  use  of  renewable  energy  sources  in  the  national  heat  markets  via
cogeneration.

(15)(17)

Public support should be consistent with the provisions of the Community
guidelines on State aid for environmental protection 23. These guidelines currently
allow  certain  types  of  public  support  if  it  can  be  shown  that  the  measures  are
beneficial  in  terms  of  protection  of  the  environment  because  the  conversion
efficiency  is  particularly  high,  because  the  measures  will  allow  energy
consumption  to  be  reduced  or  because  the  production  process  will  be  less
damaging  to  the  environment.  Such  support  will  in  some  cases  be  necessary  to
further exploit the potential for cogeneration, in particular to take account of the
need to internalise external costs.

(16)(18)

Public  support  schemes  for  promoting  cogeneration  should  focus  on
support for cogeneration based on a useful heat demand and avoid encouragement
of increased heat demand in order to avoid increase of fuel consumption and CO2
emissions. Member States should take steps to prevent public financial support for
electricity  from  cogeneration  from  being  used  to  subsidise  heat  production,
thereby creating incentives for being less careful about the proper use of the heat
output.  Without  prejudice  to  the  Community  Guidelines  on  State  aid  for
environmental  protection,  direct  support  for  production  should  in  principle  be
focused  on  the  share  of  cogenerated  electricity  produced  either  in  installations
with a capacity below a threshold value that should be set at 50 MW(e) or lower
or. inlarger installations  but then only the  amount  of  electricity  produced  by  the
capacity below such a threshold value.

(17)(19)

Member States operate different mechanisms of support  for cogeneration
at  the  national  level,  including  investment  aid,  tax  exemptions  or  reductions,
green  certificates  and  direct  price  support  schemes.  The  Commission  intends  to
monitor  the  situation  and  report  on  experiences  gained  with  the  application  of
national support schemes.

(18)(20)

Grid  connection  costs  and  tariffs  related  to  the  transmission  and
distribution of electricity from cogeneration and tariffs related to the purchase of
additional electricity sometimes needed by cogeneration producers should be set
according  to  objective,  transparent  and  non-discriminatory  criteria  taking  into
account  the  costs  and  benefits  of  cogeneration.  Especially  for  cogeneration
installations using renewables and small ones with capacity below 1 MW(e), costs
and  administrative  burdens  in  relation  to  connection  to  the  electricity  grid
constitute considerable barriers for further development.

(19)(21)

The  specific  structure  of  the  cogeneration  sector,  which  includes  many
small and medium-sized producers, should be taken into account, especially when

23

OJ C 37, 03.02.2001, pages 3-15

11

                                                
reviewing  the  administrative  procedures  for  obtaining  permission  to  construct
cogeneration capacity.

(20)(22)

Within the purpose of this Directive to create a framework for promoting
cogeneration  it  is  important  to  emphasise  the  need  for  a  stabile  economical  and
administrative  environment  for  investments  in  new  cogeneration  installations.
Member States are encouraged to address this need by designing support schemes
with  a  duration  period  of  at  least  4  years  and  by  avoiding  frequent  changes  in
administrative  procedures  etc.  Member  States  are  furthermore  encouraged  to
ensure that public support schemes respect the phase-out principle.

(23)

In  collecting  statistics  Member  States  should  analyse  and  monitor  the
amount  of  cogenerated  electricity  produced  and  consumed  by  the  producer
himself. Member States should be aware that even if such a production is not
visible in the sense that it is sold or transmitted through the grid, it should be
considered  and  counted  as  cogeneration.  To  establish  a  full  overview  of
cogenerated production this type of production must be taken into account.

(21)(24)

The overall efficiency and  sustainability of cogeneration is dependent  on
the  many  factors  such  as  technology  used,  fuel  types,  load  curves,  the  size,  and
also on the properties of the heat. Use of heat as high pressure steam for industrial
processes  provides  limits  of  the  electrical  efficiency  of  the  cogeneration
installation because of the high temperature level for the heat (above140°C). Use
of heat for central heating purposes, demanding a lower temperature level (from
40°C to 140°C) than the industrial use, allows a higher electrical efficiency of the
cogeneration installation. Use of heat for agricultural heating, such as warming of
greenhouses and  aquaculture pools, provides  an even  lower level  of temperature
(below  40°C)  and  improves  thereby  the  possibilities  to  increase  the  electrical
efficiency.  This  Directive  reflects  these  considerations  by  introducing  three
classes of cogeneration in order to ensure that evaluation of electrical efficiency of
different cogeneration installations take the different heat temperature levels into
consideration.  These  differences  could  be  taken  into  consideration  in
preparation of harmonised reference values for  separate  production of heat
and electricity.

(22)(25)

In accordance with the principles of subsidiarity and proportionality as set
out  in  Article  5  of  the  Treaty,  general  principles  providing  a  framework  for  the
promotion  of  cogeneration  in  the  internal  energy  market  and  measures  for
increasing  the  share  of  cogeneration  in  the  Community's  total  power
production  should  be  set  at  Community  level,  but  the  detailed  implementation
should be left to Member States, thus allowing each Member State to choose the
regime, which corresponds best to its particular situation. This Directive confines
itself to the minimum required in order to achieve those objectives and does not
go beyond what is necessary for that purpose.

