District Heating Ownership

Abstract

Since the Netherlands possesses the largest natural gas reserve in Western Europe, most households depend on this resource for their heat provision. Of the total consumption of natural gas, 51% is used for heat provision to households. Both social problems with earthquakes related to natural gas exploitation and environmental problems with greenhouse gas emissions, challenge the country to find alternatives. One of these alternatives is using district heating in combination with renewable heat generation. Where district heating is already present, public resistance highlights price and inflexibility as unjust – as perceived by the monopolistic infrastructure (Janssen, 2015; Mulder, Paping, & Huis in 't Veld, 2014). While customers perceive injustice on one hand, on the other hand district heating is being considered as one of the alternatives for natural gas provision during the so called ‘heat transition’. Hence, the problem of injustice would affect more and more residents.

Different types of ownership of district heating networks (e.g. private, public, cooperative) may offer opportunities to overcome or manage some of these downsides and improve the perceived energy justice. Considering this, the following question was researched: what ownership structures for new district heating systems would Utrecht residents prefer? Perceived energy justice is taken as a core concept supporting the preferences of Utrecht residents.

The identified ownership types (public, private and cooperative) are comparatively reviewed by expert interviews on their strengths, weaknesses, opportunities and threats influencing their success in the heat transition. It was found that (1) there are external factors influencing all ownership types equally (like tax increase), (2) the institutional context often influences ownership structures contrastingly (e.g. market tradition). Also it was found that arguments in favour of private ownership often included business-oriented reasons. Arguments in favour of cooperative ownership often included influence-oriented reasons. Argument in favour of public ownership often included social-oriented reasons. Mixed ownership arguments often argue that – possibly – win-win situations occur, but at the cost of increasing transactions costs.

The design space and its insights on ownership types, are used to perform an online survey to explore energy justice within residents (N=198). Respondents having higher education level than the average Utrecht population and a lower percentage of respondents living in social housing (-32%) limit the sample’s representativeness. Also, generalisability for places and neighbourhoods where less apartments are present, is limited (52% of respondents lived in apartments). We found indication (Figure 1 Ownership preferencesFigure 1) that most respondents appreciate the role of public organisations (e.g. public electricity grid operators and municipalities). Findings also suggest that network activities are the most suited for public ownership. Energy companies were most selected (61%) for the ownership of the generation activities. While community-owned heat cooperatives offer opportunities to enhance justice, this model was selected fewer times (45%-50%).

Linking the energy justice preferences with the direct preferences on ownership it is concluded that three ownership structures are preferred (‘three streams’): integrated public ownership, competition on public network and integrated cooperative ownership. Within the context of the heat transition, we expect increasing the public influence – aiming for equal responsibility, socialised cost and benefits – would best address perceived injustice in new district heating monopolies. We also expect that in well-defined spatial communities, integrated heat cooperatives could offer perceived justice of the district heating natural monopoly. Thus far, aiming for competition was found to be limited due to the high costs. Despite being preferred, it seems to be less feasible (R. Haffner et al., 2016).