In the last months, we have seen rising energy prices all over Europe. The reasons behind this are plenty and diverse, but the result is that more and more citizens in Europe experience energy poverty. At the same time, the energy sector is facing the largest challenge ever; to reach net-zero greenhouse gas emissions in Europe by 2050 and to make European economies sustainable.
By Kamma Eilschou Holm
This transformation does not only call for massive innovation; it also requires substantial long-term investments in new plants, infrastructure, etc. Given this, one could fear that the support for the European goal, both political and from the citizens, will fall apart because of the recently rising energy prices.
In June 2021, the European Commission’s Group of Chief Scientific Advisors published a statement in response to the significant increase in energy prices in Europe. In their statement, the Advisors point out that accelerating the transition towards a low-carbon energy system is a solution that can lower energy prices in the long term.
Accelerating the transition towards a low-carbon energy system would also stabilize energy prices in the long term and reduce Europe’s dependence on fossil fuel imports and further make the system more resilient to external threats. The Advisors stress also the need to achieve a fair and effective clean energy transition to mitigate the climate crisis while protecting those who are in danger of suffering from energy poverty.
To achieve all this, Europe must put people at the center of energy policy and rally the whole of society behind this common goal. Reacting to high energy prices plays a pivotal role. It should involve immediate support for households at risk of energy poverty, along with investments to increase the share of low-carbon energy production in the long term.
The statement is, in my opinion, spot on. To succeed in making the green transformation, not only for the energy sector but
for society as a whole, we must think of sustainability rather than “just green”. By that, I want to set focus on the UN’s Sustainable Development Goals and the fact that these 17 goals not only require environmental development, they also require economic and socially responsible development. In other words, to achieve sustainability, we must balance economic,
environmental, and social factors in equal harmony.
In many ways, district heating can be the answer if we move towards a more holistic approach. One of the great benefits of district heating is that a lot of different energy sources can be used. Over the last decade, in Denmark, we have shifted from using heat based on coal and natural gas to today, where our heat production mainly is based on sustainable biomass, waste energy, solar power, and electricity from wind power.
The development is not complete, but we do experience constant progress. This makes district heating in Denmark more robust against price fluctuations in different fuel markets. This autumn, the four largest district heating companies in the capital made a report, “Future district heating in the capital area towards 2050”. The key message is that our district heating system is very robust and ready to play a much broader role both when we look at the producers and consumers to come.
But the report also shows that this will only work if we succeed in maintaining our competitiveness vis-á-vis individual solutions, and that makes the forthcoming investments in the sustainable future a big issue if that leads to higher heat prices.
As infrastructure solutions by nature depend on maximizing utilization to increase return on invested capital, one of the ways to deal with the increasing cost is to get new customers. The report also shows that even though we in our entire delivery area have a very high share of consumers, there is still a potential for new customers. Together we cover 25% of the Danish use of district heating, and district heating covers 64% of the Danish heat demand at all.
To realize the additional potential, we need to be very clear about what we deliver. Not only must we have a stable and reasonable price for all, but we also need to show and document that our heat brings great comfort and is produced sustainably. This is what future customers want.
Another way to deal with the increasing costs is to optimize our infrastructure. The report shows, for example, that a low-temperature network is financially attractive even at a transmission level. This is an important stepping stone for 4th generations of district heating (4GDH) and more cost savings. Therefore, though there is no doubt about the challenges we face, district heating still gives a lot of good answers. We will definitely be an even more important part of the future than we have been in the past.