Association against stricter regulation of district heating

21.06.2024

Source: Energie & Management Powernews

The German District Heating Association AGFW sees the resolutions of the conference of consumer protection ministers as sending the wrong signal in the current debate on the heating transition in Germany.

The conference of consumer protection ministers has spoken out in favor of stronger regulation of district heating. The German District Heating Association AGFW sees these resolutions as the wrong signal in the current debate on the success of the heating transition in Germany. AGFW Managing Director Werner Lutsch recalls: "At the district heating summit with the German government a year ago, we agreed on a significant expansion and transformation of district heating."

This would require high levels of investment in heating networks and their supply with climate-neutral energy. "Companies can only manage this on the basis of stable framework conditions," explains Lutsch. Greater regulation of district heating would jeopardize the expansion targets and would be counterproductive for the heating transition.

District heating prices are already controlled

District heating prices are already being intensively monitored, for example through antitrust control of themselves and the price adjustment mechanisms. According to Lutsch, sector investigations by the Federal Cartel Office and the state cartel authorities have regularly confirmed that there are no excessive price levels in the district heating sector. In general, district heating prices are expected to level out again once the natural gas crisis is over.

The consumer protection ministers of the federal states are asking the federal government, among other things, to "examine the unbundling of network operation and heat generation along the lines of the gas and electricity networks". The AGFW is critical of such a demand because the mechanisms from the electricity and gas sector do not work for district heating. "It is a local service and not a nationally traded product," explains Lutsch. Opening up the networks would not lead to falling prices.

"Unbundling would be expensive"

On the contrary, unbundling would entail considerable administrative costs and synergy losses, according to the AGFW: "This has already been proven by investigations carried out by the German government in connection with the Federal Cartel Office's 'District Heating Sector Inquiry' a few years ago."

A comparison with other countries, such as Denmark, shows that intensive price supervision does not lead to lower prices. In countries such as Sweden and Finland, which have deliberately refrained from regulating their district heating sector, the expansion and restructuring is progressing. In contrast, current regulatory debates in other countries are causing massive uncertainty in the sector. "The urgently needed expansion of district heating is not taking place there," argues Lutsch.

 The debate about statutory third-party access requirements for heating networks is not helping, as network operators are already looking for heat sources from renewable energies or waste heat on their own initiative. "The new requirements for the decarbonization of grids under the Heat Planning Act (WPG) do the rest," says the AGFW Managing Director. In addition, around 20 percent of the heat in German district heating systems has always come from third-party sources.

Against unilateral termination by end customers

Instead of stronger regulation of district heating, stable funding conditions are important for companies, explains the association's CEO: "What district heating suppliers throughout Germany, including many municipal utilities, really need are sufficient funds for expansion and transformation." Lutsch believes that an increase and continuation of funding from the federal subsidy for efficient heating networks (BEW) would be an important step in this direction.

In addition, a stable contractual framework is essential. "No district heating supply company will take the risk of developing new customers at immense expense if they can terminate the contractual relationship at short notice," explains Lutsch. In the forthcoming amendment to the AVB-District Heating Ordinance, unilateral special rights of the customer (service adjustment and special termination rights) should therefore be removed as far as possible. The short-term interests of individual customers would otherwise lead to a lack of solidarity in the long term and jeopardize security of supply.

Author: Susanne Harmsen