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ACM gives outlines of possible systems for the future Dutch district-heating market

In the future, district-heating networks will be used more and more often for heating homes and tap water. For the realization of the ambitions in the national climate agreement, approximately 750,000 households need to switch from gas-fired installations to heat networks by 2030. The Netherlands Authority for Consumers and Markets (ACM) finds it important that public interests such as affordability, security of supply, and sustainability are properly safeguarded in the realization of that ambition. That is why several choices regarding the organization of the district-heating market need to be made in a new heat act. ACM is ready to contribute substantively to that discussion, and, in that context, has outlined three possible systems for the organization of the Dutch heat market in its publication ‘Market systems for the market for district heating, and the role of network companies’.

For each system, ACM explains what the heat market would look like, and what the roles and positions would be of the market participants that are active on the district-heating market. In that context, it is explained for each system in what way public interests can be safeguarded. In those explanations, ACM discusses the role of private companies as well as that of companies that are in public hands, including network companies that are already active in the operation of power grids and gas networks. In addition, ACM explains for each of the three systems in what way ACM is able to oversee the proper functioning of the heat chain.

The first system is based on a single district-heating company that owns the heat network, produces heat (or purchases it), and supplies it to users. This is currently the most common system in the Netherlands. The second system is based on an unbundling of the heat network company and the supplier. In the third system, there is a single heat network company with multiple heat suppliers. This system looks a lot like the current electricity and gas markets. However, it remains to be seen whether this system can be successfully implemented in practice. In the Netherlands as well as in other countries, there is no real-world example of such a heat market (or at least, not yet). In the first two systems, price regulation by ACM with regard to both heat network operation and supply is necessary in any case. In the third system, price regulation is necessary for, in any case, heat network operation. Price regulation with regard to the supply of heat will depend on the level of competition that is possible.

ACM does not have a preference regarding these three systems, but, with this paper, ACM does explain how consumer interests and public interests, such as affordability, security, and sustainability can be safeguarded if one of these options (or a combination thereof) is chosen.

See also

24-06-2021 ACM publication ‘Market systems for the market for district heating, and the role of network companies’ (in Dutch)