District Heating and CHP

The Swedish National Energy Administration (STEM) administers financial support for conversions from electric heating to district heating that was approved by Parliament in the 1997 energy policy decision. In 1998 and 1999, total support of about SKr 300 million was granted, leading to the connection to district heating grids of 9 504 houses, 12 436 apartments, and another 174 premises. This is estimated to result in a reduction in electricity use of 230 GWh. The Bill Energy Markets in Transition-Better Regulations and Supervision (2001/02:56) emphasises the need to stimulate competition in the DH sector so as to increase productivity and encourage lower prices. The appointment of a Commission of Inquiry to study the issue is in a planning stage. Total installed CHP capacity today is about 3 484 MW where 57% is CHP production based on biofuel. There is still a considerable potential to use more biofuel for CHP in municipal district heating systems. CHP in industry is normally 10% co-generation from annually 40 TWh of heat (100% biofuel) from burning black liquor in the cellulose industry. There is also a programme for investment grants for biofuel-based CHP in municipal district heating systems. In the period 1998 to 2002 resulted in an increased electricity production capacity in municipal DH plants of nearly 290 MW during 2001. The investment grants were basically € 325 per installed MW electricity production capacity based on biofuel, but not more than 25% of total investment cost. According to the government Energy Policy Bill, Collaboration for a Secure, Efficient and Environmentally Friendly Energy Supply (2001/02 143) presented by the government on 21 March 2001, these grants will be replaced by market based Green Certificate incentives: it proposed the adoption of a quota-based Green Certificate system to promote production of electricity from renewables to be implemented by January 2003