Between Engie and Veolia, the race for the heating of the future – L’Express

It’s the desire of every second: to dethrone number 1. Both in markets with high visibility and in the most unknown. The small world of heating networks, these heating distribution systems produced centrally and allowing many users to be served, falls into the second category. If they circulate under our feet in almost general indifference, they nonetheless whet the appetite of the few multinationals who share this high-potential segment. Cocorico, in Europe, two French giants dominate the sector: Engie and Veolia, in order of importance. For a long time ? The second hopes to steal his place from the first and clearly shows the color. “We have the ambition to become the leader in this market in 2030, and we have the means,” insisted Estelle Brachlianoff, the general director of Veolia, during the presentation of its strategic plan dedicated to energy in early January at London.

The group already operates more than 500 heating and cooling networks around the world, thanks to which it achieved 5.9 billion euros in turnover in 2022, out of a total of 42.9 billion. “We are already good, we want to be better,” assures the boss. For her, “decarbonizing local energy”, heating networks included, remains largely unexploited on the continent. It estimates this deposit at more than 400 gigawatts, the equivalent of Italy’s energy demand, or a market worth 500 billion euros by the end of the decade. And 150 billion for district heating networks alone. Growing strongly, this vein is also proving to be an important lever for energy transition and independence, but it remains unevenly developed: it is struggling to emerge in the countries of southern Europe, while it is extremely widespread in Northern Europe, as well as Central and Eastern Europe. Veolia is also well established in this area thanks to the privatization of numerous networks, against a backdrop of modernization and a movement away from coal, which the group wishes to get rid of by 2030.

Since taking back control of Dalkia’s international activities and leaving the French part of it to EDF, the water and waste management giant has less influence in France. But he still keeps an eye on this market, dominated by Engie and considered “rapidly developing” by Euroheat & Power, the European lobby of the sector. France has, in fact, shown renewed interest in these heating solutions since the energy crisis triggered by the Russian invasion of Ukraine and gas price volatility. “It is extremely marked, confirms Yann Rolland, deputy general manager of Engie Solutions France. Between the start of the crisis and today, we have doubled the number of projects. And the requests for connection to existing networks have been multiplied by 4, even 5!” The latest data from Fedenethe professional union of which he chairs the heat & cold networks department, will certainly be revised upwards during the next annual survey: in 2021, France had around 900 heat networks and some 6,500 kilometers of piping which produce and transport heat in the form of hot water or water vapor.

Systems being greened

As heating represents almost half of the energy demand in buildings, the government is well aware of the prospects offered by these systems in the race towards carbon neutrality. It set, in the energy transition law for green growth (LTECV), a very ambitious objective for heat networks: to deliver 39.5 terawatt hours of heat produced from renewable and recovery energies by 2030 For Fedene, this horizon means, in addition to a massive investment by the executive, the creation or extension of around 1,600 networks. Tenable? “If we continue at the same growth rate, we will not be able to achieve the objectives set on time. We cannot yet close the gap between projections and reality,” estimates Johanna Ayrault, postdoctoral researcher at Mines. Paris – PSL and at the University of Vienna (Austria).

French heating networks are, in the opinion of many experts, still under-exploited. But their greening is progressing quickly. Biomass, geothermal energy and all other renewable energies are taking more and more space from gas. The giants Engie and Veolia are now designing so-called fifth generation networks, which combine various energy sources, favoring local and green resources. Winner last year of a thalassothermal project on the Croisette in Cannes, Engie will create a heating and cooling network there using energy from the sea, supplemented by heat energy recovered in a collector. neighboring wastewater. Veolia, for its part, has developed a network on the Paris-Saclay plateau which combines deep geothermal energy and recovery of “fatal heat” from the CNRS Jean-Zay supercomputer. “We are transforming each building into an energy producer, and no longer just a consumer,” says Jean-François Nogrette, director of Veolia’s France zone and special waste Europe.

“The easiest and most profitable ones have been installed”

This is the particularity of modern heating networks: operators adapt them to the characteristics of the territories and thus form an integrated system. North of the English capital, Veolia is experimenting with one of these devices destined to multiply. Under typically London brick arches, a fleet of electric garbage trucks, returning from a tour in the chic Westminster district, recharges using electricity produced by the neighboring waste incineration unit, which also supplies a heating network connected to 2,500 homes. During peaks in demand, these trucks will soon be able to re-inject the energy stored in their batteries to contribute to the stability of the network and allow residents to turn on their heating when returning from work. They will then recharge during off-peak hours.

This cutting-edge example – a world first, argues the group – illustrates innovations in this area on the continent. However, they do not hide the difficulties in establishing new networks, particularly in France. “The easiest and most profitable ones have been installed. Thinking about those which present a less obvious return on investment, or with more risks, is not easy,” admits Odile Le Frère, head of the “energies, territories and buildings” to Cerema, the public organization which supports the transition of local authorities. For a long time, those with sufficient urban density to branch off towards this underground heat system struggled with the amount of investments to be made, given the low price of fossil fuels. But that of heating networks fluctuates much less. Since the energy crisis and the yo-yo of certain prices, the equation has changed in people’s minds. “The argument of predictability convinces them more,” remarks Odile Lephrore. Cerema is also trying to “find a financial mechanism to extract heat networks from the volatility of the price of fossil fuels”, without having, for the moment, found the solution.

The sector faces another question, also without a miracle answer. How can we persuade millions of individuals to join heating networks? “Today we connect collective complexes, whatever the use: offices, public buildings, social housing, large condominiums. For individual houses, it is more complicated… This implies a significant investment by owners in an exchanger , so that the heat goes from the network to the interior of the home”, recognizes Yann Rolland. Optimistic, the director of Engie Solutions France, however, only sees this as a temporary problem: “I am betting that in five years we will have the technical solution to connect everyone to a heat network, at the best possible economic conditions .”