– A type of bingo lottery – E24

NBBL criticizes new district heating prices. – It only helps companies, not consumers, says NBBL CEO Bard Folke Frederiksen.

The Norwegian Directorate of Water Resources and Energy (NVE) proposes a new price system for district heating.

A new fixed element of €50 per kilowatt-hour will protect district heating companies from periods of low or negative electricity prices, according to NVE.

NVE will also change how electricity subsidies for district heating customers are calculated.

Consumer organization Norske Boligbyggelag (NBBL) fears this will affect customers.

“I am deeply concerned,” says NBBL leader Bard Folke Frederiksen.

– It is not entirely certain what central heating customers will have to pay now. It seems that they will have to pay much more in periods of high electricity prices than electricity consumers, because the protection mechanism for prices above one krone is only 40 percent. He says that would be too discriminatory.

He believes central heating customers often feel locked into the system, and that there is a lot of uncertainty about what they will have to pay.

– It would almost be a sort of bingo lottery on the bill. I understand that NVE tried to suggest something more predictable by suggesting some sort of ground. Frederiksen says this only helps companies, not consumers.

– Dramatically

NVE proposes to protect district heating customers from higher prices when the price of electricity exceeds one kroner per kilowatt-hour. They only have to pay 40 percent of the price increase above this level.

In comparison, electricity customers are covered for 90 percent of the share of the electricity price that in odd hours exceeds 73 eur per kilowatt hour.

– If the spot price on a monthly basis is, for example, three kroner per kilowatt-hour, the price difference between the electricity customer and the central heating customer will be more than one kroner per kilowatt-hour. Here, NVE proposes to withdraw electricity subsidies for district heating customers. It's dramatic, Frederiksen says.

– very happy

The district heating industry is more satisfied. They believe that predictability is essential to further expand the district heating network and ease the energy system.

– We are very pleased throughout the industry to have a proposal. The time has come, says Oda General Manager Therese Gebling at Norsk Fjernvarme to E24.

– Price predictability is needed if investment is to be made in district heating so that the electricity grid can be relaxed. She says there are still many barriers for industry to invest in this.

– What is the problem with the current system?

– The biggest problem is that you don't know what you can gain from providing district heating. If the industry is going to invest, investors want to know if it will pay off. The district heating industry has had to cover the compensation itself, unlike the energy industry, Gebling says.

– This cost the industry about three billion Norwegian kroner in this period, and made it difficult to know whether there would be profitability in the future. The problem is that central heating can't make money when prices are low. We must evaluate whether this is good enough in this new proposal. We depend on predictability.

Happy with this suggestion

Municipally-owned energy company Lyse in Rogaland believes that the NVE proposal provides forecasting potential for further investment in district heating in the Stavanger region.

The company indicates that it has protected its customers from high prices, as the price ceiling ranges between 125 and 150 euros per kilowatt hour.

“We thought it was unfair that central heating customers were getting much higher rates when our costs (unlike electricity) were not rising accordingly,” Lyse wrote in an email to E24.

“At the same time, it was a big risk for us because we could not cover our costs if the price of electricity became too low. That is why we proposed a price ceiling, but also a price floor,” Lees wrote.

The company also wanted to be able to sell central heating at a fixed price, and intended to obtain support for this from NVE.

“We are very satisfied that NVE listened to each of this input,” Lyse wrote.

“The proposal from NVE provides predictability and facilitates further investment in district heating in the Stavanger region, where we are now building a new road.”