Why District Heating has been successful in Sweden
The factors influencing the development of district heating supply can be divided into market factors and institutional factors. Market factors consist of conditions appearing on the heat market. Institutional factors include legal obstacles, constraints, and benefits in the present legislation, the financial strength and in dependence of district heating entrepreneurs, and how the district heating entrepreneur gets access to the power market. The connection to the power market appears since CHP is the main driving force for district heating.
Market factors
District heating in Sweden has expanded without the competition from natural gas, since natural gas was absent on the Swedish energy scene until 1985. It was then introduced in the south, while Göteborg on the west coast received natural gas in 1988. On the other hand, district heating has met a strong competi ion from electric heating for detached houses.
After the Second World War, Swedish households have been equipped with a high degree of central heating with water radiators. In 1945, the share of households with central heating was 46 % and this share had risen to 96 % in l975. The share had fallen to 87 % in 1985, since heating with electric radiators expanded during this ten year period. The high degree of water-based central heating has facilitated district heating connections.
Sweden has a climate with long and cold winters, giving high heat densities at moderate building densities. This geographical concentration of the heat demand has facilitated district heating distribution.
Institutional factors
The municipalities in Sweden are by tradition independent in the Swedish society and have financial resources since they are allowed to tax the inhabitants. Several joining factors can explain why the municipal authorities became the district heating entrepreneurs in Sweden:
- The municipal authorities started with electricity distribution at the turn of the century. Therefore, the power generated in CHP-plants could directly be sold to their own customers.
- Most of the district heating pioneer towns had small steam power stations for reserve and peak capacity as a complement to the power deliveries from the bulk power generators. These stations were often built in the childhood of electricity distribution, before hydropower was generally available in Sweden. This implies that they knew the technology of thermal power, and therefore, a new CHP- plant was not a giant step . The old condensing reserve power stations were often rebuilt into CHP-plants as a first step.
- At the end of the 40's, a national housing programme was started up in order to provide decent housing conditions in Sweden. This programme ended up with the "million program", which was to build one million new apartments in apartment buildings and detached houses during the ten year period between 1965 and 1975. A major part of this housing programme was managed by the local public housing companies, in which the municipal authorities had a principal interest. This gave a unique opportunity to coordinate the development of district heating supply with the housing programme. With this coordination, the municipal authorities received a unique access to the important heat market and district heating obtained the first assured market.
The Swedish legislation contains both pros and cons for district heating. New buildings in Sweden have received subsidies from the state in order to facilitate their erection. According to present legislation, the municipal authorities can demand a connection to the district heating system as a condition for approving these subsidizes.
According to the Electricity Act of 1902, electricity distributors are forced to deliver electricity to anyone who wishes to buy electricity. However, an exception has been introduced into the act which facilitates the use of district heating. An electricity distributor can refuse to deliver electricity for heating purposes , if district heating can be supplied.
An embarrassing obstacle to CHP has occurred in the application of the Swedish energy tax legislation. In a condensing power station, where the waste heat is emitted from the condenser, the corresponding fuel is not taxed. But in a CHP- plant, where the condenser heat is used as a heat source in a district healing system, the corresponding fuel is taxed. This legal obstacle has reduced the economy of CHP and the driving force for CHP in Sweden. However, a change is in sight. The Swedish government proposed in February 1991 that one of the energy taxes, the general energy tax , will not be paid for fuels used for heat generation in CHP-plants.