Heating price difference when compared with consumer owned utilities
€ 1.000
€ 750
€ 500
€ 250
€ 0
Commercially owned DH utility
Muncipality owned DH utility
Figure 1: The price difference between the yearly heating bill for a typical household of either a commercially or municipality- owned district heating utility when compared with the yearly heating bill in a consumer-owned district heating utility. The data is from Denmark in 2011/2012, and the prices have been adjusted to current-day prices. Source: Danish Energy Regulatory Authority 2
adjusting for background variables, the fixed price differences between private and municipally owned district heating utilities amount to 17% for multi-dwelling buildings and 25% for single-family houses 5 . A recent German study also confirms this trend, with publicly owned district heating companies offering prices 10-20% lower than those of their privately owned competitors, once confounding factors are controlled for 6 . Why prices are lower in democratically owned utilities Why do we consistently find price differences between democratically owned and commercially owned utilities?
€941 more per year in current prices for commercially owned utilities compared to consumer-owned ones, and €750 more compared to municipality-owned utilities 3 . Moreover, following consumer complaints, several commercial utilities were sold off to consumers and municipalities in 2013. This led to immediate price drops in the yearly heating bill from around €3075 to €756 in current prices by the end of the year 4 . The pattern holds true beyond Denmark. In Sweden, privately owned district heating utilities charge significantly higher fixed fees compared to those owned by municipalities. After
2 https://www.ft.dk/samling/20151/almdel/EFK/bilag/410/1667967.pdf 3 Djørup, Søren & Odgaard, Ole & Sperling, Karl & Lund, Henrik. (2021). Consumer Ownership of Natural Monopolies and its Relevance for the Green Transition: The Case of District Heating. Danish utility regulator’s anthology project series on better regulation in the energy sector. 4 Odgaard, Ole ; Djørup, Søren Roth. / Review and experiences of price regulation regimes for district heating. I: International Journal of Sustainable Energy Planning and Management. 2020 ; Bind 29. s. 127-140. 5 Alejandro Egüez, District heating network ownership and prices: The case of an unregulated natural monopoly, Utilities Policy, Volume 72, 2021, https://doi.org/10.1016/j.jup.2021.101252 6 Bänfer, Miguel and Billerbeck, Anna and Plötz, Patrick, Public Companies Have Lower District Heating Prices – an Empirical Analysis for Germany Bänfer, Miguel and Billerbeck, Anna and Plötz, Patrick, Public Companies Have Lower District Heating Prices – an Empirical Analysis for Germany. Available at SSRN: https://ssrn.com/abstract=4932088 or http://dx.doi.org/10.2139/ssrn.4932088
40 HOTCOOL SPECIAL COLLECTION edition 2, 2025
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