District heating or geothermal heating

Tomi Mäkipelto
The correct answer is… both. Heat pumps reduce the costs for the property owner and the future investments for district heating companies.

District heating or geothermal heating? The correct answer is again both. Many housing cooperatives and business premises will change from district heating to geothermal heating in the coming years. However, the majority will remain customers of district heating.

The heat pump is one of the most important innovations in the energy business during the 2000s. First came air-source heat pumps in small houses and then geothermal heat pumps. Now is the turn of large real estate. Thanks to geoenergy stored hundreds of metres below the surface of the earth, properties can reduce the amount of district heating they need to buy or abandon it altogether.

A vocational college campus in the city of Lahti that was completed last year produces roughly 90 per cent of its heating needs from its own plot by combining geothermal heat and solar electricity. The STC/GCT logistics centre, located near the Helsinki-Vantaa airport, abandoned district heating altogether last autumn, as did the Mannerheimintie 106 housing cooperative located in downtown Helsinki.

Large real estate properties benefiting from geothermal heat have garnered significant attention in the media as well as the real estate and energy business. The Finnish construction and renovation magazine, TM Rakennusmaailma, ran the following headline, “A heat pump as if for free”. According to the magazine, the housing cooperative or business premise owner can pay for the new energy-efficient system with the life-cycle savings it produces.

In the Finnish town of Pori, the local newspaper wrote that, “companies offering energy overhauls are setting a relentless pace for district heating companies”. In the same article, the magazine reminded property owners that they should take their time before making decisions on large investments.

District heating is strong but the price is an issue

One of our projects in Huittinen has been written about in the Satakunnan Kansa newspaper. The heating costs of the Vehnä-Hovi housing cooperative have dropped by over 60 per cent and the CO2 emissions from heating have disappeared entirely. We agree with everything the journalist wrote in the excellent article.

Changing the source of heating is not something to take lightly, due to the fact that the consequences of the decision will be felt decades into the future. And if you do decide on the change, the owner of the property should ensure that the design of the new system is sufficient in all situations. The cheapest solution is seldom the best solution.

The aforementioned examples show that some customers of district heating have found out about the alternatives and, after careful consideration, have decided that the life-cycle costs of geothermal heating offer a competitive alternative to district heating. A contributing factor is the sharp increase in the costs of district heating during the 2000s. According to data from Statistics Finland, the cost of district heating increased by 137 per cent between the year 2000 and 2018, whereas during the same period the consumer price index increased by only 30 per cent.

The decisions made by property owners are also affected by the growing body of knowledge on climate change. Producers of district heating have done good work and the emissions from heat production have clearly been reduced. Many property owners, however, want more rapid change. A good example comes from Sweden, that has managed to reduce its CO2 emissions from district heating almost 60 per cent more than Finland.

However, we should not come to the conclusion that geothermal heating is a threat to the dominance of district heating solely on the basis of individual examples.

Our company has calculated that, for example in Helsinki, at most every third housing cooperative could move over to geothermal heating from district heating. Even if we were to embark on this kind of enormous change immediately, its implementation would take the whole of the 2020s. And after all that, district heating would still have 6070 per cent market share.

Currently, district heating has a market share of about 9099 per cent in its areas of operation measured in relation to the amount of square metres of buildings.

District heating is easy for construction contractors too. The users of the property also appreciate its ease and reliability. The only issue between the service provider and the end customer is usually the price. The cost of district heating will probably rise yet again in the coming years as the producers in the sector reduce the amount of fossil fuels they use. Pressure on the price increases grew recently when the Finnish government decided to ban the use of coal for the production of electricity and heat.

The popularity of geothermal heating is growing because it offers property owners a technically extremely cost-efficient and climate-friendly option. Those properties that move over to geothermal heating now will reduce the risk of price increases involved in staying with district heating. In the long run, they will pay less for their heat than their neighbours who continue to use district heating.

In the short term, the increase in the use of geothermal heating will slowly reduce the income of district heating companies. In the longer run, the use of heat pumps and intelligent controls in building services engineering will reduce the amount of district heating investments. The need for peak output is reduced. The move to cleaner district heating will be less expensive if the breakthrough to implementation is supported by first taking advantage of economically viable measures.

Heating is going electric and clean

A carefully designed and implemented geoenergy system is just as reliable a heating source as district heating.

The operational reliability is very high and in Finland there are excellent service providers in the sector, such as Gebwell and Oilon. The best thing about heat pumps is their outstanding energy efficiency: when one unit of electricity is fed into the pump, depending on the technology and conditions, it can make two to four units of heat for the property. The competitiveness of heat pumps is based fully on the use of this efficiency.

The amount of electricity CO2 emissions produced by the average Finn has dropped rapidly over the past few years. This development will continue when the third nuclear reactor at Olkiluoto eventually comes on line.

Properties that use heat pumps benefit from the reduction in emissions in the same way as other users of electricity. The emissions from properties that are moving to heat pump technology are calculated primarily according to the Finnish average of emissions from electricity production. The principle is the same for electric cars, which have been heavily reported on.

If a property owner or an owner of an electric car wants to reduce their emissions to almost zero, the options for electricity production are: nuclear, wind, or solar energy. The demand for clean electricity is driving change in energy systems. Finnish heating is going electric and clean. For consumers and companies alike, the best results will come when the energy producers and users both take part in effecting change.

The author, Tomi Mäkipelto, is the CEO of LeaseGreen, a cleantech service company specialised in energy efficiency solutions for large real estate and industrial processes.

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