12

HAVE ADOPTED THIS DIRECTIVE:

Article 1

Purpose

The  purpose  of  this  Directive  is  to  create  a  framework  for  promotion  of  cogeneration
based  on  useful  heat  demand  in  the  internal  energy  market.  Implementation  of  this
Directive  shall  take  into  account  the  specific  national  circumstances  especially
concerning climatic and economic conditions.

Article 2

Scope

This Directive shall apply to cogeneration as defined in Article 3. Annex I provides a list
of different types of cogeneration units covered by this Directive.

Article 3

Definitions

For the purpose of this Directive, the following definitions shall apply:

(a)

(b)

(c)

(d)

“cogeneration” shall mean the generation in one process of thermal energy and
electrical and/or mechanical energy. For practical reasons and based on the fact,
that  the  use  of  the  heat  output  for  different  purposes  requires  different
temperature levels of the heat, and that these differences influence efficiencies of
the  cogeneration,  cogeneration  shall  be  divided  into  three  classes:  “industrial
cogeneration”, “heating cogeneration” and “agricultural cogeneration”;

“industrial cogeneration” shall mean the generation in one process  of electrical
and/or  mechanical  energy  and  thermal  energy  useful  for  industrial  production
generally with heat temperatures of 140°C or higher;

“heating  cogeneration”  shall  mean  the  generation  in  one  process  of  electrical
and/or  mechanical  energy  and  thermal  energy  useful  for  heating  purposes  in
district heating systems or directly in buildings generally with heat temperatures
between 40°C and 140°C;

“agricultural cogeneration” shall mean the generation in one process of electrical
and/or mechanical energy and thermal energy useful for  agricultural heating  of
greenhouses,  aquaculture  plants  and  similar  applications  generally  with  heat
temperatures between 15°C and 40°C;

13

(b)

(c)

(e)(d)

(f)(e)

(g)

(h)

(i)(f)

(j)(g)

(kh)

"micro-cogeneration" shall mean cogeneration in a cogeneration unit lower
than 50 kWe;

"Efficient  micro-cogeneration"  shall  mean  micro-cogeneration  with  a
certified overall efficiency of at least 80%;

“useful heat” is shall mean heat produced in a cogeneration process to satisfy an
economically justified demand, on the basis of the efficiency criteria laid down
in  Annex  III,  point  c.  2;  useful  heat  could  via  a  secondary  process  be  used  to
generate  useful  cooling;  such  as  for  industrial  or  airconditioning  purposes
(trigeneration);

“electricity  from  cogeneration”  shall  mean  electricity  generated  in  accordance
with  the  methodology  laid  down  in  Annex  II  and  in  a  process  during  a
reporting  period  directly  linked  to  the  production  of  useful  heat  from
cogeneration  in  a  cogeneration  unit  in  accordance  with  the  methodology
laid down in Annex II;

”district heating” shall mean a system supplying commercially heat in the form
of hot water or steam to users via a distribution network;

”district  cooling”  shall  mean  a  system  supplying  chilled  water  or  hot  water  or
steam to chillers via a distribution network; 

“back-up  electricity”  shall  mean  the  electricity  that  has  to  be  supplied  through
the  electricity  grid  whenever  the  cogeneration  process  is  disrupted  or  out  of
order;

“top-up electricity” shall mean the electricity that has to be supplied through the
electricity grid in cases where the electricity demand is greater than the electrical
output of the cogeneration process.

“heat efficiency” shall mean annual useful heat output divided by the fuel input
used  for  heat  produced  in  a  cogeneration  process  and  for  gross  electricity
production. In the case of cogeneration with district heating useful heat output is
measured  at  the point of outlet to the heat distribution  network  decreased  by  a
realistic  estimation  of  losses  in  the  distribution  network.  In  the  case  of  other
cogeneration applications useful heat output is measured at the point of use;

(li)

“electrical efficiency” shall mean annual electricity production measured  at the
point  of  outlet  of  the  main  generators  divided  by  the  fuel  input  used  for  heat
produced in a cogeneration process and gross electricity production;

(m)(j)

“overall  efficiency”  shall  mean  the  annual  sum  of  electricity  production  and
useful  heat  output  divided  by  the  fuel  input  used  for  heat  produced  in  a
cogeneration process and gross electricity production;

14

(n)(k)

”efficiencyies” shall mean efficiency be calculated on the basis of Net Calorific
Values  of  fuels  (lower  calorific  value)  which  means  that  the  latent  heat  of
vaporisation of moisture is not included;

(o)(l)

“high  efficiency  cogeneration”  shall  mean  cogeneration  meeting  the  criteria
outlined in Annex III;

(p)(m) “efficiency reference value for separate production“ shall mean efficiency of the
alternative  separate  productions  of  heat  and  electricity  that  the  cogeneration
process is assumed to displace.

(q)(n)

(r)(o)

(s)(p)

(t)(q)

(u)(r)

“Power  to  Heat  Ratio”  shall  mean  the  relation  of  electrical  energy  to  useful
thermal  energy  of  a  cogeneration  plant  is  the  quotient  of  the  electricity
production  from  cogeneration  and  the  heat  production  from  cogeneration
at full capacity over a measuring period.

