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Factors that affect the price of district heating

There are approximately 200 district heating companies in Sweden and there are major differences between the prices for connection and consumption, with the most expensive rates being more than twice those of the cheapest. The prices of district heating varies largely between different firms and different geographic areas. Local conditions, fuel usage, and the density of customers are some factors that affect the price.

It is not cost-effective to construct parallel networks that distribute the hot water from the thermal power station to your residence or premises. This means that, in the distribution link at least, a "natural monopoly" exists in the market.

For this reason, there is only one district heating supplier per geographic area which in turn limits the choice of suppliers. To be able to connect to a district heating system your building must be in proximity to an already existent network.

Several factors affect pricing

The pricing of district heating is complex and not state regulated, it is affected by several different factors, such as: the district heating company's pricing philosophy and choice of fuel, municipal decisions, the size of the distribution network, local ground and soil conditions, market share and local consumption ownership maintenance requirements of the plant and the network and official Government energy policy.

District heating prices are also affected by taxes, i.e., carbon dioxide tax, but also by other tradable financial instruments such as emission rights and electricity certificates, etc.