Competition in the Heat Market

Thirty years ago the fuels for space heating were coal and oil. Since the exploitation of large resources of natural gas on land and in the sea, natural gas has become the most important fuel in the Netherlands and all coal mines have been closed. In the past 25 years about 96% of all houses in the Netherlands have been connected to the natural gas network, 2.6% to district heating, the rest uses fuel oil or electrical energy.

Table 2: Shares in the heat market

           natural gas heating     district heating
   year             %                      %
   1982            97,5                   1.0
   1985            96,7                   1,8
   1994            96.0                   2,6

The share of district heating in the heating of offices, schools, hospitals, universities and market gardening differs quite significantly from its share in the housing sector. In the city of The Hague, for instance, 45% of the offices, including government buildings and the houses of Parliament, are heated by district heating.

Provincial and municipal departments, partly initiated by energy distributing companies, decide upon the planning of district heating. If district heating has been chosen, there is usually no need for a gas distributing system. However, in this case cooking is done electrically.

The rates for district heat consumption have been determined in such a way at a resident/user of district heating does not pay more than he would pay for individual space heating, hot service water heating and cooking with natural gas. Nowadays, natural gas is slightly cheaper than domestic fuel oil, which follows the oil price trend. The natural gas price is based upon the oil price. The heat price is calculated with the gas price and is based upon the market-value principle. In certain cases, a small recruiting discount is given by the distribution company.

Table 3: Average price of heat sold

     year       NLG / GJ
     1982         21,10
     1985         24,60
     1994         19,10

With the oncoming of high-efficiency central heating boilers, better insulation of houses and more energy minded heating behaviour, energy consumption has decreased. In view of the smaller consumption per house the cost-effectiveness of district heating investments is under pressure.

The current policy of district heating companies is to connect larger entities, such as office buildings, hotels and universities. One of the reasons for doing so is the decreased use of energy in houses. Heat is also supplied to horticulture for the heating of greenhouses.

Fuels and Other Heat Sources