Overview of National DHC Market

Overview of National DHC Market

Country

Sweden

#

Name and reference of measure

Type of measure

Responsible organ

Existing or planned?

Summary

now

Summary of the Swedish DH market

Introduction

The Swedish public policy it is competition-based approach including direct competition between district heating and other heat sources and competition between heat producers at the wholesale level. Market driven regulation, including control by antimonopoly services.

The first district heating system in Sweden came into operation in 1948 in the city of Karlstad (Frederiksen & Werner, 1993). The general assumption then was that the hydropower capacity was close to its maximum which increased the need of combined heat and power plants. The oil crisis in the 1970’s also implied the need of new district heating plants, often relatively small, which aimed to reduce the need for oil as a source of heat. Later in the 1970’s and 80’s the introduction of nuclear power in Sweden reduced the need of combined heat and power plants with a following focus on heat only plants. However, the low prices for electricity worked in favor for using electricity for heating both as space heating in houses and also as fuel in district heating plants. It was first after the de-regulation of the electricity markets in the 1990’s and later in the 2000’s that electricity prices increased which turned an increased focus on district heating and combined heat and power plants (Frederiksen & Werner, 1993).

Market Development

The total energy use for heating and for hot water in Sweden has decreased from slightly above 90 TWh in the year 2000 to slightly below 80 TWh in 2006. District heating is the dominant source of heat and hot water and the share of oil is steadily decreasing, see figure I:1.

Figure I:1 The heat market in Sweden 2000-2006 in TWh

Source: Swedish Energy Agency and SCB

Over 50% of the total market for heat was provided through district heating in 2007 which is an increase from approximately 22% in 1978 (Swedish Energy Agency). This increased share for district heating has taken place primarily on the expense on the use of oil and, since the beginning of the 90s, also on the expense on the use of electrical heating both the use of electrical panels and the use of water based electrical heating (Andersson & Werner, 2003).

District heating is the most commonly used system in residential and public buildings, making up for around 90% of space heating and the provider of hot water with industrial buildings representing the remaining 10%. Figure I:2 depicts the total production and consumption (the difference being representing heat losses) of district heating from 1990 to 2007 divided on industry and residential and public buildings.

Figure I:2 District heating production and usage in Sweden 1970-2007 in TWh

Source: Swedish Energy Agency