“cogeneration unit” shall mean a unit mainly intended for within a cogeneration
processes plant, in which the process of cogeneration as defined under point
a)  partly  or  solely  takes  place;  when  a  cogeneration  unit  generates  only
electrical energy or only thermal energy it is still to be defined as a cogeneration
unit, but its output shall not be considered cogeneration for the purpose of this
Directive.

“cogeneration  installation”  shall  mean  an  installation  made  up  of  one  or  more
intended principally for cogeneration units processes within the meaning  of
point (a) above. A cogeneration installation may include equipment where it is
possible  to  generate  have  segments  in  which  only  electrical  energy  or  only
thermal energy are generated. The output from such equipment segments shall
not be considered cogeneration for the purpose of this Directive;

“new cogeneration units” shall mean cogeneration units having started operation
on, or after, 1 January 2004;

“existing  cogeneration  units”  shall  mean  cogeneration  units  having  started
operation before 1 January 2004;

In  addition,  the  definitions  in  Directive  96/92/EC  and  in  Directive  2001/77/EC  shall
apply.

Article 4

Guarantee of origin of electricity from cogeneration

1.

Member States shall no later than two one years after the entry into force of this
Directive ensure that the origin of electricity produced in cogeneration units can
be  guaranteed  as  such  within  the  meaning  of  this  Directive  according  to
objective,  transparent  and  non-discriminatory  criteria  laid  down  by  each

15

Member  State.  Member  States  shall  ensure  that  this  guarantee  of  origin  of  the
electricity is issued to this effect in response to a request.

2.

Member States shall designate no later than one year six months after the entry
into  force  of  this  Directive  one  or  more  competent  bodies,  independent  of
generation and distribution activities, to supervise the issue of the  guarantee  of
origin referred in paragraph 1 Member States or the competent bodies shall put
in place appropriate mechanisms to ensure that the guarantee of origin are both
accurate  and  reliable  and  they  shall  outline  in  the  report  referred  to  in
Article 6(34) the measures taken to ensure the reliability of the certificate system

3.

Guarantee of origin shall:

-

-

-

-

specify  the  fuel  source  from  which  the  electricity  was  produced,  specify
the  use  of  the  heat  generated  together  with  the  electricity  and  finally
specify the dates and places of production;

specify  the  quantity  of  electricity  from  cogeneration  that  the  guarantee
represents;

specify  the  efficiency  reference  values  for  separate  production  of
electricity and heat, and the efficiency of cogeneration in accordance with
Article 5;

enable producers  of  electricity  from  cogeneration  to  demonstrate  that  the
electricity they sell is produced from cogeneration  within  the  meaning  of
this Directive.

Member States may include additional information on the guarantee of origin.

Guarantee  of  origin,  issued  according  to  paragraph  2,  shall  be  mutually
recognised by the Member States, exclusively as proof of the elements referred
in paragraph 3. Any refusal to recognise a certificate of origin as such proof, in
particular  for  reasons  relating  to  the  prevention  of  fraud,  must  be  based  on
objective, transparent and non-discriminatory criteria. In the event of refusal to
recognise a certificate of origin, the Commission may compel the refusing party
to  recognise 
transparent  and
to  objective, 
it,  particularly  with  regard 
non-discriminatory criteria on which such recognition is based.

Article 5

Efficiency criteria

In order to determine the energy savings and the reductions in CO2 levels
resulting from a cogeneration process as defined in this Directive, the
Commission Member States shall no later than two years after following the
entry into force of thise Directive ensure that the efficiency of cogeneration

16

4.

1.

production, defined in terms of achievement of primary energy savings can be
determined in accordance with Annex III and after consulting associations
representing the cogeneration sector, the Member States, the European
Parliament and the Council, present an in-depth analysis with regard to
establishing general principles for comparing cogeneration with
harmonised reference values for the separate production of heat and
electricity.

The  report  referred  to  in  the  first  paragraph  should  be  based  on  a  fully
documented analysis, taking account of :

a)       operating data under realistic conditions,

b)      climatic differences in the Member States,

c)       the different technologies in the Member States,

d)      differentiation between existing and new installations,

e)       access  to  fuels,  the  distribution  of  energy  resources  and  the

development of the energy mix,

f)       security of supply and environmental aspects.

2.

For  the  purpose  of  determining  the  efficiency  of  cogeneration,  Member  States
On  the  basis  of  this  analysis,  the  Commission  shall  not  later  than  two  years
after the entry into force of this Directive adopt : publish, in accordance with
the procedure in Article 13.2, harmonised reference values for determining
primary energy savings by cogerenation.

(a)      efficiency  The  reference  values  for  separate  production  of  heat  and
electricity  and  of  separate  production  of  heat  shall  be  the  same  in  all  EU
countries.  to  be  used  for  the  calculation  of  primary  energy  savings  from
cogeneration in accordance with the methodology set out in Annex III.

-         These reference values shall be set by fuel type.

