Directive 2004/8/EC of the European Parliament and of the Council of 11 February 2004 on the promotion of cogeneration based on a useful heat demand in the internal energy market and amending Directive 92/42/EEC
Date: 2004-02-11
Institutions: Council of the European Union, European Parliament
Subjects: electrical energy, energy production, energy use, heating, security of supply, single market, technology

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DIRECTIVE 2004/8/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

of 11 February 2004

on the promotion of cogeneration based on a useful heat demand in the internal energy market
and amending Directive 92/42/EEC

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
EUROPEAN UNION,

Having regard to the Treaty establishing the European Com-
munity, and in particular Article 175(1) thereof,

Having regard to the proposal from the Commission (1),

Having regard to the opinion of the European Economic and
Social Committee (2),

Having regard to the opinion of
Regions (3),

the Committee of

the

Acting in accordance with the procedure laid down in Article
251 of the Treaty (4),

Whereas:

(1)

(2)

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, avoiding network losses and reducing
emissions, in particular of greenhouse gases. In addition,
efficient use of energy by cogeneration can also contri-
bute 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.

Directive 2003/54/EC of the European Parliament and of
the Council of 26 June 2003 (5) establishes common
rules for the generation, transmission, distribution and
supply of electricity within the internal market in electri-
city. In this context, the development of cogeneration
contributes to enhancing competition, also with regard
to new market actors.

(4)

(5)

(3)

The Green Paper entitled ‘Towards a European strategy
for the security of energy supply’ points out that the
European Union is extremely dependent on its external

(6)

(1) OJ C 291 E, 26.11.2002, p. 182.
(2) OJ C 95, 23.4.2003, p. 12.
(3) OJ C 244, 10.10.2003, p. 1.
(4) Opinion of the European Parliament of 13 May 2003 (not yet
published in the Official Journal), Council Common Position of 8
September 2003 (not yet published in the Official Journal) and Posi-
tion of the European Parliament of 18 December 2003 (not yet
published in the Official Journal).

(5) OJ L 176, 15.7.2003, p. 37.

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 heighten the risk of interruption to or diffi-
culties in supply. However, security of supply should not
be conceived 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 technol-
ogies 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 2001 on the Green Paper (6), the Euro-
pean Parliament called for incentives to encourage a
shift
production plants,
including combined heat and power.

towards

efficient

energy

The Commission's Communication ‘A Sustainable
Europe for a better world — A European Union Strategy
for Sustainable Development’ presented at the Gothen-
burg European Council on 15 and 16 June 2001 identi-
fied 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 use of cogeneration geared towards
making primary energy savings could constitute 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 meet
further commitments. The
Commission in its Communication on the implementa-
tion of the first phase of the European Climate Change
Programme 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.

In its Resolution of 25 September 2002 on the Commis-
sion communication on the implementation of the first
phase of the European Climate Change Programme (7),
the European Parliament welcomes the idea of submit-
ting a proposal to strengthen Community measures to
promote the use of combined heat and power (CHP) and
calls for prompt adoption of a Directive on the promo-
tion of CHP.

(6) OJ C 140 E, 13.6.2002, p. 543.
(7) OJ C 273 E, 14.11.2003, p. 172.

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(7)

(8)

(9)

The importance of cogeneration was also recognised by
the Council Resolution of 18 December 1997 (1) and by
the European Parliament Resolution of 15 May 1998 (2)
on a Community strategy to promote combined heat
and power.

The Council in its Conclusions of 30 May 2000 and of 5
December 2000 endorsed the Commission's Action Plan
on energy efficiency and identified promotion of cogen-
eration as one of the short-term priority areas. The Euro-
pean Parliament in its Resolution of 14 March 2001 on
the Action Plan on energy efficiency (3) called on the
Commission to submit proposals establishing common
rules for the promotion of cogeneration, where this
makes environmental sense.

pollution

integrated

prevention

Council Directive 96/61/EC of 24 September 1996
concerning
and
control (4), Directive 2001/80/EC of the European Parlia-
ment and of the Council of 23 October 2001 on the
limitation of emissions of certain pollutants into the air
from large combustion plants (5) and Directive 2000/76/
EC of the European Parliament and of the Council of 4
December 2000 on the incineration of waste (6) high-
light the need to evaluate the potential for cogeneration
in new installations.

