HOT|COOL NO.3/2021 - "Don't waste it!"

Enabling policies for district heating

For enabling district heating (DH), consumers' trust and acceptance are necessary. Therefore, DH projects should be based on socioeconomic viability and an aim for the societal common good. Price and ownership regulation should address consumer acceptance and protection, companies' access to capital and associated risk, and the need for long-term, strategic energy planning at a local level.

By Søren Djørup, NORCE Norwegian Research Centre

The green transition of energy systems is putting DH on the agenda worldwide. This quickly leads us to the question of DH regulation. This policy question is vital for establishing new DH areas due to the tremendous technical potentials for more efficient and sustainable energy supplies. For example, several studies have documented vast possibilities across the European continent. Consumer trust and acceptance When implementing DH systems, consumers' trust in the project and their acceptance of connecting to the grid as a technical monopoly is necessary. Denmark has a high share of DH and many years of experience with DH regulation. This short piece will describe some over- all regulatory measures that have been in place to create social acceptance of Danish DH systems. For example, the ownership models have played a central role and created synergies with other regulatory measures to create a well-functioning, widespread, and publicly ac- cepted infrastructure. One may wonder if the sector has been so successful that its regulators sometimes forget its regulatory roots.

The Danish DH consumer ownership model often gains inter- national attention as it has worked very well in Denmark. At the same time, private commercial companies have avoided the monopoly price regulation and inflated consumer prices. The consumer ownership model has played a vital role for the price regulation to succeed, thereby helping consumers trust and accept the DH systems in Denmark. However, besides understanding the mechanisms of owner- ship models, it is also essential to know how these ownership models work in an 'ecosystem' of regulatory measures — a sys- tem of measures that, through their synergies, have promoted a socioeconomic and environment-friendly use of energy. A key message for building a well-functioning heating regu- lation that serves the purposes of society is that it should have a legislative basis that explicitly states this purpose. National legislation for the heating sector plays an essential role in creating the foundation for the DH economy. As an overall national frame, part of a national heat supply act is to outline the societal purpose of DH systems. In the Danish Heat Supply Act, the societal purpose is explicitly stated: § 1. The law aims to promote the most socioeconomic, com- prising environment friendly, use of energy for the heating of buildings and supply of hot water and within this framework to decrease the energy supply’s dependence on fossil fuels (The Danish Heat Supply Act) Thus, the primary purpose of DH grids is not business and profit. The primary goal is to fulfill a role as urban infrastruc- ture and, as such, contribute to an efficient energy system for society.

While a sustainable transition of the energy systems is de- pendent on DH, the Danish experiences show that

1. DH is dependent on consumers' trust

2. Consumers' trust is dependent on an efficient price regulation

3. An efficient price regulation has been dependent on ownership

Made with FlippingBook - Online magazine maker