Heating and cooling is the biggest energy end-use sector in Europe, representing about half of the total energy consumption.
Heating and cooling is responsible for approximately 40% of carbon emissions in Europe. It also represents a higher share of
household spending than electricity utilised for other purposes.
Heating and cooling is produced and consumed for the purposes of space heating and cooling, cooking and supplying hot water in buildings, as well as for industrial processes. Space heating and cooling, including hot water consumption and cooking, account for about 66% of the total heating supplied in the EU. This amounted to an estimated final energy consumption of about 3,886 TWh (334 million TOE) in 2017.
The residential sector represents 45%, industry 37%, and services 18% of the total heating and cooling consumption in Europe.
District heating and cooling is one of several solutions to supply heat and cooling to the end users.
Fortum’s view on the development of heating and cooling markets
The owners and tenants of residential, tertiary and industrial buildings are the main customers in heating and cooling markets.
Heating and cooling supplies are primarily designated for the space heating, as these customers account for the vast majority of heat demand in the EU. To fulfil this demand, a number of heating delivery options are in use: district heating, direct electricity heating, heat pumps, and individual gas, pellet or coal boilers.
District heating (DH) is often treated differently compared to other alternative heating methods because it is linked to a physical infrastructure and a strong market position in the network area. Some European countries have profound district heating regulation covering pricing, network access, competition, environment, etc. Other countries have chosen to rely on competition with no or very little heating-specific regulation.
Based on Fortum’s extensive operational experience in district heating and cooling sector within several countries, under different regulatory models we can conclude that in all of them there is a room for further development. Heating and cooling markets needs the development to be able to contribute to the established energy and climate policy targets, as well as to increase competitiveness and economic efficiency of the sectors. It is also important to incentivise and enable customers to influence their own environmental footprint as well as the price tag of their heating and cooling consumption. We believe that increasing competition between different heating methods benefits customers and suppliers alike, as competition normally leads to better service levels and promotes innovations in technologies and business concepts.
District heating and cooling can contribute to all these targets.