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Project meeting London,10 March 2009 Karin Ericsson, Lund University

Introduction and development of the Swedish district heating systems ‑ Critical factors and lessons learned. Project meeting London,10 March 2009 Karin Ericsson, Lund University. Why is district heating interesting?. Complex fuels unrefined biomass (straw forestry residues, waste wood) MSW

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Project meeting London,10 March 2009 Karin Ericsson, Lund University

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  1. Introduction and development of the Swedish district heating systems‑ Critical factors and lessons learned Project meeting London,10 March 2009 Karin Ericsson, Lund University

  2. Why is district heating interesting? • Complex fuels • unrefined biomass (straw forestry residues, waste wood) • MSW • Deep geothermal heat • Surplus heat • Industrial waste heat • Condensing power plants=>CHP www.res-h-policy.eu

  3. The objectives are… • to describe the introduction and development of the Swedish DH systems and to identify what policies/regulations and non-policy factors that have shaped this development and • to on the basis of these factors provide lessons learned for the European arena www.res-h-policy.eu

  4. Heating of buildings in Sweden 1970-2006 www.res-h-policy.eu

  5. Heating of buildings in 2007 www.res-h-policy.eu

  6. History in brief • 1948 first public DH system in Sweden • After 1960 more rapid development • 247 of 290 the Swedish municipalities • First market: Densely populated city centres, public buildings • More recently: also one- and two-dwelling buildings • Early drivers for building DH systems: • Efficient electricity production via CHP • Economy and fuel flexibility (cheap heavy fuel oil, industrial waste heat) • Environment (emission control) www.res-h-policy.eu

  7. Ownership • Initially municipal administrations • Then transformed into municipally owned companies • Local electricity distribution • The first DH systems involved retrofitted oil condensing power plants (reserve power and peak load) => CHP Fortum Sydkraft/E.on Vattenfall Municipal administrations and municipal companies www.res-h-policy.eu

  8. Energy sources and fuels www.res-h-policy.eu

  9. CHP 2-5% of total electricity supply. • Initially strong argument for DH systems • Barriers: nuclear power and low electricity prices www.res-h-policy.eu

  10. Economics and costs • DH tariffs of 0.4-0.9 SEK/kWh (0.04-0.09 EUR/kWh) • Differences in costs and philosophies on annual returns. • Main cost drivers: fuel (45%) and capital (33%) • Costs vary between DH systems depending on: • Fuels used • Total heat load (economies of scale) • Linear heat density (heat supply/metre of pipe) www.res-h-policy.eu

  11. Linear heat density • Settlement structure • Urban city centres and multidwelling buildings • Penetration rate of DH in the service area • Competing systems may erode the market • Heat demand of customers • Energy conservation is a threat to the economics in a mature DH system. www.res-h-policy.eu

  12. Policies and regulations that have shaped the Swedish DH sector • Specific district heating regulation • Municipal energy planning and land-use planning • Energy and environmental taxation • Investment subsidies • Tradable renewable electricity certificates • Waste management legislation and taxes www.res-h-policy.eu

  13. Specific district heating regulation • 1996 deregulation of energy markets (electricity and district heat). • Before 1996 cost-based pricing in municipal energy companies • After 1996 municipal companies should be operated in a businesslike fashion. • Debated due to monopoly position of the DH supplier in each system. • New district heating law (July 2008) • Monitoring of the DH sector by the Energy Market Inspectorate www.res-h-policy.eu

  14. Energy and environmental taxation • High taxes on oil products (1970s) • Energy tax reform (1991) • Introduction of carbon and sulphur tax and nitrogen charge • Energy and carbon taxes are levied on fuels in heat production; biomass and peat are exempted • Electricity is taxed at consumption level www.res-h-policy.eu

  15. The carbon tax on fuels in heat production www.res-h-policy.eu

  16. Energy and carbon taxes • In individual heating • Increased competitiveness of district heating, wood pellets and heat pumps. • In DH production • Increased competitiveness of biomass, waste and industrial waste heat www.res-h-policy.eu

  17. Non-policy factors that have shaped the Swedish DH sector • Opportunities associated with municipal ownership • Technical standards • The forest industry and biomass supply • Public perception www.res-h-policy.eu

  18. Municipal ownership - opportunities and consequences • The first customer base among public buildings • Schools, hospitals and multi-dwelling buildings owned by municipal housing companies • National housing programme – the building of 1 million dwellings in 1965-75 • Use of fuels and energy sources • Coordination of waste management and DH production • Political preferences www.res-h-policy.eu

  19. Conclusions and lessons learned for the European arena • Heat demand and heat density • The benefits of DH systems • Policies and regulations • Competing systems • Ownership and institutional factors • Public perception www.res-h-policy.eu

  20. The benefits of DH systems: utilisation of surplus heat and RES • CHP • Initially strong motive, then weak development in Sweden • Most compelling argument for building DH systems in other European countries. • Industrial waste heat • Supplies from the forest industry dominate in Sweden. • Also available in refineries, chemical food processing industries and metallurgical industries, and hence in most European countries. • RES • Biomass and MSW in Sweden • Forest resources and forest industry, but also biofuel imports (up to 40% of biomass use in DH systems). • Biomass from the agricultural sector, deep geothermal heat or solar heat could be important in other European countries. www.res-h-policy.eu

  21. Policies and regulations • Energy and environmental taxes on fossil fuels have promoted district heating and greatly influenced the use of fuels and energy sources in DH production. • The possibility of applying such taxes in other countries depends on: • ETS • Acceptance of taxes • Household incomes • The availability of indigenous fossil fuel resources www.res-h-policy.eu

  22. Competing systems • Electricity - main competing system in Sweden and perhaps in other countries • Earlier: electric boilers and direct electric heating • Now: heat pumps • Natural gas • Where there is gas supply to buildings • The lock-in depends on the existence of central heating www.res-h-policy.eu

  23. Ownership and institutional factors • In Sweden the municipalities have played an important role in the introduction and development of DH systems. • What actors or institutions have the interest and organisational resources to do this in other European countries? www.res-h-policy.eu

  24. Public perception • High acceptance for community-wide technical solutions in Sweden. • Good reputation due to reliable supplies and competitive prices • Acceptance and reputation depends on the cultural and political heritage • In e.g. Eastern European countries district heating is often associated with the Soviet era. • Certain lack of confidence has emerged in some places in Sweden after the deregulation and as DH tariffs have increased. www.res-h-policy.eu

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