(10) Directive 2002/91/EC of the European Parliament and of
the Council of 16 December 2002 on the energy perfor-
mance of buildings (7) requires the Member States to
ensure that for new buildings with a total useful floor
area of over 1 000 m2, the technical, environmental and
economic feasibility of alternative systems,
such as
cogeneration of heat and power, is considered and taken
into account before construction starts.

(11) High efficiency cogeneration is in this Directive defined
by the energy savings obtained by combined production
instead of separate production of heat and electricity.
Energy savings of more than 10 % qualify for the term
‘high-efficiency cogeneration’. To maximise the energy
savings and to avoid energy savings being lost,
the
greatest attention must be paid to the functioning condi-
tions of cogeneration units.

(13)

(14)

(15)

(16)

It is important for transparency to adopt a harmonised
basic definition of cogeneration. Where cogeneration
installations are equipped to generate separate electricity
or heat production, such production should not be
specified as cogeneration for issuing a guarantee of
origin and for statistical purposes.

To ensure that support for cogeneration in the context
of this Directive is based on the useful heat demand and
primary energy savings, it is necessary to set up criteria
to determine and assess the energy efficiency of the
cogeneration production identified under the basic defi-
nition.

The general objective of
this Directive should be to
establish a harmonised method for calculation of electri-
city from cogeneration and necessary guidelines for its
implementation, taking into account methodologies such
as those currently under development by European stan-
dardisation organisations. This method should be adjus-
table to take account of technical progress. Application
of the calculations in Annexes II and III to micro-co-
generation units could, in accordance with the principle
of proportionality, be based on values resulting from a
type testing process certified by a competent, indepen-
dent body.

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 in addition the relevant defini-
tions contained in Directive 2003/54/EC and in Direc-
tive 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 (8).

(17) Measuring the useful heat output at the point of produc-
tion of the cogeneration plant underlines the need to
ensure that advantages of the cogenerated useful heat
are not
losses from distribution
networks.

in high heat

lost

(18)

The power to heat ratio is a technical characteristic that
needs to be defined in order to calculate the amount of
electricity from cogeneration.

(12)

the evaluation of primary energy
In the context of
savings, it is important to take into account the situation
of Member States in which the most of electricity
consumption is covered by imports.

(19)

(1) OJ C 4, 8.1.1998, p. 1.
(2) OJ C 167, 1.6.1998, p. 308.
(3) OJ C 343, 5.12.2001, p. 190.
(4) OJ C 257, 10.10.1996, p. 26.
(5) OJ L 309, 27.11.2001, p. 1.
(6) OJ L 332, 28.12.2000, p. 91.
(7) OJ L 1, 4.1.2003, p. 65.

this Directive,

the definition of
For the purpose of
‘cogeneration units’ may also include equipment
in
which only electrical energy or only thermal energy can
be generated, such as auxiliary firing and after burning
units. The output from such equipment should not be
considered as cogeneration for issuing a guarantee of
origin and for statistical purposes.

(8) OJ L 283, 27.10.2001, p. 33.

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(20)

(21)

(22)

(23)

(24)

The definition of ‘small scale cogeneration’ comprises,
inter alia, micro-cogeneration and distributed cogenera-
tion units such as cogeneration units supplying isolated
areas or limited residential, commercial or industrial
demands.

To increase transparency for the consumer's choice
between electricity from cogeneration and electricity
produced on the basis of other techniques, it is necessary
to ensure that, on the basis of harmonised efficiency
reference values, the origin of high-efficiency cogenera-
tion can be guaranteed. Schemes for the guarantee of
origin do not by themselves imply a right to benefit
from national support mechanisms.

It is important that all forms of electricity produced
from high-efficiency cogeneration can be covered by
guarantees of origin. It is important to distinguish guar-
antees of origin clearly from exchangeable certificates.

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 co-
generation in the report, and of measures taken to
ensure the reliability of the guarantee system.

