The purpose of the Assignment is to assist the EIB PAS Team in their support to MA LIOP and the Beneficiaries of European Funded Projects in the District Heating Sector (Local Authorities and Operators of District Heating Systems) for the selected 4 Municipalities of Timisoara, Ramnicu Valcea, Botosani and Iasi. The objective of these project is to improve the energy efficiency of the cities’ district heating systems as well as the reliability and quality of heat supply to customers by rehabilitating particularly degraded parts of the heat transmission and distribution networks.
The main objective of the Business Strategy is to identify and describe measures that would contribute towards the DH systems in 4 out of the 7 municipalities (namely Timisoara, Ramnicu Valcea, Botosani and Iasi) becoming fully sustainable within a reference period of 20 years. The DH systems can be considered to be sustainable when:
The compliance with LIOP requirements (management system, planned and additional measures) is verified. This can be analysed either when the application is submitted for approval or at the end of the project implementation;
There are no serious legal issues that could pose a risk for the continuity of the DH services (i.e. lack of a legally compliant concession contract or operating permits for all vital DH infrastructure and services, ongoing insolvency or bankruptcy of the DH operator, factual infringement of other legal provisions foreseen in Romanian Law, etc.).
In the short term (to be fulfilled within years 1- 5 of the reference period):
an acceptable quality of heat and hot water supply to consumers is guaranteed in the whole service area (in terms of continuity and availability at adequate pressure/temperature conditions) thus eliminating one of the main reasons for disconnections of consumers; the unit cost of heat remains competitive while covering at least the operating expenses of the DH operator net of revenues from electricity sales and bonuses;
In the long term (to be fulfilled throughout and until the end of the reference period):
the unit cost of heat remains competitive while covering the operating expenses of the DH operator and also an important part of the asset depreciation cost, including at least the short-lived equipment and the major technological plant assets (in case of assets owned by the Municipality, as part of the concession fee), thus allowing to create provisions for financing the progressive replacement of such assets at the end of their useful economic life without the need of public subsidies;
The DH heating system is aligned with the Paris agreement obligations and the Company operator and the Municipal team ensure that objectives in terms of emissions reduction are met.
An existing district heating (DH) system can be considered as aligned with the Paris agreement if the DH system meets the definition of efficient DH in the EU Energy Efficiency Directive (using at least 50% renewable energy or 50% waste heat or 75% cogenerated heat or 50% of a combination of such energy and heat); or there is a viable decarbonisation plan for the DH system that can meet the definition of efficiency and rehabilitation project does not increase GHG emissions from the system on an annual basis. The DH system is deemed to be unsustainable if any of the criteria mentioned above cannot be fulfilled.
For this assignment, the services we provided we including review and update of data – using a Questionnaire sent to the 4 cities at the beginning of the contract, analysis and propose to improve the business strategy and operational performance of the DH operator, SWOT analysis and revised Business Strategy for DH services, long term Investment and Development Plan with Priority Investment and Development Plan, financial sustainability analysis and model, endorsement of the Business Strategy and LTIDP by the Municipalities, review and update of data, and analysis of the business strategy and operational performance of the DH service/operator.
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