-         The reference values shall be set for a specific cogeneration unit in the
year of installation of the cogeneration unit and of the separate units
of the same age.

-         Once  a  set  of  reference  values  is  set  for  a  specific  cogeneration  unit
these  reference  walues  are  valid  for  a  period  of  ten  years  and  after
that for  a new period  of ten  years. The recalibrated reference values
shall be based on the final year of this ten year period.

17

(b)     principles for defining the national efficiency reference values for separate
production of heat and electricity based on a well-documented analysis of
the most realistic references in each Member State.

3.           Member States shall review the national efficiency reference values for separate
production of heat and electricity every 5 years to take account of technological
developments and changes in the distribution on energy sources. Where changes
in the national efficiency reference values for separate production are made, the
new reference values shall be published and shall be notified to the Commission.

4.            The  Commission  shall  evaluate  the  criteria  for  determining  the  efficiency  of
cogeneration  adopted  by  the  Member  States  pursuant  to  (paragraph  2).  After
having consulted the Member States, the Commission shall in the report referred
to  in  Article  10  (1),  consider  the  scope  for  a  harmonised  methodology  that
Member States could follow in order to determine the efficiency of cogeneration
production.

Article 6

National potentials for high-efficiency cogeneration

1.

2.

Member  States  shall  establish  an  analysis  of  the  national  potential  for  high-
efficiency  cogeneration,  including  efficient  micro-cogeneration,  considering
achieving the maximum energy and CO2 savings possible from cogeneration
in each Member State.

The analysis shall comply with the criteria listed in Annex IV below. It shall be
based on well-documented scientific data.

In  assessing  national  potentials  for  cogeneration,  the  analysis  shall
consider :

-         The type of fuels that are likely to be used to realise the cogeneration
potentials,  including  specific  considerations  on  the  potential  for
increasing  the  use  of  renewable  energy  sources  in  the  national  heat
markets via cogeneration.

-         The  type  of  cogeneration  technologies  as  set  out  in  Annex  I  that  are

likely to be used to realise the national potential.

-         The  type  of  separate  production  of  heat  and  electricity  that  high-

efficiency cogeneration is likely to substitute.

-         A division of the potential into modernisation of existing capacity and

construction of new capacity.

18

and  shall  The  analysis  may  for  statistical  purposes  distinguish  between
applications of cogeneration in at least the following categories:

-

-

-

industrial cogeneration

heating cogeneration

agricultural cogeneration

3.            The  analysis  shall  include  appropriate  mechanisms  to  assess  the  cost-
effectiveness  of  increasing  the  share  of  high-efficiency  cogeneration  in  the
national  energy  mix.  The  analysis  of  cost-effectiveness  shall  also  take  into
account national commitments accepted in the context of the climate change
commitments  accepted  by the Community pursuant  to  the  Kyoto  Protocol
to the United Nations Framework Convention on Climate Change.

34.

45.

Member States shall include in the analysis a separate analysis of barriers, which
may  prevent  the  realisation  of  the  national  potential  for  high-efficiency
cogeneration.  In  particular,  this  analysis  shall  consider  barriers  relating  to  the
prices of and access to fuels, barriers in relation to grid system issues, barriers in
relation  to  administrative  procedures,  and  barriers  relating  to  the  lack  of
internalisation of the external costs in energy prices.

Member States shall for the first time not later than two years 18 months after
the  entry  into  force  of  this  Directive  and  thereafter  every  three  two  years
evaluate progress towards increasing  the share of high-efficiency cogeneration.
Member  States  shall  also  evaluate  measures  taken  to  promote  high-efficiency
cogeneration  and  indicate  to  what  extent  the  measures  are  consistent  with
national climate change commitments.

The  analysis  of  the  national  cogeneration  potential  shall  specify  the
potentials  in  relation  to  the  timeframes  2010,  2015  and  2020  and  include
appropriate cost estimates for each of the timeframes.

56.

On  the  basis  of  the  reports  referred  to  in  paragraphs  1,  34  and  45,  the
Commission shall assess how much progress Member States have made towards
realising their national potentials for high-efficiency cogeneration.

The Commission shall publish its conclusions in the report referred to in Article
1011, for the first time not later than four years after the entry into force of this
Directive and thereafter every three years.

19

Article 7

Support schemes

1.

2.

3.

Member States shall ensure that support for cogeneration production is based on
the  useful  heat  demand,  in  the  light  of  opportunities  available  for  reducing
energy  demand  through  other  economically  feasible  measures  like  energy
efficiency measures.

Without  prejudice  to  Articles  87  and  88  of  the  Treaty,  the  Commission  shall
evaluate  the  application  of  support  mechanisms  used  in  Member  States
according  to  which  a  producer  of  cogeneration  receives,  on  the  basis  of
regulations issued by public  authorities,  direct or indirect  support, which  could
have the effect of restricting trade.

The  Commission  shall  consider  whether  those  mechanisms  contribute  to  the
pursuit of the objectives set out in Articles 6 and 174(1) of the Treaty.