Public support should be consistent with the provisions
of the Community guidelines on State aid for environ-
mental protection (1),
including as regards the non-
cumulation of aid. These guidelines currently allow
certain types of public support if it can be shown that
the support measures are beneficial in terms of protec-
tion of the environment because the conversion effi-
ciency is particularly high, because the measures will
allow energy consumption to be reduced or because the
production process will be less damaging to the environ-
ment. Such support will in some cases be necessary to
further exploit the potential for cogeneration, in particu-
lar to take account of the need to internalise external
costs.

(25)

Public support schemes for promoting cogeneration
should focus mainly on support for cogeneration based
on economically justifiable demand for heat and cooling.

(26) Member States operate different mechanisms of support
for cogeneration at the national level, including invest-
ment aid, tax exemptions or reductions, green certifi-
cates and direct price support schemes. One important
means to achieve the aim of this Directive is to guar-
antee the proper functioning of these mechanisms, until
a harmonised Community framework is put into opera-
in order to maintain investor confidence. The
tion,

(1) OJ C 37, 3.2.2001, p. 3.

Commission intends to monitor the situation and report
on experiences gained with the application of national
support schemes.

(27)

For the transmission and distribution of electricity from
high-efficiency cogeneration, the provisions of Article
7(1), (2) and (5) of Directive 2001/77/EC as well as rele-
vant provisions of Directive 2003/54/EC should apply.
Until the cogeneration producer is an eligible customer
under national legislation within the meaning of Article
21(1) of Directive 2003/54/EC,
tariffs related to the
purchase of additional electricity sometimes needed by
should be set according to
cogeneration producers
objective,
transparent and non-discriminatory criteria.
Especially for small scale and micro-cogeneration units
access to the grid system of electricity produced from
high-efficiency cogeneration may be facilitated subject to
notification to the Commission.

(28)

In general, cogeneration units up to 400 kW falling
within the definitions of Council Directive 92/42/EEC of
21 May 1992 on efficiency requirements for new hot-
water boilers fired with liquid or gaseous fuels (2) are
unlikely to meet the minimum efficiency requirements
therein and should therefore be excluded from that
Directive.

(29)

The specific structure of the cogeneration sector, which
includes many small and medium-sized producers,
should be taken into account, especially when reviewing
the administrative procedures for obtaining permission
to construct cogeneration capacity.

is important

(30) Within the purpose of this Directive to create a frame-
to
work for promoting cogeneration it
emphasise the need for a stabile economical and admin-
istrative environment for investments in new cogenera-
tion installations. Member States should be encouraged
to address this need by designing support schemes with
a duration period of at least four years and by avoiding
frequent
etc.
Member States should furthermore be encouraged to
ensure that public support schemes respect the phase-
out principle.

in administrative procedures

changes

(31)

The overall efficiency and sustainability of cogeneration
is dependent on many factors, such as technology used,
fuel types, load curves, the size of the unit, and also on
the properties of the heat. 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 and other differences influ-
ence efficiencies of the cogeneration, cogeneration could
be divided into classes such as: ‘industrial cogeneration’,
‘heating cogeneration’ and ‘agricultural cogeneration’.

(2) OJ L 167, 22.6.1992, p. 17. Directive as last amended by Directive

93/68/EEC (OJ L 220, 30.8.1993, p. 1).

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(32)

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 promo-
tion of cogeneration in the internal energy market
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.

(33)

The measures necessary for the implementation of this
Directive should be adopted in accordance with Council
Decision 1999/468/EC of 28 June laying down the
procedures for the exercise of
implementing powers
conferred on the Commission (1),

HAVE ADOPTED THIS DIRECTIVE:

Article 1

Purpose

The purpose of this Directive is to increase energy efficiency
and improve security of supply by creating a framework for
promotion and development of high efficiency cogeneration of
heat and power based on useful heat demand and primary
taking into
energy savings in the internal energy market,
account
especially
circumstances
concerning climatic and economic conditions.

national

specific

the

Article 2

Scope

This Directive shall apply to cogeneration as defined in Article
3 and cogeneration technologies listed in Annex I.

