Interview with Sebastian Rühl, Energieservice Plus "Lip service from district heating suppliers is not enough for us"

Düsseldorf (energate) - The housing company LEG sees itself as a portfolio manager for affordable living with rents below 6 euros per square meter. In an interview, energate spoke to Sebastian Rühl, Managing Director of the responsible subsidiary Energieservice Plus, about whether and how the goal of climate-neutral living can be achieved in the long term.

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Sebastian Rühl: In view of the current regulation and the inconsistent processes of the grid operators, solar tenant electricity is actually a major challenge for us. Getting existing tenants enthusiastic about the topic is not so easy, because the price of self-generated PV electricity cannot compete with the top three places on price comparison portals. A realistic price is currently a little below the basic service, which we at least have to compete with.

energate: Does that mean that green tenant electricity is only for new builds?

Rühl: No, with a view to our goal of climate-neutral living by 2050, we too have to deal with green tenant electricity and, above all, the development of roof area potential for PV. However, our pilot projects in Cologne and Münster only run with subsidies from the respective municipalities. In Münster, for example, we are working together with the local municipal utility to supply a car-free settlement with around 200 residential units. Here we deliberately postponed the commissioning until 2021 in order to wait for the improved rental electricity subsidy thanks to the EEG amendment and also to be able to use municipal subsidies.

energate: Combined heat and power plants for the simultaneous in-house production of electricity and heat are out of the question?

Rühl: In 2010 this would certainly still have been an innovative approach. Installing a CHP plant in 2021 and turning it into a rental electricity product is not the last word in my opinion. We therefore essentially see CHP only as a bridging technology for the next ten or twelve years, which is only suitable for certain locations where there are no better alternatives without fossil fuels. In my opinion, the road to decarbonization will tend to result in a technology mix of green local and district heating and the electrification of the heat supply via heat pumps.

energate: How large is the share of district heating at the moment and are there already talks with suppliers to increase this?

Rühl: Our current mix is ​​about 60 percent gas supply with central heating and 20 to 25 percent district heating. The rest is divided into a small proportion of oil-supplied central heating systems, decentralized gas boilers and night storage heaters, for which the tenants themselves conclude contracts with the energy suppliers. Our goal is to replace larger parts of the central gas supply, but also the decentralized thermal baths, with green district heating. We are already in talks with the local district heating suppliers in many places, including Steag in Essen and DEW21 in Dortmund. The latter wants to convert its network from steam to water with lower temperatures and, for example, couple in waste heat. This can be an interesting approach for us to make LEG's holdings climate-neutral in the future via green district heating.

energate: From what percentage of green heat does a new district heating connection become attractive for LEG?

Rühl: It is difficult to draw a clear line because CO₂ figures for district heating always only reflect the actual situation and the green share also varies greatly over the course of the year. At the very least, we must be able to see a wide gap to the alternative gas supply and be able to count on well below 80 grams of CO₂ per kWh in the medium term. District heating, which is decoupled from a coal-fired power plant, may currently be cheap, but will, like gas boilers, become obsolete in the longer term. Lip service from the district heating suppliers is therefore not enough for us - we need and hope for a clear commitment and concrete plans for the transformation. If both are given, we are happy to work with district heating suppliers and do our part - upgrading existing house connections and the secondary system, but also building cost subsidies for new connections.

energate: How do you feel about decentralized, green-fed neighborhoods?

Rühl: That's an option, but of course we can't get involved in the green neighborhood development in all areas. If an efficient heat supply is available, there is no point in decoupling from it. However, where district heating networks are not available spatially or where they will remain gray for the foreseeable future, we work on alternatives - of course also in partnership with the energy supply companies.

energate: How do you see the chances for heat pumps in existing buildings?

Rühl: In the new subsidy programs, high amounts are available for the use of heat pumps. We'll look at that. However, the current price level for the hardware and today's electricity price do not necessarily speak for the large-scale installation of heat pumps, especially since the annual performance figures (COP) cannot be achieved in the existing building as under laboratory conditions in the energy-optimized new building. In the medium term, however, when the energetic modernization of existing buildings has progressed further, electricity prices are falling and the necessary price developments for heat pumps have also set in, we clearly expect technology to play a central role in climate-neutral living in existing buildings.

energate: How does the CO₂ price introduced this year affect your business?

Rühl: The CO₂ pricing helps us with the calculations on the efficiency side and definitely sets the tone for the use of regenerative energies in the heat supply. So far, there has only been a monetary advantage for renovations through the saving in fuel, today the saved certificates are added to this. However, it remains to be seen whether the steering effect that is currently being hoped for will materialize at currently 25 euros per tonne of CO₂. For our customers and LEG as a provider in the affordable residential segment with low average rents, it is definitely important that society, tenants and landlords share the costs for the overall social goal of climate protection fairly. This is the only way we can come to a solution that is viable for all parties.

energate: How do you feel about Dena's proposal to split the CO₂ costs according to the energy certificate, for example 70/30 or 50/50 depending on how much the landlord already invested in efficiency?

Rühl: Unfortunately, if we replace the heating system and insulate buildings, there will not automatically be significantly more energy efficiency without appropriate user behavior. This shows that both sides are important and that cost sharing as an incentive is the right way to go. However, when differentiating between building efficiency classes, it will hardly be practicable to use the often imprecise consumption energy certificates. They are based on the consumption of the last three years and only have to be renewed every ten years. However, we want to continuously develop our portfolio - and it would be too cumbersome to recalculate the efficiency classes every year. Even more problematic are the proposed reimbursement claims for decentralized gas boilers or contracting models in which the contractor settles accounts directly with the tenant. In the case of the decentralized gas boilers alone, we are talking about around 22,000 residential units in our portfolio, for which the tenants would have to submit their gas bills to us spread over the year and, depending on the efficiency class of the building, part of the CO₂ costs would get back. This is not feasible in practice and overwhelms tenants and landlords alike.

energate: What is your counter-proposal?

Rühl: One alternative, for example, would be to organize gas purchases via the landlord and apportion the costs via the utility bill, similar to what we are already doing today with gas central heating or the maintenance of gas boilers. This approach would also have the advantage that, by bundling, we could probably also achieve a significant improvement in terms for tenants, who all too often still have expensive basic services. At the same time, of course, the approach also offers advantages for utilities, in which the small-scale B2C business, in which the payment defaults of individual customers often have to be priced into the tariffs and result in enormous process costs, is raised to the B2B level and centralized. Incidentally, the approach would also be conceivable for electricity at apartment level, which would lead to significantly greater planning security, especially when it comes to tenant electricity.

energate: Is there really a noticeable CO₂ price effect, in the Corona period the gas price had fallen sharply in the meantime?

Rühl: The price shocks caused by Corona teach us: In the end, there is always an overall cost calculation and the fall in prices naturally compensates to a certain extent for the supposed increase in costs due to CO₂ pricing. We are also concerned with the great uncertainty in calculation models as to where the costs will be after 2026, as soon as national emissions trading actually starts and the price is no longer specified by law. Will it then be in the direction of 100 euros and more like in some European countries or will it happen like in the ETS with the low CO₂ prices that have been observed for years?

The questions were asked by Michaela Tix, energate editorial team, Essen.