Stable heating price with district heating as electricity and gas prices rally

Date: 08/02/2022

The last few months have seen sharply rising energy prices in Denmark and the rest of Europe, especially for electricity and gas, and some consumers are facing a significant extra bill. But what happens to the district heating price from the transmission company of the central municipalities in Copenhagen (CTR) when electricity and gas prices rise?

CTR lowered its heating price slightly from 2021 to 2022. They did so for various reasons. The cost of biomass has fallen, and in 2022, they will pay an excess coverage (incurred 2021) back to their customers. Finally, they do not expect sizeable, extraordinary price increases due to the current situation in the energy market.

Thus, CTR can maintain a more stable price for district heating because their heat comes from several different energy sources. The free choice of source makes the heating price more robust because the various energy sources do not necessarily follow the same development in price.

Natural gas is one of the fuels CTR uses, but consumption is declining and has only covered 5-10% of the heat in the last few years. Most of the heat comes from biomass, wherein in 2021, they have seen stable or falling prices.

CTR also gets a lot of the heat from waste energy plants, where they, as heat buyers, actually get a share in the extra earnings that the producer has had due to the high electricity prices. They also do this at some of the combined heat and power plants. On some cogeneration, they pay compensation if the plant has to run for the sake of heat at low electricity prices, but they save that compensation when the electricity price is high.

All in all, this means that even though CTR has paid more for natural gas and electricity for pumps, it only charges a small part of our heating price, while other elements of the heating price are stable or falling.

This complexity shows that district heating is not tied up in a single energy source alone, e.g., electricity - good for the heating bill, security of supply, and flexibility in the energy system.