Article 3

Definitions

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

(a) ‘cogeneration’ shall mean the simultaneous generation in
thermal energy and electrical and/or

one process of
mechanical energy;

(b) ‘useful heat’ shall mean heat produced in a cogeneration
process to satisfy an economically justifiable demand for
heat or cooling;

(c) ‘economically justifiable demand’ shall mean the demand
that does not exceed the needs for heat or cooling and
which would otherwise be satisfied at market conditions
by energy generation processes other than cogeneration;

(d) ‘electricity from cogeneration’ shall mean electricity gener-
ated in a process linked to the production of useful heat
and calculated in accordance with the methodology laid
down in Annex II;

(1) OJ L 184, 17.7.1999, p. 23.

(e) ‘back-up electricity’ shall mean the electricity supplied
through the electricity grid whenever the cogeneration
process is disrupted, including maintenance periods, or out
of order;

(f) ‘top-up electricity’

shall mean the electricity supplied
through the electricity grid in cases where the electricity
demand is greater than the electrical output of the co-
generation process;

(g) ‘overall efficiency’ shall mean the annual sum of electricity
and mechanical energy production and useful heat output
divided by the fuel
input used for heat produced in a
cogeneration process and gross electricity and mechanical
energy production;

(h) ‘efficiency’ shall mean efficiency calculated on the basis of
‘net calorific values’ of fuels (also referred to as ‘lower
calorific values’);

(i) ‘high efficiency cogeneration’

shall mean cogeneration

meeting the criteria of Annex III;

(j) ‘efficiency reference value for separate production’ shall
mean efficiency of the alternative separate productions of
heat and electricity that
is
intended to substitute;

the cogeneration process

(k) ‘power to heat ratio’ shall mean the ratio between electri-
city from cogeneration and useful heat when operating in
full cogeneration mode using operational data of
the
specific unit;

(l) ‘cogeneration unit’ shall mean a unit that can operate in

cogeneration mode;

(m) ‘micro-cogeneration unit’ shall mean a cogeneration unit

with a maximum capacity below 50 kWe;

(n) ‘small scale cogeneration’ shall mean cogeneration units

with an installed capacity below 1 MWe;

(o) ‘cogeneration production’ shall mean the sum of electricity
and mechanical energy and useful heat from cogeneration.

In addition, the relevant definitions in Directive 2003/54/EC,
and in Directive 2001/77/EC shall apply.

Article 4

Efficiency criteria of cogeneration

1.
For the purpose of determining the efficiency of cogen-
eration in accordance with Annex III, the Commission shall, in
accordance with the procedure referred to in Article 14(2), not
later than 21 February 2006, establish harmonised efficiency
reference values for separate production of electricity and heat.
These harmonised efficiency reference values shall consist of a
including
matrix of values differentiated by relevant factors,
year of construction and types of fuel, and must be based on a
well-documented analysis taking,
into account data
from operational use under realistic conditions, cross-border
exchange of electricity, fuel mix and climate conditions as well
as applied cogeneration technologies in accordance with the
principles in Annex III.

inter alia,

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The Commission shall, in accordance with the procedure
2.
referred to in Article 14(2), review the harmonised efficiency
reference values for separate production of electricity and heat
referred to in paragraph 1, for the first time on 21 February
2011, and every four years thereafter, to take account of tech-
nological developments and changes in the distribution of
energy sources.

3. Member States implementing this Directive before the
establishment by the Commission of harmonised efficiency
reference values for separate production of electricity and heat
referred to in paragraph 1, should, until the date referred to in
paragraph 1, adopt their national efficiency reference values for
separate production of heat and electricity to be used for the
calculation of primary energy savings from cogeneration in
accordance with the methodology set out in Annex III.

Article 5

Guarantee of origin of electricity from high-efficiency
cogeneration

On the basis of

1.
the harmonised efficiency reference
values referred to in Article 4(1), Member States shall, not later
than six months after adoption of these values, ensure that the
origin of electricity produced from high-efficiency cogeneration
can be guaranteed according to objective, transparent and non-
discriminatory criteria laid down by each Member State. They
shall ensure that this guarantee of origin of the electricity
enable producers to demonstrate that the electricity they sell is
produced from high efficiency cogeneration and is issued to
this effect in response to a request from the producer.

