Germany: Funding for CO₂ supermarkets proves success

The new German incentive programme for commercial refrigeration systems using natural refrigerants is proving to be highly beneficial for both retailers and suppliers. The country is hence taking a different approach than Denmark where the demand for CO₂ (R744) has surged due to a rigid combination of HFC limits and taxation.

Germany has taken a decisive step to directly support the use of natural refrigerants in new and existing supermarket installations. While a study by the Federal Environment Agency had found that natural refrigerant solutions are ready to be tested and used as the best available solution, the German Environment Ministry launched an incentive scheme last September to translate these results in concrete financial help for the retail industry.

New installations with a minimum energy consumption of 100,000 kWh per year or energy costs of at least €10,000 are eligible to receive a 25% funding of the net investment cost if they are using natural refrigerants only. A further 10% of funding is available if the system using natural refrigerant is non-electrically powered (e.g. gas), or for the further use of waste heat from refrigeration systems.

Similarly, existing installations are eligible to receive a 25% of net investment costs if they are using CO₂, ammonia, or non-halogenated hydrocarbons. Here, an independent review has to prove a minimum 35% energy efficiency savings through the use of new refrigerants and components.

The move comes at a time when refrigeration and air conditioning systems still consume 15% of Germany’s electricity, while holding an unexploited energy savings potential of up to 60% – much more than in any other industry sector.

“Massive impact” on German CO₂ supplier

Running for only a few months the incentive scheme already proves to be a success for a wider uptake of CO₂ refrigeration. Although the funding is only provided to retailers and there are hence no direct subsidies for manufacturers of R744 systems, the latter have noted a significant stimulation of their CO₂ business. According to the leading German CO₂ system supplier Carrier the incentive scheme has led to a steep increase in demand for R744 installations. While Carrier delivered only two CO₂ installations per year in the past, by March 2009 the amount had gone up to 17 requested systems only for this year, with further expected. The confidence process has started where after initial doubts retailers embrace CO₂ as an efficient solution without safety compromises. Some observers now expect that after the current test phase retailers will decide for R744 and it will be established as a standard solution within the next 5 years.

Germany has hence taken a different approach from Scandinavian countries where a combination of HFC limits and high import taxes have encouraged the industry to switch to natural refrigerants, such as CO₂. If the financial incentives will bring the expected results is to be seen. The German government has already announced to prolong the subsidy scheme and make it more efficient and the application process easier.

Chemical lobby reacts

End of March, the European Partnership for Energy and the Environment (EPEE) issued a press release to criticise the incentive scheme for its clear support of natural refrigerants. While new installations will only be subsidised when running with CO2, ammonia and non-halogenated hydrocarbons, existing systems using natural refrigerants are subsidised with 25% of the net investment costs as opposed to only 15% for F-gases systems. Its argument that the choice of natural refrigerants will work against the energy efficiency criteria, however, is explicitly excluded in the funding guidelines which state that existing installations may not be less efficient using CO₂, ammonia and hydrocarbons after their retrofit than they were before.