SATO

Controlling upward energy price pressures through energy company and property sector cooperation

SATO Corporation, Press release, 14th March 2019 at 1:20 pm

District heating companies have again raised their prices in the current heating season and it is the occupants of residential buildings who foot the bill. SATO Technical Director Jari Kanervo proposes that energy companies and the property sector both accept responsibility. Kanervo believes that property sector actors should work together with energy producers towards sustainable energy management solutions, for example by capitalising on IoT technologies.

 

According to Jari Kanervo, Technical Director at rental housing provider SATO, individual energy conservation projects often seek to sub-optimise consumption without taking combined effects into account, and their benefits therefore tend to be short-lived. One rising trend, for example, is the use of exhaust air heat pumps for heating purposes. Kanervo says that while this may allow most of the property's energy needs to be inexpensively met for the most part of the year, demand will nonetheless spike when the weather turns cold and the property must then turn to district heating companies. Selling energy only in the cold season is not profitable for district heating companies, however, and this is reflected in the prices they charge.

- Since demand rises rapidly in the cold season, district heating companies need to turn on back-up power plants, which makes energy production considerably more expensive and steps up the adverse environmental impacts of heat production. District heat pricing is to a considerable extent based on transient peak output that may only last for a few hours, and this is problematic. At the same time, changes in pricing structure geared to  place greater emphasis on base fees materially reduce the return on traditional energy consumption investments and thus inevitably impact on the volume of energy investments. Increased cooperation, for example by jointly developing local hybrids for energy and heat production, could address this issue, Kanervo muses.

The most recent hikes in the price of district heat were seen this winter in Helsinki, where heat became nearly one-fifth more expensive overnight. Kanervo emphasises that the repeated increases in the price of district heat are paid by the entire property sector and ultimately by the occupants of residential buildings, in the form of either higher maintenance charges or higher rents.