2. Member States may designate one or more competent
bodies, independent of generation and distribution activities, to
supervise the issue of the guarantee of origin referred to in
paragraph 1.

3. 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 10(1) the measures taken to ensure
the reliability of the guarantee system.

Schemes for the guarantee of origin do not by themselves

4.
imply a right to benefit from national support mechanisms.

5.

A guarantee of origin shall:

— specify the lower calorific value of 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 high efficiency
cogeneration in accordance with Annex II that the guar-
antee represents,

— specify the primary energy savings calculated in accordance
with Annex III based on harmonised efficiency reference
values established by the Commission as referred to in
Article 4(1).

Member States may include additional information on the guar-
antee of origin.

Such guarantees of origin, issued according to paragraph
6.
1, should be mutually recognised by the Member States, exclu-
sively as proof of the elements referred in paragraph 5. Any
refusal to recognise a guarantee of origin as such proof, in par-
ticular 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 guarantee of origin, the
Commission may compel the refusing party to recognise it,
transparent and non-
particularly with regard to objective,
discriminatory criteria on which such recognition is based.

Article 6

National potentials for high-efficiency cogeneration

1. Member States shall establish an analysis of the national
potential for the application of high-efficiency cogeneration,
including high-efficiency micro-cogeneration.

2.

The analysis shall:

— be based on well-documented scientific data and comply

with the criteria listed in Annex IV,

— identify all potential

for useful heating and cooling
demands, suitable for application of high-efficiency cogen-
eration, as well as the availability of fuels and other energy
resources to be utilised in cogeneration,

In particular,

— include a separate analysis of barriers, which may prevent
the realisation of the national potential for high-efficiency
cogeneration.
this analysis shall consider
barriers relating to the prices and costs 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.

3. Member States shall for the first time not later than 21
February 2007 and thereafter every four years, following a
request by the Commission at least six months before the due
date, evaluate progress towards increasing the share of high-
efficiency cogeneration.

Article 7

Support schemes

1. Member States shall ensure that support for cogeneration
— existing and future units — is based on the useful heat
demand and primary energy savings, in the light of opportu-
nities available for reducing energy demand through other
economically feasible or environmental advantageous measures
like other energy efficiency measures.

2. 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.

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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.

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

The Commission shall in the report referred to in Article
3.
11 present a well-documented analysis on experience gained
with the application and coexistence of the different support
mechanisms referred to in paragraph 2 of this Article. 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.

(a) coordination between the different administrative bodies as
regards deadlines, reception and treatment of applications
for authorisations;

(b) 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

(c) the designation of authorities

to act as mediators in
disputes between authorities responsible for issuing authori-
sations and applicants for authorisations.

Article 8

Electricity grid system and tariff issues

Article 10

Member States' reporting

1.
For the purpose of ensuring the transmission and distri-
bution of electricity produced from high-efficiency cogenera-
(2) and (5) of Directive
tion the provisions of Article 7(1),
2001/77/EC as well as the relevant provisions of Directive
2003/54/EC shall apply.

Until the cogeneration producer is an eligible customer
2.
under national legislation within the meaning of Article 21(1)
of Directive 2003/54/EC, Member States should take the neces-
sary measures to ensure that the tariffs for the purchase of elec-
tricity to back-up or top-up electricity generation are set on the
basis of published tariffs and terms and conditions.

3.
Subject to notification to the Commission, Member States
may particularly facilitate access to the grid system of electricity
produced from high-efficiency cogeneration from small scale
and micro cogeneration units.

Article 9

Administrative procedures

1. Member States or the competent bodies appointed by the
Member States shall evaluate the existing legislative and regula-
tory framework with regard to authorisation procedures or the
other procedures laid down in Article 6 of Directive 2003/54/
EC, which are applicable to high-efficiency cogeneration units.

