Good practice:

Zagreb district heating system renewal – policy and financing perspective

Project assumes renovation of a significant share of the district heating distribution network, characterized by significant water and energy losses. In 2017 total heated surface was 5,6 million sqm and delivered energy was 1,3 TWh. Energy loses were close to 15% and water loses close to 40%. Project assumes revitalization of 68 km of the network by the mid of 2023. Project brings added value to achievement of national and EU targets related to energy efficiency and GHG reduction as it foresees total energy savings of 0,201798PJ and significant decrease of the water losses. Croatia opted to use the so called Integrated territorial investments scheme, pursuant to article 7 of the ERDF regulation which enables the member states to use this mechanism dedicated to urban development. One of the specific objectives City of Zagreb, as a centre of the Urban agglomeration and intermediary body, opted to use was the increase of the efficiency of the district heating system. It was a multi layer exercise that involved national level ministries, City of Zagreb (multiple departments) and final beneficiary, district heating company HEP Toplinarstvo, ltd. Project is now in the execution phase with two main elements, construction works and raising of awareness on the potential that district heating systems have in the decarbonization process.

The practice required significant efforts on multiple levels of governance as it is run through the scheme that represents novelty in usage of structural funds in Croatia (also Europe). Project total value is 93m€ and ERDF co-finance is 56,2 m€.

Project will deliver a revitalization of 68 km of district heating distribution network. Water and energy losses will significantly decrease, energy losses decreased by 0,21PJ.
DG Competition approved the state aid (based on FS and CBA).
All licenses have been issued.
Grant agreement has been signed.

There were numerous challenges in the preparation and execution of the project. Biggest challenge was related to the set up and usage of the Integrated territorial scheme in Croatia (as this project was the single biggest in the portfolio). Stakeholders coordination posed a challenge as well.

Learning potential is strong, first in relation to financing this type of project from ESI funds. Significant efforts were put in the project development from its roots in strategic planning phase when project was introduced on the list of major projects in Operational programme to its formal approval by the EU and national competent authorities (DG Competition and relevant ministries). Project is a good example of cooperation between local, regional, national and EU authorities with private sector and citizens on the path to deliver energy and climate related goals.