Heating sector

The total annual heat consumption of Estonia is less than 6,600 GWh; in 2013, 70% of this amount (4,600 GWh) was taken up by district heating.
 

As a comparison, we can give the example of an apartment house with one hundred apartments, using approximately 0.7 GWh of thermal energy that is distributed by means of district heating. Approximately 30% of the population use individual heating solutions, generating thermal energy mostly from wood and natural gas.

District heating sector plays an important role in the achievement of Estonia’s renewable energy objectives. We promote the co-generation of thermal energy and electricity, if this is economically and technically feasible, which can contribute to diminishing environmental impacts caused by the heating supply and help to conserve more energy than it would be possible in the case of the separate generation of electricity and thermal energy.

District heating costs can be optimised by consumers themselves. The best alternative for some cost saving would be to decrease the thermal energy consumption of an apartment house by a properly renovated façade and efficiently operating technical systems. Foundation KredEx will help to make the required investments.

Heating sector

 

Organisation and price of district heating

 

The responsibility for the organisation of heating sector lies with local governments that will establish district heating areas and the procedure for the provision of the related services.

According to the legislation regulating the district heating sector, heat distribution operators will be required to ensure effective, reliable, secure heat supply that meets the environmental requirements and needs of consumers at justified price.

According to Article 9 of the District Heating Act, heat distribution operators will be required to harmonise the maximum fee chargeable for thermal energy sold to consumers with the Estonian Competition Authority.

For the purposes of price harmonisation, the Estonian Competition Authority will observe, above all, the principle of the maximum fee chargeable for thermal energy being cost-based while the expenditures made to generate and distribute thermal energy must be justified.

Average price of thermal energy

In Estonia, there are, in total, 230 district heating network areas. In February 2015, the prices of thermal energy without value added tax, remained between 33.54–88.57 €/MWh. The average weighed price of thermal energy without value added tax, was 53.83 €/MWh in February 2015, whereas the arithmetic mean value was 64.37 €/MWh. As a general rule, the main reasons behind the higher than average prices of thermal energy, are the use of expensive fuels, like oil shale oil and natural gas and the poor technical condition of district heating networks.

Development of heating sector

Demographic trends must be taken into consideration when evaluating the sustainability of district heating regions, in terms of deciding whether the future number of consumers is about to increase or decrease. In 2015, the responsibility for the evaluation of a region will be transferred to the local government, which must approve the heating sector development plans of district heating networks located within its administrative territory.

In the conditions of depreciating generation plant and heat distribution networks, stricter performance and efficiency requirements and dropping consumption volumes, it is important to motivate district heating operators to invest into the sector. In addition, wide-based support mechanisms must be made available, assuming that district heating area is sustainable in the long-term.

 

Investments into reconstruction of housing and district heating

 

In 2014-2020, approximately 232 million euros of the funds of the European Union Structural Funds will be invested in the administrative area of the Ministry of Economic Affairs and Communications.

Slightly less than a half of the budget, 102 million euros, will be spent on achieving the desired energy performance outcomes in apartment houses; this will result in reduced expenditures of consumers made on thermal energy.

The efficient generation of thermal energy is another important funding area and approximately 78 million euros will be spent to help to renovate inefficient heat distribution networks or transfer unpromising district heating systems to local heating.

Subsidies to local governments

 

Local governments can apply for support for the development of heating sector development plants to study the options available for the continued use of district heating. Regulations to support funding the measures will be developed simultaneously with the amendments introduced to the District Heating Act, to ensure the provision of environmental and investment support, as effective as possible.

The financing rounds will be opened in 2015 and the co-ordination of the organisation of rounds will be the function of the Environmental Investment Centre (KIK).

 

Last updated: 8 June 2015