Such evaluation shall be made with a view to:

(a) encouraging the design of cogeneration units to match
economically justifiable demands for useful heat output and
avoiding production of more heat than useful heat;

(b) reducing the regulatory and non-regulatory barriers to an

increase in cogeneration;

(c) streamlining and expediting procedures at the appropriate

administrative level; and

(d) ensuring that the rules are objective, transparent and non-
discriminatory, and take fully into account the particulari-
ties of the various cogeneration technologies.

1. Member States shall, not later than 21 February 2006,
publish a report with the results of the analysis and evaluations
carried out in accordance with Articles 5(3), 6(1), 9(1) and 9(2).

2. Member States shall not later than 21 February 2007 and
thereafter every four years, following a request by the Commis-
sion at least six months before the due date, publish a report
with the result of the evaluation referred to in Article 6(3).

3. Member States shall submit to the Commission, for the
first time before the end of December 2004 covering data for
the year 2003, and thereafter 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 capaci-
ties and fuels used for cogeneration. Member States may also
submit statistics on primary energy savings achieved by appli-
cation of cogeneration,
in accordance with the methodology
shown in Annex III.

Article 11

Commission reporting

1.
On the basis of the reports submitted pursuant to Article
10, the Commission shall review the application of this Direc-
tive and submit to the European Parliament and to the Council
not later than 21 February 2008 and thereafter every four
years, a progress report on the implementation of this Direc-
tive.

In particular, the report shall:

(a) consider progress towards realising national potentials for

high-efficiency cogeneration referred to in Article 6;

(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;

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(c) examine the experiences gained with the application and
coexistence of different support mechanisms for cogenera-
tion;

cogeneration produced in such a production, for issuing a guar-
antee of origin and for statistical purposes, shall be determined
in accordance with Annex II.

(d) review efficiency 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.

for high-efficiency cogeneration,

2. When evaluating the progress referred to in paragraph
1(a), the Commission shall consider to what extent the national
potentials
referred to in
Article 6, have been or are foreseen to be realised taking into
account Member State measures, conditions, including climate
conditions, and impacts of the internal energy market and
implications of other Community initiatives such as Directive
2003/87/EC of the European Parliament and of the Council of
13 October 2003 establishing a scheme for greenhouse gas
emission allowance
trading within the Community and
amending Council Directive 96/61/EC (1).

If appropriate, the Commission shall submit further proposals
to the European Parliament and Council, notably aiming at the
establishment of an action plan for the development of high
efficiency cogeneration in the Community.

3. When evaluating the scope for further harmonisation of
calculation methods as referred to in Article 4(1), the Commis-
sion shall consider the impact of the coexistence of calculations
as referred to in Article 12, Annex II and Annex III, on the
internal energy market also taking into account the experiences
gained from national support mechanisms.

3.
Until the end of 2010, Member States may, using an
alternative methodology, define a cogeneration as high-effi-
ciency cogeneration without verifying that the cogeneration
production fulfils the criteria in Annex III(a), if it is proved on
national
level that the cogeneration production identified by
such an alternative calculation methodology on average fulfils
the criteria in Annex III(a). If a guarantee of origin is issued for
such production then the efficiency of
the cogeneration
production specified on the guarantee shall not exceed the
threshold values of the criteria in Annex III(a) unless calcula-
tions in accordance with Annex III prove otherwise. However,
specification of the quantity of electricity from cogeneration
produced in such a production,
for issuing a guarantee of
origin and for statistical purposes, shall be determined in
accordance with Annex II.

Article 13

Review

1.
The threshold values used for calculation of electricity
from cogeneration referred to in Annex II(a) shall be adapted to
technical progress in accordance with the procedure referred to
in Article 14(2).

2.
The threshold values used for calculation of efficiency of
cogeneration production and primary energy savings referred
to in Annex III(a) shall be adapted to technical progress in
accordance with the procedure referred to in Article 14(2).

If appropriate, the Commission shall submit further proposals
further
to the European Parliament and Council aiming at
harmonisation of the calculation methods.

3.
The guidelines for determining the power to heat ratio
referred to in Annex II(d) shall be adapted to technical progress
in accordance with the procedure referred to in Article 14(2).

