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

(A) National Framework for socioeconomic viability

(B) PRICE REGULATION & (C) OWNERSHIP

(D) LOCAL GOVERNANCE & PLANNING

CONSUMER

COMPANY

(E) STATE MECHANISM FOR LONG-TERM FINANCING

Figure 3. A model for national regulation of DH. A) A national framework for socioeconomic viability rooted in the very aim of legislation as well as basis for zoning policies. B) Regulation of prices due to natural monopoly and C) ownership models that supports price regulation and general willingness to collaborate with society. These company structures then D) create the basis for collaboration in local energy planning. The rooting of DH in societal purposes and its public acceptance then creates political legitimacy of E) state mechamisms for stable, long-term financing of hugh up-front capital costs.

Summing up

A consumer obligation to connect to DH grids in specified urban areas combined with a firm price regulation has provided the best conditions for implementing DH systems in Denmark.

A regular market with ‘free choice’ for connection and no price regulation is not likely to succeed to a great extent since it does not consider the risk and worries among consum ers and investors. Investors are not expected to invest if there is no reasonable cer tainty of demand. Consumers are not likely to create demand if there is no guarantee of controlled prices. The ownership structures are highly influential. The Danish ownership models have aligned interests between society, company, and consumers and strengthened the willingness to collaborate for strategic energy planning while keeping consumer prices low.

The state – and its regulation – has a central role in establishing a framework removing uncertainty among producers and consumers. In DH, state regulation does not hinder the market – its function is to create it.

For further information please contact: Søren Djørup, sodj@norceresearch.no

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