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Self-sufficient districts are the declared goal of climate policy. But what are the characteristics of climate-neutral districts? What are their benefits and how can they be achieved? What are the challenges and barriers? From a technical point of view, such districts are possible, but there are not only technical challenges.

Introduction and technological basics

Definition of an energy self-sufficient district

To be energy self-sufficient, districts use renewable energy such as solar, wind, and biogas to generate heat and electricity without using any other energy sources from outside the district. This makes them completely energy independent and self-sufficient. The goal is to achieve a positive annual energy footprint, which means producing not only enough energy, but more than the district needs. The idea is to significantly reduce climate-damaging CO₂ emissions.

While cities are responsible for 70 percent of global CO2 emissions and consume over 65 percent of the world's energy, action at the urban level is critical to tackling climate change and can significantly help achieve the EU’s targets of climate neutrality across the entire EU by 2050 and a 55 percent reduction in greenhouse gas emissions by 2030.

Technological basics

Energy self-sufficient districts are technically possible. Renewable energy sources such as photovoltaics, solar thermal energy, geothermal energy, and bioenergy from solid and liquid biomass have long been known and used to generate electricity and heat. Geothermal energy can be used on demand, while photovoltaics and solar thermal energy produce electricity and heat to a greater or lesser extent depending on the location and weather conditions. On a bright, blue summer day, photovoltaic cells often produce far more electricity than is needed, and solar thermal systems heat water to a much higher temperature than on a cold, cloudy winter day, when more light is needed and a hot shower is more important than at the height of summer. The question of how to store energy is therefore central to the success of the energy transition and to the stability of the electricity system and grid.

While batteries are one method of storage, they have limited capacity and are not sufficient. Several companies and research institutions are working to develop innovative storage technologies to enable long-term storage of electricity from renewable sources. One approach is “power to gas,” in which electricity is converted to hydrogen or methane gas. Another is “power to X,” the production of synthetic fuels, electricity and raw materials from electrical energy. Chemical energy storage using reactive metals such as aluminum, silicon, titanium, calcium, magnesium, or sodium also appears to be a possibility. And the German Aerospace Center (DLR) is considering Carnot batteries, which have been around for almost 100 years: a heat pump powered by renewable energy heats a medium (water, salt, rocks) and a steam turbine can convert this energy back into electricity when needed.

Planning, implementation, sector coupling

To make districts energy self-sufficient, the physical infrastructure must be designed accordingly. From new construction to the renovation of existing buildings, there is a need for high-quality buildings with high energy efficiency and appropriate facilities for the use of renewable energy.

Energy-efficient building technology is another requirement, but consumption should also be as energy-efficient as possible. However, turning a large number of energy-efficient buildings into an energy-independent district requires the integration of information and communication technologies (ICT) that intelligently link the various systems so that an integrated, interoperable and energy-efficient overall system is created from a large number of different individual technologies and components. Thereby, different sectors such as electricity, heating and mobility are coupled.

Sector coupling can mitigate the challenges of intermittent solar power. It significantly reduces the need for electricity storage systems, as the intermittent nature of solar power generation no longer needs to be balanced only in the electricity sector, but the heating and transportation sectors, among others, can also provide the necessary flexibility to balance fluctuations. Surplus electricity can be stored as heat, cold, synthetic fuels, etc. without the need for expensive electricity storage systems.

Sector coupling allows renewable energy to be increasingly used in the heating and transportation sectors, which have been almost exclusively powered by fossil fuels. These fossil fuels can be saved if excess electricity is used for heat pumps and electric cars. Coupling the electricity and heating sectors is particularly important for heat pump heating systems, which are considered the most efficient form of cogeneration.

According to Russell McKenna, Head of the Laboratory for Energy Systems Analysis at the Paul Scherrer Institute (PSI) and Professor of Energy Systems Analysis at ETH Zurich, who has been working on the subject of self-sufficiency for a long time, the concept is most likely to be implemented at the level of settlements, districts or small communities. This is because kilowatt-hours of energy can be produced and stored more cheaply on this scale than in a single building. In addition, certain technical solutions, such as thermal networks or extensive heat storage systems, are only possible at a certain size.

And there is another advantage to combining many households: peaks in demand are better distributed. Household electricity consumption tends to be very irregular and difficult to predict. Small energy systems for a small number of households can quickly reach their limits if several households happen to have high demand at the same time. Serving 100 or more households smooths out peaks in demand and makes the demand profile more predictable.

Financing and funding

Making cities climate-neutral and developing energy self-sufficient districts costs money, not only for local governments, but also for private companies and individuals. Both the federal and state governments are promoting the energy-efficient renovation of existing buildings and the development of energy self-sufficient districts. Until last year, KfW provided a subsidy for climate protection and adaptation in districts. However, the federal government has decided not to provide any more funding for the “Energy Efficient Urban Redevelopment” program for 2024 and beyond.

However, KfW continues to support the creation of integrated district concepts for energy-efficient redevelopment, sustainable mobility, and green infrastructure. In addition, KfW is financing the costs of a redevelopment manager to support and coordinate the planning and implementation of the measures envisaged in the concepts.