Article 12

Alternative calculations

Article 14

Committee procedure

Until the end of 2010 and subject to prior approval by
1.
the Commission, Member States may use other methods than
the one provided for in Annex II(b) to subtract possible electri-
city production not produced in a cogeneration process from
the reported figures. However, for the purposes referred to in
Article 5(1) and in Article 10(3), the quantity of electricity
from cogeneration shall be determined in accordance with
Annex II.

2. Member States may calculate primary energy savings
from a production of heat and electricity and mechanical
energy according to Annex III(c), without using Annex II to
exclude the non-cogenerated heat and electricity parts of the
same process. Such a production can be regarded as high-effi-
ciency cogeneration provided it fulfils the efficiency criteria in
Annex III(a) and, for cogeneration units with an electrical capa-
city larger than 25 MW, the overall efficiency is above 70 %.
the quantity of electricity from
However, specification of

(1) OJ L 275, 25.10.2003, p. 32.

1.

The Commission shall be assisted by a Committee.

2. Where reference is made to this paragraph, Articles 5 and
7 of Decision 1999/468/EC shall apply, having regard to the
provisions of Article 8 thereof.

The period laid down in Article 5(6) of Decision 1999/468/EC
shall be set at three months.

3.

The Committee shall adopt its rules of procedure.

Article 15

Transposition

Member States shall bring into force the laws, regulations and
administrative provisions necessary to comply with this Direc-
tive not later than 21 February 2006. They shall forthwith
inform the Commission thereof.

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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.

Article 16

Amendment to Directive 92/42/EEC

The following indent shall be added to Article 3(1) of Directive
92/42/EEC:

‘— cogeneration units as defined in Directive 2004/8/EC
of the European Parliament and of the Council of 11
February 2004 on the promotion of cogeneration
based on useful heat demand in the internal energy
market (*).

(*) OJ L 52, 21.2.2004, p. 50.’

Article 17

Entry into force

This Directive shall enter into force on the day of its publica-
tion in the Official Journal of the European Union.

Article 18

Addressees

This Directive is addressed to the Member States.

Done at Strasbourg, 11 February 2004.

For the European Parliament

The President

P. COX

For the Council

The President

M. McDOWELL

ANNEX I

Cogeneration technologies covered by this Directive

(a) Combined cycle gas turbine with heat recovery

(b) Steam backpressure turbine

(c) Steam condensing extraction turbine

(d) Gas turbine with heat recovery

(e) Internal combustion engine

(f) Microturbines

(g) Stirling engines

(h) Fuel cells

(i) Steam engines

(j) Organic Rankine cycles

(k) Any other type of technology or combination thereof falling under the definition laid down in Article 3(a)

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ANNEX II

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 normal conditions of use. For micro-cogeneration units the calculation may be based on
certified values.

(a) Electricity production from cogeneration shall be considered equal to total annual electricity production of the unit

measured at the outlet of the main generators;
(i) in cogeneration units of type (b), (d), (e), (f), (g) and (h) referred to in Annex I, with an annual overall efficiency

set by Member States at a level of at least 75 %, and

(ii) in cogeneration units of type (a) and (c) referred to in Annex I with an annual overall efficiency set by Member

States at a level of at least 80 %.

(b) In cogeneration units with an annual overall efficiency below the value referred to in paragraph (a)(i) (cogeneration
units of type (b), (d), (e), (f), (g), and (h) referred to in Annex I) or with an annual overall efficiency below the value
referred to in paragraph (a)(ii) (cogeneration units of type (a) and (c) referred to in Annex I) cogeneration is calcu-
lated according to the following formula:

E CHP = HCHP. C

where:

E CHP
C

HCHP

is the amount of electricity from cogeneration

is the power to heat ratio

is the amount of useful heat from cogeneration (calculated for this purpose as total heat production minus
any heat produced in separate boilers or by live steam extraction from the steam generator before the
turbine).

The calculation of electricity from cogeneration must be based on the actual power to heat ratio. If the actual power
to heat ratio of a cogeneration unit is not known, the following default values may be used, notably for statistical
purposes, 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:

Type of the unit

Default power to heat ratio, C

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

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) 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 the overall efficiency used in paragraphs (a) and
(b).

