District heating and district cooling in Norway

Although the district heating still comprises a small share of the total energy consumption in Norway (2 per cent in 2012), it has long been a growing industry. During the last ten years, the consumption of district heating has doubled and amounted to 4.2 TWh in 2012. Of this, about two-thirds were delivered to the service sector, while households and industry accounted for respectively 22 and 11 percent of the total consumption.

The production of district heating is based on many different energy sources and technologies. The main energy source for district heating is waste with the production share of around 40 percent each year during the period 2003-2012. Other sources of energy in district heating production are biofuel, electricity, waste heat, gas and coal. Consumption of biofuels and waste heat in production of district heating has increased steadily over the years. The use of electricity and fuel oil, however, has varied somewhat between years depending on the price ratio between these two energy sources.

The calculations made in this report show that 65 percent of district heating in Norway was produced from renewable energy sources in 2012. The share of renewable heating has shown a slight upward trend since 2003 and the variation has mostly been dependent on the proportion of fuel oil used for district heating production.

Since district heating is an important substitute to electricity, the increase in the electricity price has been an important reason for the growth in the price of district heating. The relevant electricity price for consumers includes taxes and the variable component of the grid rent. From 2000 to 2012 the price that the consumers pay for electricity increased from 63.1 to 81.2 øre/kWh. In the same period the price for district heating increased from 52.3 to 69.5 øre/kWh. If the fixed component of the grid rent is subtracted from the electricity price (9,7 øre/kWh in 2012) there is little difference between the price of district heating and electricity. The price for district heating varies between different groups of consumers. Customers in the industry sector pay significantly lower price than households and services sector.

The increase in energy prices in the 2000s has also contributed to the increase in investments. Total investments in district heating amounted to around NOK 2.2 billion in 2012. Other causes of high investment level have been Enova's support for the development of district heating and regulatory changes that influenced the district heating sector.

Like for the district heating production, there has been a significant increase in the number of enterprises producing district cooling. In 2012, 133 GWh of district cooling was delivered, which remains modest compared to the consumption of district heating. District cooling is delivered almost exclusively to services sector.

The figures and calculations in this report are based on district heating statistics produced by Statistics Norway; see http://www.ssb.no/en/energi-og-industri/statistikker/fjernvarme for detailed data and tables.