Page 54 - European Energy Innovation - Winter 2015 publication
P. 54
Winter 2015 European Energy Innovation


District heating and cooling enable
transition to low carbon cities
By Antti Kohopää

POPULAR SOLUTION IN FINLAND Existing or new customers do not need to invest in
In Finland, 46% of commercial, public and residential buildings renewables because DHC-companies do it for them..
are heated by district heating and over 50% of new buildings Therefore there is no need to support or compel DHC
choose district heating. Customers choose district heating, customer to invest in on-site production of renewable energy.
because it is competitive and future proof solution. Finnish
district heating and cooling (DHC) are service products. By DISTRICT HEATING AND COOLING ARE UNDER
choosing district heating and cooling, customers outsource COMPETITION
heating and cooling production to an energy company. In future, District heating and cooling providers are in competition
DHC will be even more than producing and transmitting heating which means that customers have the option of choosing
and cooling to buildings. Energy companies together with their their supplier. For example in Sweden and Finland, main
partners will take care of customers’ energy use. A bigger share competitors are individual heat pump suppliers, while
of income of district heating companies will come from services in many central European countries individual gas
for customers and improving the living conditions of customers. boilersuppliers are competitors. District cooling companies
compete with heat pump and chiller suppliers. Therefore it is
Finnish district heating and cooling is developed on a crucial that policy does not distort the competition.
commercial basis and funded by customers through energy
bills. Customers should not be obligated to connect district The EU emission trading systemis a good example of such
heating or cooling nor should companies be obligated to distortion, where district heating is covered while gas and
connect customers. Service market is under development oil usage in individual boilers are not.. In addition, some EU
at the moment. Between 2009-2013, annual average growth countries have many policies like taxes, building regulations,
(CAGR) of district heating related service market has been regulated energy prices and support mechanisms which weaken
the competitiveness of DHC towards alternative solutions.
DSSUR[LPDWHO\DQGSURƓWDELOLW\RYHU Hopefully, these will be analyzed and removed in the future
– then there will be an opportunity for more customers and
In Finland, the growth of DHC business or service business is not
regulated. DHC, related services and smart appliances will be in FRXQWULHVWRHQMR\WKHEHQHƓWVRIGLVWULFWKHDWLQJDQGFRROLQJ
place when market actors – customers and providers – are ready.
Despite the fact that Finland is the coldest country of the Renovation of building stock creates huge possibilities for
EU, it has one of the most rapidly increasing district cooling district heating and cooling. A comprehensive renovation of
sectors in Finland. District cooling is developed for customer building stock is the best chance to sell district heating and
demand by eight district heating companies located in cooling for customers and cities. Even elaborate and cost
different parts of Finland.
Demand is driven by customers’ expectations for better indoor Renovation of buildings is good for district heating and cooling.
quality, better insulation and bigger windows for new buildings,
as well as higher internal heat loads like electrical appliances In Finland, where the market share of district heating is high
during the year. In Finland, district cooling is produced mainly
by using heat pumps and by free cooling from cold sea water. DQGEXLOGLQJVWRFNLVUHODWLYHO\QHZWKHVSHFLƓFFRQVXPSWLRQRI
Absorption heat pumps and chillers are used as well. district heated buildings decrease by 1% per year. In countries
where buildings are older and the market share of district
heating and cooling is lower, the potential might be different.

Finnish district heating is on its way to a carbon neutral future. Combined heat and power production is a key technology in
During the past four years the share of renewables in district heat achieving climate and energy targets. In future, CHP will need
production has increased from 18% to 35%. Finnish Energy both, a competitive heat market, as well as a competitive
has estimated that, by 2030, the share can be above 50%. electricity market.

Furthermore, over 70% of all district heat is produced in The shift from existing regulated and distorted market to a
combined heat and power plants. Combined heat and power competitive market starts by removal operating subsidies for
plants reduce one third of CO2-emmissions compared with renewable and fossil energy sources. Second step would be
the situation where the same amount of heat and electricity liberalizing the heating, cooling and electricity market rather
would be produced separately. than try to facilitate the market with regulation. O
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