District heating: the state issues a license to rip off providers (opinion)

Opinion

expansion of the offer
The state issues district heating providers with a license to rip them off

The federal government wants to massively expand the district heating supply in Germany. In the medium term, at least 100,000 new buildings are to be connected to the heating network every year. Municipalities with more than 10,000 inhabitants will in future have to submit a “heating plan” that shows which streets will be used for district heating, electricity and gas lines in the future.

That sounds simple and effective, especially since a district heating connection increases the convenience of consumers and saves them from having to buy their own heating system. The decision only has one catch: With today’s supply structures, the state issues a license to the district heating providers to rip them off. Because their networks, through which the hot water flows into the households, are natural monopolies. The operators, mostly municipal utilities, have a completely free hand in pricing. You can squeeze customers until they squeak. There is no competition like there is with electricity and gas, where every network operator is obliged to also transmit the energy of other, cheaper competitors to the customer. The municipal utilities even require a connection obligation: where district heating networks are located, residents should have to obtain district heating.

According to the Cartel Office, the users are “captive customers”

This disadvantage is painfully reflected in the bills of the district heating networks. According to the Cartel Office, the users are “captive customers”. According to the consumer center, a kilowatt hour of district heating costs an average of 16 cents. Gas is currently available for 8.9 cents per kilowatt hour – and the trend is initially falling. So if you live in a 100 square meter apartment, you have to pay almost 1000 euros more per year for heating than a tenant with a gas boiler.

The fact that Germany has not long been more competitive when it comes to district heating is also down to the SPD and the Greens. In the past, in various government constellations, they have failed to establish and permit a free market. The country was already on a promising path. Just think of the bioenergy villages, which up until about ten years ago were celebrated by politicians as saviors. Committed citizens, above all farmers, built rows of biomass power plants that also produced heat. Villagers buried hot-water pipes in their streets to heat homes, schools, city halls, and churches with their own power plants. The heat self-suppliers were often organized as cooperatives, so they benefited twice from their commitment: through green heat and their share in the company’s profits.

Then the situation turned. Suddenly, the biomass power plants were no longer appropriate. An anti-atmosphere spread, the opinion prevailed that the plants were neither economically nor ecologically justifiable; there are far too many energy crops on German fields and too little food (“Germany is maist!”). Operators of local gas and electricity grids, most of which also belong to the municipalities, expressed this opinion remarkably often. They found the new, private competitors in the traditional business field annoying because one of their most secure sources of money was threatening to dry up: the network fee. For every kilowatt hour of gas and electricity they pass through, they collect a lavish fee, guaranteed by the state. Your Stadtsäckl fill up effortlessly in this way.

The heat transition must take place democratically

The long-term criticism worked. The grand coalition massively cut funding for biomass power and heating plants, and many operators gave up. Most recently, the Greens made sure that only very large bio-power plants that refine the biogas they produce into methane and feed it into the German gas grids are actually still functioning economically.

There is no question that the promotion of biogas plants under the Renewable Energy Sources Act lacked a sense of proportion for a long time; it was too high and had to be readjusted. First of all, it must be clearly defined how much of its renewable raw materials Germany can use for heating, which is a difficult undertaking and has not been successful to date. But none of this should prevent the heat transition from taking place democratically. The Federal Network Agency and the Cartel Office must develop instruments to keep district heating providers’ prices in check. Competitors may even be obliged to pass it on, for example if large industries or waste incinerators themselves enter the district heating market with their waste heat.

District heating is only the second-best solution

The state urgently needs to work out new incentives and funding channels to get rural areas back on track and creative. Almost a quarter of Germans live in towns with fewer than 10,000 inhabitants. Here in particular there is great potential for a sustainable local and district heating supply. Citizens could increasingly contribute financially to their generation – as with community wind farms. They do not necessarily have to rely on biogas power plants. Large heat pumps are also being used more and more frequently. They even work in big cities, as Stockholm proves. With the help of highly efficient large-scale systems, the city’s district heating supply has become 98 percent sustainable. However, such power plants are not created overnight. However, without clear framework conditions, potential investors in Germany will certainly not lose a cent.

But it must also be clear: District heating is only the second-best solution. Today, 70 percent comes from fossil fuels, primarily from gas and hard coal, and only 30 percent from waste, biomass, geothermal energy and other renewable sources. Despite all political commitments, these conditions cannot simply be reversed in the foreseeable future. The first choice for warm rooms should therefore remain the private heat pump. Because it is not only very climate-friendly, but also democratic. You can operate them free of charge with your own solar power, if available. Even those who do not own a PV system and have to buy the necessary operating power on the open market are currently the cheapest at less than eight cents per kilowatt hour of heat.