One important aspect is the network's scope. The greater the delivery volumes to consumers who live close to each other, the more advantageous the cost structure. Sweden stands out in this regard due to its extensive network. Company-specific conditions also play an important role, particularly the fuel used, planned investments and the degree of maintenance required for the network and facilities.
Producers depend on policy initiatives
Fuel price trends, taxes and economic control instruments – such as electricity certificates, emissions rights, feed-in tariffs and the regulatory burden on businesses – also impact the price. Even though district heating generally offers great fuel flexibility, district heating producers are still largely dependent on policy initiatives.
Prices affected by local conditions
Operators on local district heating markets use two primary pricing models: alternative pricing and cost based pricing. Alternative pricing is focused on consumers' alternative options with the aim of setting the price not higher than competitors' prices, while still yielding a profit. Cost based pricing is intended to match the district heating price with the costs involved.
Because district heating is local in nature, prices are significantly affected by local conditions and regulations and thus vary from place to place.