The  Commission  shall  in  the  report  referred  to  in  Article  1011  present  a
well-documented  analysis  on  experience  gained  with  the  application  and
coexistence of the different support mechanisms referred to in paragraph 2. The
report  shall  assess  the  success,  including  cost-effectiveness,  of  the  support
systems in promoting the use of high-efficiency cogeneration in conformity with
the national potentials referred to in Article 6. The report shall further review to
what  extent  the  support  schemes  have  contributed  to  the  creation  of  stable
conditions for investments in cogeneration.

4.            The Member States shall ensure that support for cogeneration is provided
in a non-discriminatory way, i.e. irrespective of operators and of the use of
the  electricity,  mechanical  energy  or  heat  generated  in  the  cogeneration
installation.

Article 8

Electricity grid system issues

1.

2.

Without  prejudice  to  the  maintenance  of  the  reliability  and  safety  of  the  grid,
Member  States  shall  take  the  necessary  measures  to  ensure  that  transmission
system  operators  and  distribution  system  operators  in  their  territory  guarantee
the transmission and distribution of electricity produced from cogeneration.

Member States shall establish a legal framework or require transmission system
operators and distribution system operators to set up and publish standard rules
on the bearing of the costs of technical adaptations, such as grid connections and
grid  reinforcements,  which  are  necessary  in  order  to  integrate  new  producers
feeding into the grid electricity produced from cogeneration.

20

Member States shall establish a legal framework or require transmission system
operators and distribution system operators to set up and publish standard rules
relating to the sharing of costs of system installations, such as grid connections
and reinforcements, between all system users benefiting from them.

The  sharing  shall  be  enforced  by  a  mechanism  based  on  objective,  transparent
and  non-discriminatory  criteria  taking  into  account  the  benefits  which  initially
and subsequently connected producers as well as transmission system operators
and distribution system operators derive from the connections.

The rules shall be based on objective, transparent and non-discriminatory criteria
taking  particular  account  of  all  the  costs  and  benefits  associated  with  the
connection  of  the  producers  to  the  grid.  The  rules  may  provide  for  different
types of connection.

Member  States  may  require  transmission  system  operators  and  distribution
system operators to bear, in full or in part, the costs referred to in paragraph 2.

Transmission  system  operators  and  distribution  system  operators  shall  be
required  to  provide  any  new  producer  wishing  to  be  connected  with  a
comprehensive and detailed estimate of the costs associated with the connection.

Member  States  shall  ensure  that  the  charging  of  transmission  and  distribution
fees  does  not  discriminate 
cogeneration.
against 
Where  appropriate,  Member  States  shall  put  in  place  a  legal  framework  or
require  transmission  system  operators  and  distribution  system  operators  to
ensure that fees charged for the transmission and distribution of electricity from
installations using cogeneration reflect realisable cost benefits resulting from the
installation’s connection  to  the  network. Such cost benefits may arise  from the
direct use of the low-voltage grid.

electricity 

from 

Unless  the  cogeneration  producer  is  an  eligible  customer  under  national
legislation within the meaning of Article 17 (2) of Directive 96/92/EC, Member
States  shall  take  the  necessary  measures  to  ensure  that  the  tariffs  for  the
purchase of electricity to back-up or top-up electricity generation are set on the
basis  of  published  tariffs  and  terms  and  conditions.  Such  tariffs  and  terms  and
conditions shall be fixed or approved in accordance  with  objective, transparent
and  non-discriminatory  criteria  by  an  independent  regulatory  authority  prior  to
their entry into force.

Member States shall designate one or more competent bodies, which may be an
independent  regulatory  authority,  to  monitor  and  benchmark  the  tariffs  and
terms and conditions offered to cogeneration producers when back-up or top-up
electricity is purchased or when excess electricity is sold. The body shall publish
for  the  first  time  three  years  after  the  entry  into  force  of  this  Directive  and
thereafter every third  year  a  report outlining  the  findings  of  these  assessments.
The report shall be forwarded to the Commission.

21

3.

4.

5.

6.

7.

8.

1.

Member States shall particularly facilitate access to the grid system of electricity
produced  from  cogeneration  units  using  renewables  energy  sources  and
installations  with  a  capacity  less  than  1  MWe,  as  set  out  in  Annex  III,  a).  In
particular, by requiring Transmission and Distribution system operators to
connect sub-1 MWe systems to the electric grid without imposing unrealistic
connection  fees  or  other  impediments.  Costs  and  administrative  burdens
should  be  reduced  to  an  absolute  minimum  for  these  units  and  fair
compensation should be paid for excess electricity sold to the grid.

Article 9

Administrative procedures

Member  States  or  the  competent  bodies  appointed  by  the  Member  States  shall
evaluate  the  existing  legislative  and  regulatory  framework  with  regard  to
authorisation  procedures  or  the  other  procedures  laid  down  in  Article  4  of
Directive  96/92/EC,  which  are  applicable  to  cogeneration  installations,  with  a
view to:

(a)

(b)

(c)

(d)

the  design  of  cogeneration 

encouraging 
to  match
economically  justified  demands  for  useful  heat  output  and  avoiding
production  of  more  heat  than  useful  heat  resulting  in  fuel  savings
compared  with  the  separate  production  of  heat  and  electricity;  and
avoiding production of more heat than useful heat.

installations 

reducing  the  regulatory  and  non-regulatory  barriers  to  an  increase  in
cogeneration;

streamlining  and  expediting  procedures  at  the  appropriate  administrative
level; and

ensuring  that  the  rules  are  objective,  transparent  and  non-discriminatory,
and take  fully into account the  particularities  of  the  various  cogeneration
technologies.

