euroheat & power 21 october 2005 1 heating sector institutional reform in the former soviet...
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21 October 2005 1
Euroheat & Power
Heating Sector Institutional Reform in the Former Soviet Union Baku, 21 October 2005
Challenges in Liberalisation of Large District Heating Networks
Dusan JakovljevicEuroheat & Power, Brussels
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Euroheat & Power
"Association of Associations"
Members in 32 countries, incl. 21 national district heating & cooling (DHC) and combined heat & power (CHP) Associations:
Austria, Czech Republic, Denmark, Estonia, Germany, Finland, France, Hungary, Iceland, Italy, Lithuania, Latvia, The Netherlands, Norway, Poland, Romania, Russia, Slovakia, Sweden, Switzerland and The United Kingdom.
Euroheat & Power
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Euroheat & Power
Areas of Activity Lobbying
– Positioning in EU policies
Pooling of expertise and technical cooperation– Market analysis / statistics and certification– Assessing the societal / environmental impact– Elaborating common guidelines (quality assessment)– Common research platform
Exchange of experience and meeting platform– Forums for utilities / industries– Conferences, exhibitions
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Eliminate prejudices and market the societal advantages of CHP/DHC
Create transparency and increase credibility Raise political awareness for opportunities and
problems Link interests to political targets / measures Create technical toolbox needed for successful
policy implementation
Lobbying for CHP/DHC
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DHC: the link
Surplus heatfrom industry
Municipal Waste
CHP
Biofuels
Fossil fuels
Geothermal
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Liberalised Market: Characteristics
decentralised ownership a large pool of private
actors competing in the market place
unbundling of production, distribution and supply
full market access necessity to change
company’s focus from production to customer
Policy View
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Euroheat & Power
Liberalised Market: Benefits
increased investment increased energy efficiency becoming a market player employment and training customer benefits environmental awareness
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Dangers of tariff only model
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Euroheat & Power
Private Sector Participation in District Heating
Up to 1990 in general Western Europe: municipal and customer
ownership Eastern Europe: State ownership
From 1990 in general Significant changes Liberalisation of Electricity and Gas markets Direct impact on district heating
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Private Sector Participation in District Heating
Four alternative ownership models Full state or municipal control Full private control Mixed ownership and management – PPP
(PPP = Public Private Partnership) Non profit cooperatives – customer ownership
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Private Sector Participation in District Heating
Public Private Partnership – different models Operation or management contracts Leasing Concession Generation-only-privatisation Minority private equity, invited Minority private equity, stock market (IPO) Majority private equity Full private ownership with municipal support
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Euroheat & Power
Current ownership structure
Rough indication of ownership structure in CEE countries
privatised/concessioned
municipalities
state
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Euroheat & Power
Examples of ownership in District Heating
Full public ownership
Helsinki, München, Wien, Gothenburg, Budapest Full private ownership
Berlin, Hamburg, Malmö Public Private Partnerships
Tallinn, Vilnius (leasing)
Paris (concession - since 1927!)
Warsaw, Brno, Riga, Romania (generation only)
Mannheim, Brescia (IPO)
Praha, Skopje (private majority)
Southampton (full private with municipal support)
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Euroheat & Power
Private Sector Participation in District Heating
Important prerequisites for private participation Good regulatory framework (heat tariffs, no gas
subsidies) Detailed regulation must be avoided Market philosophy Non political governance, commercial behaviour Duration of contracts for PPP
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Euroheat & Power
Private Sector Participation in District Heating
Assessing Private Participation in District Heating Is the decision process focused on business? Is a private actor realising environmental benefits? Is a private actor looking to a long-term perspective? What local focus will a private actor have? Is a private partner financially/technically credible? Is the national legislation appropriate for DH?
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Euroheat & Power
Private Sector Participation in District Heating
Concluding Remarks Many types of partnership are possible Realise that District Heating is local business Realise that District Heating is infrastructure Market approach is necessary Negotiate contracts carefully – also exit options Private money is often needed – and welcome
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Euroheat & Power
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