Pricing models in district heating

Examensarbete för masterexamen
Master Thesis
Larsson, Olof
The pricing models, i.e. how the customer price is determined, in the Swedish district heating (DH) sector are constructed in numerous ways. The price components that constitute the pricing models are defined and applied differently due to the absence of standards or a common business area terminology. This makes it complex to overview the actual price a customer has to pay for the delivered heat. Transparent pricing models can be used to govern customers DH consumption pattern, affecting the production mix when more expensive peak load production needs to be utilized. Different pricing models give the customer more or less incentive to change his or her consumption pattern, for example by performing energy conservation measures. This study contains an analysis of the pricing models applied in the residential sector and an analysis of how the pricing models affect the outcome of two typical energy conservation measures. The analyzed pricing models are those of the companies certified in the Reko Fjärrvärme business agreement, which corresponds more than 90 % of the district heat deliveries in Sweden. In the analysis two different artifact buildings, a one/ two family house and an apartment building, are evaluated. The results from the analysis indicate a tendency among the DH companies to focus on the total annual energy use, even though an important part of the cost for the DH production is more related to the capacity requirement. Only a few pricing models are designed to address this. One of the assessed measures implies reduced peak load during the winter months. The other measure is instead assumed to reduce the load evenly throughout the year and does therefore not specifically reduce the peak load. The two energy conservation measures yield close to twice as high savings in percentage in the DH networks with pricing models encouraging such measures, compared to those which do not. This result can be attributed to the absence of a fixed cost. There are generally no clear incentives to perform energy conservations measures aimed specifically at reducing peak load demand, although exceptions exist. The results indicate possibilities of positive synergies with respect to potential cost reductions in the production system by avoiding high cost peak load generation as well as increased incentives for energy conservation measures on the customer side if a suitable pricing model is applied. Price components currently in use in the business that can be utilized for promoting peak load reductions include seasonal differentiation of the energy price, capacity cost based on winter consumption, actual measurement of capacity and the absence of a fixed cost.
Energi , Hållbar utveckling , Övrig annan teknik , Energy , Sustainable Development , Other Engineering and Technologies not elsewhere specified
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