2.

Member  States  shall  –  where  this  is  appropriate  in  the  context  of  national
legislation –provide an indication of the stage reached specifically in:

(a)

(b)

co-ordination  between  the  different  administrative  bodies  as  regards
deadlines, reception and treatment of applications for authorisations;

the  drawing  up  of  possible  guidelines  for  the  activities  referred  to  in
paragraph 1,  and  the  feasibility  of  a  fast-track  planning  procedure  for
cogeneration producers; and

22

3.

1.

2.

3.

(c)

the  designation  of  authorities  to  act  as  mediators  in  disputes  between
authorities  responsible  for  issuing  authorisations  and  applicants  for
authorisations.

The Commission shall, in the report referred to in Article 11 and on the basis of
the Member States' reports referred to in Article 10(1), assess best practices with
a view to achieving the objectives referred to in paragraph 1.

Article 10

Member States' reporting

Member  States  shall,  not  later  than  two  years  18  months  after  the  entry  into
force of this Directive, publish a report with the following content:

(a)      efficiency reference values for separate production of heat and electricity

referred to in Article 5 (2);

(b)     principles for defining the national efficiency reference values for separate

production of heat and electricity referred to in Article 5 (2);

(c)(a)analysis  of  national  potential  for  high  efficiency  cogeneration  referred  to

in Article 6(1);

(d)(b)analysis  of  barriers,  which  may  prevent  the  realisation  of  the  national
potential for high efficiency cogeneration referred to in Article 6(34);

(e)(c) examination of the measures taken to facilitate access to the grid system of
electricity  produced  from  cogeneration  and,  inter  alia,  the  feasibility  of
introducing 
in
two-way  metering  for  cogeneration  units 
residential buildings;

installed 

(f)(d) evaluation of the existing legislative and regulatory framework referred to

in Article 9(1) and 9(2).

Member States shall not later than two years 18 months after the entry into force
of this Directive and hereafter every three two years publish a report on progress
towards  increasing  the  share  of  high  efficiency  cogeneration  referred  to  in
Article 6(45);

Member States shall submit to the Commission on an annual basis statistics on
national  electricity  and  heat  production  from  cogeneration,  in  accordance  with
the methodology shown in Annex II.

They  shall  also  submit  annual  statistics  on  cogeneration  capacities  and  fuels
used for cogeneration.

23

Article 11

Commission reporting

On the basis of the reports submitted pursuant to Article 8(7) and Article 10 (1) and (3)
above provisions in Article 5 and 10, the Commission  shall  review  the  application  of
this  Directive  and  submit  to  the  European  Parliament  and  to  the  Council  not  later  than
four  years  after  the  entry  into  force  of  this  Directive  and  thereafter  every  six  years,  a
progress report on the implementation of this Directive.

In particular, the report shall:

(a)      consider  the  scope  for  further  harmonisation  of  the  criteria  to  determine

the efficiency of cogeneration.

(b)(a)consider progress towards realising national potentials for high-efficiency

cogeneration referred to in Article 6.

(c)(b)assess  the  extent  to  which  rules  and  procedures  defining  the  framework
conditions  for  cogeneration  in  the  internal  energy  market  are  set  on  the
basis  of  objective,  transparent  and  non-discriminatory  criteria  taking  due
account of the benefits of cogeneration.

(d)(c)examine  the  experiences  gained  with  the  application  and  coexistence  of

different support mechanisms for cogeneration.

(e)(d)review  reference  values  for  separate  production  on  the  basis  of  the  current

technologies

If  appropriate,  the  Commission  shall  submit  with  the  report  further  proposals  to  the
European Parliament and the Council.

Article 12

Transposition

Member States shall bring into force the laws, regulations and administrative provisions
necessary to comply with this Directive not later than two years after the entry into force
of this Directive. They shall forthwith inform the Commission thereof.

When  Member  States  adopt  these  measures,  they  shall  contain  a  reference  to  this
Directive  or  shall  be  accompanied  by  such  a  reference  on  the  occasion  of  their  official
publication. The Member States shall lay down the methods of making such reference.

24

Article 13

Committee

1.            The  Commission  shall  be  supported  by  a  committee  known  as  the
'cogeneration  committee',  comprising  of  representatives  of  the  Member
States and chaired by representatives of the Commission.

2.            In applying this paragraph, the regulatory procedure pursuant to Article 5
of  Decision  1999/468/EC,  with  particular  reference  to  Article  7  and  8
thereof, shall be used.

3.            The Committee shall adopt its own Rules of Procedure.

Article 1314

Entry into force

This Directive shall enter into force on the twentieth day following that of its publication
in the Official Journal of the European Communities Commission.

Article 1415

Addressees

This Directive is addressed to the Member States.