(d) Member States may determine the power to heat ratio as the ratio between electricity and useful heat when oper-

ating in cogeneration mode at a lower capacity using operational data of the specific unit.

(e) The Commission shall, in accordance with the procedure referred to in Article 14(2), establish detailed guidelines for

the implementation and application of Annex II, including the determination of the power to heat ratio.

(f) Member States may use other reporting periods than one year for the purpose of the calculations according to para-

graphs (a) and (b).

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ANNEX III

Methodology for determining the efficiency of the cogeneration process

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

(a) High-efficiency cogeneration

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

— cogeneration production from cogeneration units shall provide primary energy savings calculated according to

point (b) of at least 10 % compared with the references for separate production of heat and electricity,

— production from small scale and micro cogeneration units providing primary energy savings may qualify as

high-efficiency cogeneration.

(b) Calculation of primary energy savings

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

Where:

PES
CHP Hη

Ref Hη
CHP Eη

is primary energy savings.

is the heat efficiency of the cogeneration production defined as annual useful heat output divided by the
fuel input used to produce the sum of useful heat output and electricity from cogeneration.

is the efficiency reference value for separate heat production.

is the electrical efficiency of the cogeneration production defined as annual electricity from cogeneration
divided by the fuel input used to produce the sum of useful heat output and electricity from cogenera-
tion. Where a cogeneration unit generates mechanical energy, the annual electricity from cogeneration
may be increased by an additional element representing the amount of electricity which is equivalent to
that of mechanical energy. This additional element will not create a right to issue guarantees of origin in
accordance with Article 5.

Ref Eη

is the efficiency reference value for separate electricity production.

(c) Calculations of energy savings using alternative calculation according to Article 12(2)

If primary energy savings for a process are calculated in accordance with Article 12(2) the primary energy savings
shall be calculated using the formula in paragraph (b) of this Annex replacing:
‘CHP Hη’ with ‘Hη’ and
‘CHP Eη’ with ‘Eη’,

where:
Hη shall mean the heat efficiency of the process, defined as the annual heat output divided by the fuel input used to
produce the sum of heat output and electricity output.
Eη shall mean the electricity efficiency of the process, defined as the annual electricity output divided by the fuel
input used to produce the sum of heat output and electricity output. Where a cogeneration unit generates mechan-
ical energy, the annual electricity from cogeneration may be increased by an additional element representing the
amount of electricity which is equivalent to that of mechanical energy. This additional element will not create a right
to issue guarantees of origin in accordance with Article 5.

(d) Member States may use other reporting periods than one year for the purpose of the calculations according to para-

graphs (b) and (c) of this Annex.

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(e) For micro-cogeneration units the calculation of primary energy savings may be based on certified data.

(f) Efficiency reference values for separate production of heat and electricity

The principles for defining the efficiency reference values for separate production of heat and electricity referred to
in Article 4(1) 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 intended to substitute.

The efficiency reference values shall be calculated according to the following principles:

1. For cogeneration units as defined in Article 3, the comparison with separate electricity production shall be based

on the principle that the same fuel categories are compared.

2. Each cogeneration unit shall be compared with the best available and economically justifiable technology for
separate production of heat and electricity on the market in the year of construction of the cogeneration unit.

3. The efficiency reference values for cogeneration units older than 10 years of age shall be fixed on the reference

values of units of 10 years of age.

4. The efficiency reference values for separate electricity production and heat production shall reflect the climatic

differences between Member States.

ANNEX IV

Criteria for analysis of national potentials for high-efficiency cogeneration

(a) The analysis of national potentials referred to in Article 6 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 cogenera-
tion,

— 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 or, where feasible, mechanical energy that high-efficiency

cogeneration is likely to substitute,

— a division of the potential into modernisation of existing capacity and construction of new capacity.

(b) 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.

(c) The analysis of the national cogeneration potential shall specify the potentials in relation to the timeframes 2010,

2015 and 2020 and include, where feasible, appropriate cost estimates for each of the timeframes.