In addition, there are individual measures such as the promotion of energy-efficient renovation of residential buildings, the promotion of individual measures on the building envelope, systems engineering (except heating), heat generation systems, heating optimization as well as professional planning and construction supervision.

In a 2020 report on energy and environmental research, the Austrian Federal Ministry for Climate Action, the Environment, Energy, Mobility, Innovation and Technology (BMK) conducted a differential cost analysis for a plus-energy district over a 30-year period. According to the report, the additional investment costs compared to a conventional district are between €120 and €230 per square meter of net floor area. The investment required for local energy generation depends heavily on the mix of uses in the district. For different consumption profiles—residential, office, local suppliers—they are lower than for a purely residential area due to the possible use of waste heat. The report also compared financing and maintenance costs with operational savings. The results showed only minor additional or reduced costs, ranging from -2 to 0.6 euros per square meter of net floor area.

Legal framework and practical example

In energy self-sufficient districts, energy is generated locally and by several individual systems, which means that very different stakeholders—citizens, local authorities, industrial and commercial enterprises—must be involved in decision-making. This requires new infrastructure, business and partnership models in order to create an appropriate legal framework.

Legal frameworks for energy communities, such as those required in energy self-sufficient districts, include the EU Renewable Energy Directive (RED II), the Act on the Digitization of the Energy Transition (GND Act), the Renewable Energy Sources Act (EEG 2023), and the Metering Point Operation Act (MsbG). The sheer number of directives and laws that must be complied with shows that forming an energy community is no easy task.

However, there are already a number of examples of climate-friendly district development and plans for further projects. One example is Bahnstadt Heidelberg. Since 2008, a 116-hectare passive housing development has been under construction with some 3,700 apartments, laboratory buildings, shops, kindergartens and schools, a fire station and a cinema. All the electricity and heat is supplied by a wood-fired cogeneration plant operated by Heidelberg's municipal utility.

On the 22-hectare site of the former goods station in Stuttgart-Bad Cannstatt, the new Neckarpark residential and commercial development is being built with 850 residential units, commercial space, parks, squares and streets. Its innovative energy concept uses wastewater as the main source of heat.

An energy self-sufficient district is being built on the conversion site of the former Graf Stauffenberg barracks in Sigmaringen. In the future, 75 percent of the energy consumed in the district will be generated directly on site, primarily from renewable energy sources. At the heart of the intelligent energy supply system is a "virtual power plant" that acts as a control center for energy and heat. It decides which type of energy to use depending on demand, time of day and weather conditions. Intelligent storage technology ensures that the energy supply can be flexibly adapted to the energy requirements for heat, electricity and mobility. Renewable heat is provided by a woodchip boiler, a solar thermal system and a heat pump. Electricity for living, working and charging electric cars is provided by photovoltaics. Two combined heat and power (CHP) units provide reliable and energy-efficient heat and electricity whenever there is no sun or wind.

Today, the Bedburg-Kaster resource conservation settlement, which consists of about 110 residential units in single-family homes, duplexes, and townhouses, serves as a model district for the energy transition. Its own PV system and a directly connected wind turbine supply green electricity, which residents can also use in the evening or when there is no wind thanks to battery storage. The district is also connected to the public power grid. Green heat is provided by the combined generation of energy from wastewater heat recovery, heat pumps, a 10,000-liter buffer storage tank, and a 400-square-meter area of geothermal collectors. All components are intelligently controlled from the district's own energy center. This is where all the energy and communication infrastructure comes together.

In general, new developments are designed to be as energy self-sufficient as possible, as a largely open area makes planning easier. The greater challenge is in redesigning existing districts, where space for new systems, whether for electricity and heat generation, storage or control, is usually limited, and the use of roofs for solar energy also depends on the orientation of the roofs. In many cases, it will not be possible to achieve complete energy self-sufficiency, but at least a significant reduction in energy demand and therefore CO2 emissions (up to 80 percent).

Benefits and future developments

A first step toward energy self-sufficient districts was the introduction of tenant power. This involves PV systems or cogeneration units supplying a multi-tenant building with green electricity produced on site, which is sold by the landlord directly to the tenants. This model has evolved to include not only individual buildings, but also larger groups of buildings. As the number of buildings served increases, the economics of the projects improve and new opportunities arise to use electricity where it is generated—for example, for e-mobility or to generate heat from excess energy.

The advantages of district solutions are obvious. They are less expensive, as economies of scale and synergy effects reduce investment costs. They create secure supply conditions and make their own energy consumption more transparent thanks to smart meter-supported energy visualization.

Increasingly, future developments will have to take existing buildings into account and redesign them accordingly. But there is still a lot of work to be done to convince everyone involved: local authorities, businesses, residents, energy suppliers and the housing industry as well as private homeowners. Particularly when it comes to converting existing buildings, there is likely to be considerable resistance, as the so-called Heating Law (Building Energy Act) has already shown. And it will be necessary to develop appropriate financing models that are affordable for both tenants and private owners.