Done at Brussels,

For the Council
The President

25

ANNEX I

Cogeneration technologies covered by the Directive

Combined cycle gas turbine with heat recovery

Steam backpressure turbine

SNon-nuclear steam extraction condensing turbine

Gas turbine with heat recovery

Internal combustion engine

Microturbines

Stirling engines

Fuel cells

Steam engines

Organic Rankine cycles

Any other type of non-nuclear technology or combination thereof falling under
the definitions laid down in Article 3.

a)

b)

c)

d)

e)

f)

g)

h)

i)

j)

k)

26

ANNEX II

Definition Calculation of electricity from cogeneration

Values used for calculation of electricity from cogeneration shall be determined on the basis
of the expected or actual operation of the unit under realistic conditions.

a)            Electricity  production  from  cogeneration  shall  be  considered  equal  to  total  annual

ba)

electricity production of the unit.
(cid:1)  in cogeneration units of type b), d), e), f), g), and h) referred to in Annex I, with

an annual overall efficiency higher or equal to 75%, and

(cid:1)  in  cogeneration  units  of  type  a)  and  c)  referred  to  in  Annex  I  with  an  annual

overall efficiency higher or equal to 85%.

Calculations  shall  be  made  in  order  to  separate  electricity  from  cogeneration  and
electricity  not  produced  in  a  cogeneration  process.  In  cogeneration  units  with  an
annual overall efficiency below 75% (cogeneration units of type b), d), e), f), g), and
h)  referred  to  in  Annex  I)  or  with  an  annual  overall  efficiency  below  85%
(cogeneration units of type a) and c) referred to in Annex I) The following formula
shall be used:

E CHP = Qnet . C

where

E CHP is the amount of electricity from cogeneration

C

Qnet

is the power to heat ratio

is  the  net  heat  production  from  a  cogeneration  process  (defined  as  total  heat
production minus any heat produced separately, e.g. in separate boilers, peak
boilers or as live steam extraction).

To determine whether electricity counts as electricity from If the actual power to
heat ratio of a cogeneration for statistical purposes unit is not known, the following
default values may be used for units of type a), b), c), d), and e) referred to in Annex
I  provided  that  the  calculated  cogeneration  electricity  is  less  or  equal  to  total
electricity  production  of  the  unit,  where  the  actual  power  to  heat  ratio  is  not
known:

Type of the unit

Default power to heat capacity
ratio, C

District heating

Industrial

Combined  cycle  gas  turbine  with  heat
recovery

Steam backpressure turbine

Steam condensing extraction turbine

Gas turbine with heat recovery

Internal combustion engine

0.95

0.45

0.45

0.55

0.75

0.75

0.30

0.30

0.40

0.60

27

Subject  to  prior  notification  to  the  Commission,  Member  States  may  use  other
default  values  for  power  to  heat  ratios  than  the  ones  provided  in  this  Annex.  Such
alternative default values shall be published by Member States.

If Member States introduce default values for power to heat ratios for units of type f),
g), h), i), j) and k) referred to in Annex I, such default values shall be published and
shall be notified to the Commission.

c)b)

Subject to prior approval by the Commission, Member States may use other methods
than the one provided for in paragraph b) of this annex to subtract possible electricity
production not produced in a cogeneration process from the reported figures.

c)            If a share of the energy content of the fuel input to the cogeneration process is
recovered in chemicals and recycled this share can be subtracted from the fuel
input before calculating electricity from cogeneration in Annex II and primary
energy savings in Annex III.

d)           Member  States  may  prior  to  approval  by  the  Commission  in  accordance  with
the  procedure  referred  to  in  Article  13.2  use  an  alternative  methodology  for
calculation  of  electricity  from  cogeneration  developed  by  the  European
Standardisation Organisations CEN and/or CENELEC;

28

ANNEX III

Methodology for determining the efficiency of the cogeneration production process

Values  used  for  calculation  of  efficiency  of  cogeneration  production  and  primary  energy
savings shall be determined on the basis of the expected or actual operation of the unit under
realistic conditions.

a)

High-efficiency cogeneration

For  the  purpose  of  this  Directive  high-efficiency  cogeneration  production  shall  fulfil  the
following criteria:

– 

– 

– 

– 

production from new  cogeneration  units  shall provide primary  energy  savings of at
least 10% compared with the references for separate production of heat and power;

production from existing cogeneration units shall provide primary energy savings of
at least 5% compared with the references for separate production of heat and power;

production  from  cogeneration  units  using  renewable  energy  sources  and  from
cogeneration  installations  with  an  installed  capacity  below  1  Mwe,  and  micro-
cogeneration  units,  providing  primary  energy  savings  in  the  range  0-5%  may
qualify as high-efficiency cogeneration;

Member  States  may  introduce  principles  whereby  production  from  cogeneration
units below the thresholds referred to in this Annex may be considered to be partially
fulfilling  the  efficiency  criteria.  If  such  principles  are  applied,  appropriate
methodologies for determining the reduced efficiency of such production, calculated
in  proportion  to  the  reduced  primary  energy  savings,  shall  be  developed  by  the
Member  State  and  shall  be  notified  to  the  Commission.  In  such  cases,  the  reduced
efficiency of the cogeneration production shall be clearly displayed on the certificate
of origin.

