Articles

The 1950s and 1960s: The welfare state and population growth

Growing populations and urbanization led to the growth of the suburbs. Many of these new suburbs were planned with district heating from the outset—municipalities, and sometimes jointly, invested in large, centralized CHP plants. For the end-users, district heating provided affordable, accessible, and convenient heat supplies that required little service and maintenance.

In the 1960s, preliminary explorations for oil and gas had taken place in the Danish part of the North Sea, and the private entrepreneur A.P. Møller-Maersk was awarded the concessional rights to these fossil-fuel reserves. Oil was first extracted from the oil platform Danfield in 1972. That same year, the commercial transmission company for natural gas (DONG, now known as Ørsted) was established with the Danish state as the only shareholder.

The global energy crisis and national-scale collective heat infrastructure planning

Policymakers and the Danish public warmly welcomed the newly discovered oil and gas reserves within the national sea territories. The Danish government now set out to create a long-term strategy for ensuring the stability of energy supplies well into the future. These strategies were outlined in the Danish Energy Plan 1976, with the key policy priorities captured by the headlines: energy independence, fuel diversification, and energy efficiency. Energy infrastructure planning initiatives laid out in this plan focused on using waste heat from industry, integrating CHP, and the harvest of locally available renewable energy resources.

1979: First heat supply act

The first Heat Supply Act, adopted in 1979, provided the legal framework for the heat planning initiatives ahead. National-scale collective heat- and energy infrastructure planning ensued. As a part of this energy planning, a process referred to as “zoning” strategically identified and mapped out nonoverlapping heat supply areas (or zones) for natural gas and district heating. In this way, zoning prevented internal competition between these two heat supply sources. The zoning processes aimed to ensure a healthy economy throughout the heat supply infrastructure system and that the overall objectives of the Heat Supply Act were met.

The nonprofit principle for heat pricing and the obligation to connect

The “obligation to connect” to collective heat supply infrastructures was adopted in 1982. The “obligation to connect” allowed municipalities to enforce the connection of municipal building stock to the collectively planned local heat infrastructures. This ensured a stable group of end-users / heat consumers and thus a stable economy for the heat suppliers. Citizens subject to the obligation to connect were obliged to pay the annual subscription fees to the heat supply infrastructures but not to use that heat source. Not all municipalities enforced the commitment to connect, and some only enforced it partially.

The underground district heating infrastructures were typically financed via favorable long-term loans (e.g., 20–50 years) afforded by the Municipal Credit Bank. The final price of heat was determined by the nonprofit principle / the principle of necessary costs. According to this pricing principle, the final price of heat-service provision for the end-user comprises the total and necessary heat costs. This includes heat generation-, transmission-, and distribution, as well as heat infrastructure investments-, management-, and service.

The 1980s: The scramble for oil and gas

In 1980, American experts estimated that oil and gas from the Danish North Sea could provide Denmark with energy independence for up to 20 years. Natural gas production began in 1984, and the Danish North Sea oil and gas generated revenue for the first time in 1988. In the following decades, the state-owned transmission system for gas from the privately-owned North Sea oil fields was gradually incorporated into the national heat-supply infrastructures.

The 1990s: Energy independence and growing environmental awareness

The Danish energy plan from 1990 (the Energy 2000 Action Plan) was widely considered the first global strategy for greenhouse gas reductions. This Danish energy plan set the scene for the low-carbon energy transitions and sustainable development initiatives ahead.

By the 1990s, the economy of the natural gas project was not doing well.

In 1990, the second revision of the Heat Supply Act integrated the objectives of the Energy 2000 Action Plan. The revised Heat Supply Act sought to increase the number of CHP plants in the national heat supply infrastructures and to support the economy of the national natural gas project. Heat infrastructure planning was decentralized. Local councils were now the relevant heat planning authorities, and future heat infrastructure planning initiatives would take place on a project-to-project approach. Future heat supply infrastructure planning activities ensured the logical continuation of the previous zoning practices. The use of natural gas and biomass was encouraged.

Bare field plants

District heating networks were extended throughout the country with the popularly labeled “bare field” (or greenfield) plants. Typically, the bare field plants were natural-gas fueled decentralized CHP plants serving smaller towns or villages. Heat distribution networks were established simultaneously as the heat production plants at these decentralized CHP plants, and the heat was generated via a natural gas-powered motor. In this way, the natural gas companies had none of the risks associated with a natural gas heat distribution network.

The price of natural gas increased unexpectedly, however, and the economy of the decentralized CHP plants suffered. For the end-users, this meant increasing heating bills.

Technologies allowing for biomass and biogas in the energy system matured rapidly during these years. The biomass agreement was adopted and, with this agreement, also ambitious plans for biomass integration into the energy system by the year 2000. In May 1998, Denmark was energy self-sufficient.

The 2000s: Biomass and wind power integration in the grid

Environmental awareness and concern grew in the following decades. Sustainability-related issues were the order of the day. The turn of the century marked an era of biomass- and wind power integration into the Danish energy system. As the ratio of biomass integrated into the Danish heat supply infrastructures increased, some have forwarded questions about the sustainability of this biomass.

Change readiness? Reflections from the past and looking into the future

In the future, large-scale industrial heat pumps and various short-term- and longer-term thermal storage solutions will facilitate the sector coupling processes necessary to integrate even more intermittent renewables into the Danish grid.

In Denmark, visionary politicians and public members have pushed for environmental awareness in Danish energy planning and policy from early on. Denmark’s story as a frontrunner in the global race toward low-carbon energy transition processes is a popular and widespread narrative. The top WEC ranking of the Danish energy system emphasizes the extent to which it does meet the energy trilemma criteria: energy security, energy equity, and sustainability.

For further information please contact: Katinka Johansen, katinka.johansen@soc.lu.se