DECARBONISING HEAT SUPPLY KIEL

Promoter – Financial Intermediary

STADTWERKE KIEL AG

Location

• Germany

Description

The project consists of several planned investments in the Kiel district heating system, the main elements are: the installation of a large heat pump (50 MWth), a 1500 MWh heat storage tank; and the expansion and modernisation of the heat distribution network.

Additionality and Impact

The EIB financing will allow the Promoter to construct a heat pump and heat storage facility and refurbish and extend the district heating network. The Project will contribute to improving the share of renewable energy sources (RES) and unavoidable waste heat in Germany's heating sector, which is currently at 25% (2022), and the 2023 updated "National Energy and Climate Plan" expects to reach 50% by 2030.

The financing of this Project will also contribute to Bank's lending priority objectives on energy as well as on climate action. Such investment is crucial to improve security, energy efficiency and flexibility of heat supply and meet existing and future demand for heat and hot water. The Project addresses a number of market failures: Low-carbon power and heat projects reduce carbon externalities, low-carbon technologies contribute also towards increasing security of supply by reducing dependency on imported fossil-based energy. Security of supply can be considered as a public good.

In terms of project results, the Project has a "Very Good" economic return, considering the savings achieved in the generation of heat, both via the new heat pump and the connection of individual users to the DH network. Therefore, the Project generates a broader positive social benefit.

The capacity, its work practices and the organisational structure of the Promoter are considered appropriate for the proposed Project.

The Bank's contribution to the Project is supported by a combination of advantages such as the provided long tenor profile, flexible drawdown terms as well as crowding in other financiers, thereby facilitating the operation`s financing and its timely implementation.

Objectives

The programme's objectives are to maintain and expand the district heating systems and to substitute fossil-fuel based central heating with a more sustainable and efficient renewable generation (heat pump), resulting in a reduction of greenhouse gases emissions and lower air pollution.

Sector(s)

• Energy - Electricity, gas, steam and air conditioning supply

Proposed EIB finance (Approximate amount)

EUR 125 million

Total cost (Approximate amount)

EUR 259 million

Environmental aspects

The project is at early stages of development and certain features of the design to be developed in the future may trigger environmental impact assessment (EIA) processes for some investments once more information is available. The environmental aspects of the programme will be appropriately assessed as part of the EIB's appraisal process.

Procurement

The promoter is a majority publicly-owned undertaking. The Bank will require the Promoter to ensure that contracts for the implementation of the project have been and will be tendered in accordance with the relevant applicable EU procurement legislation (Directives 2014/25/EU, and/or 2014/23/EU where applicable, as well as the Directive 92/13/EEC and/or Directive 89/665/EEC), as interpreted by the Court of Justice of the EU, with publication of tender notices in the EU Official Journal, as and where required.

Status

Signed - 20/12/2024