b)

Calculation of primary energy savings

The amount of primary energy savings provided by cogeneration production defined in
accordance with Annex II to this Directive shall be calculated on the basis of the following
formula:

1

 +

CHP H(cid:1)

Ref H(cid:1)

CHP E(cid:1)

Ref E(cid:1)

x 100%

PES =       1 -

Where:

PES

is primary energy savings

CHP H(cid:2)is the heat efficiency of the cogeneration production

Ref H(cid:2) is the heat efficiency of the reference for separate heat production

29

CHP E(cid:2) is the electrical efficiency of the cogeneration production

Ref E(cid:2) is the electrical efficiency of the reference for separate electricity production

Subject  to  prior  notification  to  the  Commission,  Member  States  may  use  other  formula
leading to the same results to calculate the primary energy savings from cogeneration. In the
cases  where  alternative  formulas  are  used,  such  formula  shall  be  published  by  the  Member
State.

In  the  case  of  cogeneration  units  connected  to  the  electricity  distribution  system,  the
reference values provided in the above table may be lowered by 5-10% to take account
of avoided network losses.

c)

Efficiency reference values for separate production of heat and electricity

The  principles  for  defining  the  references  for  separate  production  of  heat  and  electricity
referred  to  in  Article  5(2)  and  in  the  formula  set  out  in  paragraph  b)  of  this  Annex  shall
establish  the  operating  efficiency  of  the  separate  heat  and  electricity  production  that
cogeneration is assumed to displace.

To  define  the  efficiency  reference  values  for  the  transitional  period  up  until  the
publication  of  harmonised  reference  values  in  the  Official  Journal  of  the  European
Union, the following principles shall be applied:

1)  For  new  cogeneration  units  as  defined  in  Article  3,  the  comparison  with  new  separate
electricity production shall be based on the principle that similar fuel categories are compared.
The  following  indicative  efficiency  reference  values  for  new  separate  electricity  production
may be used:

Indicative efficiency reference values for new separate electricity production

Fuel category

Natural gas

Coal

Oil

Operating efficiency

55%

42%

42%

Renewables and waste

22-35%

In the case of cogeneration units connected at the electricity distribution system, the reference
values  provided  in  the  above  table  may  be  lowered  with  5-10%  to  take  account  of  avoided
network losses.

2) For new cogeneration units as defined in Article 3, the indicative efficiency reference value
of new separate heat production shall be an operating efficiency of 90%.

In the case of heat production based on oil or coal, the efficiency reference value may shall be
lowered to 85%. In the case of heat production based on renewable energy sources or waste,
the efficiency reference value may shall be lowered to 80%. In the case of high temperature
steam  used  for  industrial  processes,  the  reference  values  for  separate  heat  production  may
shall be lowered to 80%.

30

3) For  existing cogeneration  units as defined in Article 3, the  efficiency  reference  value for
separate  electricity  production  shall  be  based  on  the  average  operating  efficiency  of  the
national  fossil-fuelled  electricity  production.  Where  appropriate,  possible  cross-border  trade
in electricity having an impact on the reference values may be taken into account.

4)  For  existing  cogeneration  units  as  defined  in  Article  3  the  efficiency  reference  value  for
separate  heat  production  shall  be  based  on  the  average  operating  efficiency  of  the  national
heat production mix.

5)  Subject  to  prior  notification  to  the  Commission,  Member  States  may  include  additional
aspects in the national criteria for determining the efficiency of cogeneration.

31

ANNEX IV

Criteria for analysis of national potentials for high-efficiency cogeneration

a)           The analysis of the national potential for high-efficiency cogeneration shall identify
suitable heating and/or cooling demands and shall distinguish between application of
cogeneration in at least the following main categories:

-         Industrial cogeneration

-         Heating cogeneration

-         Agricultural cogeneration

b)           For each of the three categories referred to under a), the analysis shall consider:

-         The  type  of  fuels  that  are  likely  to  be  used  to  realise  the  cogeneration
potentials, including specific considerations on the potential for increasing the
use of renewable energy sources in the national heat markets via cogeneration.

-         The type of cogeneration technologies as listed in Annex I that are likely to be

used to realise the national potential.

-         The  type  of  separate  production  of  heat  and  electricity  that  high-efficiency

cogeneration is likely to substitute.

-         A  division  of  the  potential  into  modernisation  of  existing  capacity  and

construction of new capacity.

c             The analysis shall include appropriate mechanisms to assess the cost effectiveness –
in  terms  of  primary  energy  savings  -  of  increasing  the  share  of  high-efficiency
cogeneration in the national energy mix. The analysis of cost effectiveness shall also
take  into  account  national  commitments  accepted  in  the  context  of  the  climate
change commitments accepted by the Community pursuant to the Kyoto Protocol to
the United Nations Framework Convention on Climate Change.

d            The  analysis  of  the  national  cogeneration  potential  shall  specify  the  potentials  in
relation  to  the  timeframes  2010,  2015  and  2020  and  include  appropriate  cost
estimates for each of the timeframes.

32