Table of Contents

  • Heating and cooling in buildings and industry account for half of the EU’s energy consumption. 75% of heating and cooling in the EU is still generated from fossil fuels while only 16% is generated from renewable energy. According to the EU commission, the heating and cooling sector must sharply reduce its energy consumption and cut its use of fossil fuels in order to meet the EU’s climate and energy goals. (COM(2016) 51 final).

  • Heating and cooling in buildings and industry account for half of the EU’s energy consumption. 75% of heating and cooling in the EU is still generated from fossil fuels while only 16% is generated from renewable energy. There is a lot of room for efficiency improvements to reduce the emissions and at the same time the cost for energy users. According to the EU commission, the heating and cooling sector must sharply reduce its energy consumption and cut its use of fossil fuels in order to meet the EU’s climate and energy goals.

  • The European Union is committed to a sustainable, competitive, secure and decarbonised energy system. The Energy Union and the Energy and Climate Policy Framework for 2030 establish ambitious Union commitments to reduce greenhouse gas emissions further (by at least 40% by 2030, as compared with 1990), to increase the proportion of renewable energy consumed (by at least 27%) and to make energy savings of 30% at the Union level by 2030.

  • The heating markets in each of the Nordic countries are presented in this chapter. The Nordic countries’ heating and cooling markets have several common factors, such as

  • The total energy demand for building heating in residential and service sectors in Sweden was 76 TWh in 2015 (Figure 12). Single family houses accounted for 41%, multi-family houses for 32% and non-residential buildings for 27% of the demand. District heating has been a dominant source of energy for heating and hot water in the residential and service sectors (Figure 12). In 2014, some 80% of the total 55 TWh district heat consumed in Sweden was used in the residential and service sectors (Figure 12).

  • The total energy use for building heating and hot water in Finland was 83 TWh in 2015 (Figure 18) including heat and hot water used in single family houses, multi-family houses, commercial and public buildings, industrial buildings, agricultural buildings and free-time residential buildings. Single family houses accounted for 37%, multi-family houses for 25%, commercial and public buildings 19%, industrial buildings 13%, agricultural buildings 3% and free-time residential buildings 3% of the total energy for heating and hot water in the Finnish buildings in 2015 (Figure 18).

  • The total energy consumption for building heating in residential and service sectors in Denmark was 54 TWh in 2015 (Figure 23). Single family houses accounted for 58%, multi-family houses for 20% and non-residential buildings for 22% of the demand. District heating represented almost 50% of the total energy for heating and hot water in the Danish residential and service sectors in 2015 (Figure 23).

  • Electricity is the dominant source of energy for heating and hot water in the residential and services sectors, and data collection from ENOVA estimated that 85% of space heating was based on electricity in 2015, and in 2012 SSB estimated that over 90% of residential housing have access to heating from electrical ovens and heating cables. There is however no data available in Norway showing the total actual energy use for heating in the residential and service sector for all buildings, and the data from e.g. ENOVA is based on a sample of 3,415 buildings and on self-reported numbers. The data represents about 8.4 TWh of energy use in space heating.

  • A large share of Iceland’s energy consumption comes from renewable resources, and 99% of houses in Iceland are heated with renewable energy. Nine out of ten are heated directly with geothermal heat, through district heating systems, and the remaining 10% with renewable electricity (in areas where there are no geothermal resources). (Icelandic Ministry of Industry and Commerce, 2016).

  • District heating prices in the Nordic countries vary more within the country than between countries. In Figure 35, the district heating prices for apartment buildings in Denmark, Sweden and Finland are presented. The figures present the prices of a large number of the district heat companies, with the most expensive one on the left-hand side and lowest cost in the right-hand side. The average price in Denmark is about 80 EUR/MWh and 60 EUR/MWh in Finland, in Sweden between the two. The pricing principles and regulation in each country has been discussed in detail in the previous chapters.

  • Increasing share of intermittent renewable electricity generation, such as wind and solar power, increases the need for demand flexibility and storage of electricity. During windy periods, there is abundancy of electric power in the Nordics, and the electricity prices are very low or in some hours even negative. The subsidized investments into renewable electricity generation partly drive the electricity market prices down, and the profitability of condensing power generation has decreased, which has led to closing down of power plants. As a result, there is increasing need for energy storage, but also need to cut the peaks in power demand.

  • The heating and cooling sector in the Nordic countries shares some common approaches and fundamentals of the market, although there is also some variation from country to country. The common approaches towards the proposed regulation have been identified based on the interviews of regulatory bodies and market actors in different countries as well as the country specific market analysis. In many topics, there were somewhat differing views from country to country, and also within a country based on the interviewed persons and the organizations they present. This chapter describes the common and also differing views towards the selected topics. The persons interviewed during this study are presented appendix I. The interviews were carried out only for a selected group of people, and therefore the results are not comprehensive, but rather serve as a starting point for further discussions. Any opinions presented in this chapter are Pöyry’s own interpretations and do not necessarily reflect the views of all Nordic countries and all parties.

  • Pöyry Management Consulting team will conduct interviews in each Nordic country to identify views of the Nordic countries on the common Nordic goals and key priorities in the EU heating and cooling policy context. Pöyry will interview both regulators and industry. The work is conducted for the Nordic Council of Ministers.