1. 2014-06-16District heating in Sweden 1 District heating in Sweden - Swedish Heat market challenges Erik Thornström Head of Energy policy, CHP and EU-coordination Swedish District Heating Association

2. 2014-06-16 District heating in Sweden 2 by owner Municipal Private/foreign 22% 8% Government 70 % 140 member companies With 110 CHP plants Members of the Swedish District Heating Association

3. District Heating in Sweden ● 9,7 million inhabitants ● 60 TWh district heating, 40 % from CHP that gives 10 TWh of electricity (2010) ● 20 000 km of district heating pipes ● 56% of total heat market ● Lowest price on heating in most municipalities ● Present in all communities with over 10 000 inhabitants ● Still growing ● Turnover 3,5 billion euro, (1 % of Swedish GDP) ● Investments of nearly 800 million Euro per year 2014-06-16 District heating in Sweden 3

4. Infrastructure for heating 2014-06-16 District heating in Sweden 4

5. 2014-06-16 District heating in Sweden 5 Fuels in Swedish District Heating - history

6. Energy supply to district heating, 2012 2014-06-16 District heating in Sweden 6

7. Decoupling of GHG and GDP in Sweden 2014-06-16 District heating in Sweden 7

8. Share of district heating in the heat market 2014-06-16 District heating in Sweden 8

9. Cost for heating 2014-06-16 District heating in Sweden 9 Air/water hp Geothermal hp Bio – pellets DH DH – no inv. Municipalities Cost for heating a small multifamily house in Swedish municipalities SEK/year

10. Cost for heating, incl. capacity 2014-06-16 District heating in Sweden 10 SEK / year Air/water hp Geothermal hp Bio – pellets DH DH – no inv. Cost for heating a small multifamily house in Swedish municipalities Municipalities

11. District Cooling in Sweden 2014-06-16 District heating in Sweden 11 District cooling in Sweden

12. District cooling in Sweden – short facts ● Stockholm DC-system biggest with 425 GWh deliveries in 2013 ● District cooling networks 506 km in 2013 ● 34 companies provides district cooling ● Main customers: Offices, public buildings, computer centers and shopping markets ● Free-cooling, heat pumps and absorption chillers most used as cool sources ● District cooling important product fort future to compete with heat pumps 2014-06-16 District heating in Sweden 12

13. Current plans for new CHP in Sweden ● CHP accounted for about 40 % of heat production in 2013 (almost three times the share in 1990) ● Member survey in 2011 showed investments plans for new CHP for about 600 MW with annual electricity production on about 4,6 TWh until 2020 ● Some old plants will be phased out - net capacity increase is expected to be about 1,5 TWh electricity ● Forest industry plans to invest in new industrial CHP plants with about 1,5 TWh in increased electricity production 2014-06-16 District heating in Sweden 13

14. Development of taxation and policy on CHP ● In 2004 energy tax for fuels in CHP was decreased and made equivalent as of the taxation of industrial CHP-plants ● In May 2003 the green electricity certificate scheme was introduced – strong push for biomass-CHP ● Gradually increased energy and CO2-taxes during 90’s and 2000’s has also pushed for phasing out fossil fuels in CHP- production ● CO2-taxation in district heating connected CHP in ETS was removed from 1 January 2013 – ETS seen as the climate policy tool in the CO2-trading sector 2014-06-16 District heating in Sweden 14

15. Government efforts to regulate DH ● 1996: ”Deregulating” the market ● 2005: State inquiry ”Empower customer”: ”Transparency” ● 2008: First DH legislation - transparency ● 2011: State inquiry ”TPA”: Design of TPA-regulation ● 2012: Government: No TPA, but something else -price stability regulation, Access to DH grid for waste heat, potential for waste heat before new heat production ● 2014: Regulated access to district heating networks, no price regulation but regular follow-up of SDHA initiative “Price Dialogue”, EED-legislation CBA of waste heat potential implemented 2014-06-16 District heating in Sweden 15

16. Some challenges for the future of DH ● Decreasing heating demand ● Definition of nearly-zero-energy buildings crucial ● Increased competition from other heat alternatives such as heat pumps ● Need of decreasing costs for heat production and distribution to remain competetive ● Increased regulatory burden 2014-06-16 District heating in Sweden 16

17. The future: Heating with only recycled energy 2014-06-16 District heating in Sweden 17

18. The future: Replacing electricity and fossil fuels in other sectors 2014-06-16 District heating in Sweden 18

19. Thank you! E-mail: erik.thornstrom@svenskfjarrvarme.se +46-8-677 27 08 erik.thornstrom@svenskfjarrvarme.se 2014-06-16 District heating in Sweden 19