If the expectations from project proposals were met, the final decision was made. In this phase, all normal actions for establishing a company were carried out, including con- tracts with suppliers, authority approvals, land purchases, etc. Financing the development and construction of the dis- trict heating solution is essential for establishing the district heating network. In Denmark, it is possible to apply for a guarantee for a loan from the local government to get the district heating network company established. This guaran- tee makes it possible to get a low-interest rate loan from national or private banks. The loan pays all investment costs, including development costs, until consumer payments take over and operational costs are paid. When loans are secured, the first employee can be hired, who will often be the future plant manager. Afterward, the chairman and the plant manager will be responsible for hiring staff and mak- ing contracts with suppliers, though advisors typically help with contracts and agreements. Community ownership gives the consumer the possibility to make their own decisions, get involved, and elect their board among neighbours in a democratic process which offers an additional benefit to the local community and local confidence that can affect other local activities. When the district heating network company was established, and delivery began, new consumers/shareholders were required to pay for a share if they wanted to connect to the network. The share is only paid once and is transferred free to a new building owner if the first shareholder moves away. This way of establishing district heating networks was generally a success. Still, some companies struggled in the first 10 to 15 years because they were forced to use expensive natural gas due to decreasing subsidies and a high energy tax. An additional issue was the falling electricity price, which made natural gas- based CHP networks unable to keep heat prices low. After the government removed the requirements regarding using natural gas, most companies managed to decrease the heating price and get more consumers connected. However, it still can be an issue if the population decreases and buildings are left empty or torn down. If heat loss increases due to decreasing supply to consumers, it can be challenging to maintain a good economy in the company. Then it becomes essential to find very low-cost heat sources, such as solar collectors or own integrated wind turbine combined with a heat-pump-based source like air, water, or waste heat.
companies. If decided, the loans were included in the total investment for establishing the district heating network company afterward. If it had not been agreed upon to establish the district heating company, the loans would not have been paid back and lost. The companies giving the loans this way took the risk. The companies were promised to be included in the tendering process in competition with other suppliers. The companies offering the loans then could not be sure to win the project, but if the project was realised, they got their loan paid back by including the loan in the investment for establishing the district heating network. It is essential to highlight that these agreements are “Gentlemen’s agreements” since the working group had no legality. Local natural gas companies often gave the most significant loans, which were not required to be paid back because the gas company had a monopoly on selling gas when the network was established. Often, loans from natural gas companies could finance investigations, and other loans were not necessary. The advisor and the working group made the project proposal. Their cooperation ensured that the members of the working group received education and skills regarding the details of the project. It was common in projects to investigate different solutions, including different fuels and technologies for heat supply, etc. The project report and information were then shared with all community citizens. Public meetings were arranged to discuss project details, economic consequences, and connection requirements. The projects typically showed that between 60% and 70% of all consumers needed to connect from the start to be viable, which depends on local conditions.
Consumer agreements were made, but these were, at this point, not legally binding.
A founding meeting for the legal district heating company was arranged if the number of agreements was near or above the required 60% to 70%. The consumers participating in the meeting elected a board for the company, which took over the project. The community-owned company was established, where shareholders were liable for their share of capital, which typically was very low and between 10 and 1000 € paid per share (dwelling) After establishing the company, binding consumer agree- ments were made, tenders were published, and the final decision to establish the district heating network was pre- pared based on the bids received from the tendering.
For further information please contact: John Tang Jensen, jtjensen10@gmail.com
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