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Market opening and third party access in district heating networks

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  • Söderholm, Patrik
  • Wårell, Linda

Abstract

The purpose of this paper is to analyse the possible effects of introducing TPA in district heating networks by identifying and scrutinizing a number of possible scenarios for increased competition. The analysis builds on a theoretical discussion of economic efficiency in district heating operations, and the possible impacts on consumer prices of a market opening. An important conclusion is that regulated TPA may have small positive effects on competition, and at the same time it can have a negative impact on the possibility to run the integrated district heating operations in a cost-effective manner. This conclusion stems in part from the observation that most district heating networks are local in scope. Moreover, district heating operations are highly interdependent in, for instance, that the level of the return temperature of the water will affect the efficiency of combined heat and power plants. For these reasons, the introduction of the so-called single-buyer model or, perhaps even more preferable, an extended and more transparent producer market could represent more efficient market designs. Moreover, in networks with clear natural monopoly characteristics an ex ante price regulation must be considered.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 39 (2011)
Issue (Month): 2 (February)
Pages: 742-752

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Handle: RePEc:eee:enepol:v:39:y:2011:i:2:p:742-752

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Web page: http://www.elsevier.com/locate/enpol

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Keywords: District heating Third party access Competition;

References

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  1. Katrin Rehdanz, 2005. "Determinants Of Residential Space Heating Expenditures In Germany," Working Papers, Research unit Sustainability and Global Change, Hamburg University FNU-66, Research unit Sustainability and Global Change, Hamburg University, revised Dec 2005.
  2. Grohnheit, Poul Erik & Gram Mortensen, Bent Ole, 2003. "Competition in the market for space heating. District heating as the infrastructure for competition among fuels and technologies," Energy Policy, Elsevier, Elsevier, vol. 31(9), pages 817-826, July.
  3. Christian Growitsch & Thomas Wein, 2005. "Negotiated Third Party Access—An Industrial Organisation Perspective," European Journal of Law and Economics, Springer, Springer, vol. 20(2), pages 165-183, September.
  4. Soderholm, Patrik, 2000. "Fuel flexibility in the West European power sector," Resources Policy, Elsevier, Elsevier, vol. 26(3), pages 157-170, September.
  5. Fridolfsson, Sven-Olof & Tangerås, Thomas P., 2009. "Market power in the Nordic electricity wholesale market: A survey of the empirical evidence," Energy Policy, Elsevier, Elsevier, vol. 37(9), pages 3681-3692, September.
  6. Ek, Kristina & Söderholm, Patrik, 2008. "Households' switching behavior between electricity suppliers in Sweden," Utilities Policy, Elsevier, Elsevier, vol. 16(4), pages 254-261, December.
  7. Amundsen, Eirik S. & Bergman, Lars, 2006. "Why has the Nordic electricity market worked so well?," Utilities Policy, Elsevier, Elsevier, vol. 14(3), pages 148-157, September.
  8. Westin, Paul & Lagergren, Fredrik, 2002. "Re-regulating district heating in Sweden," Energy Policy, Elsevier, Elsevier, vol. 30(7), pages 583-596, June.
  9. Söderholm, Patrik & Pettersson, Fredrik, 2008. "Climate policy and the social cost of power generation: Impacts of the Swedish national emissions target," Energy Policy, Elsevier, Elsevier, vol. 36(11), pages 4154-4158, November.
  10. Tennbakk, Berit, 2000. "Power trade and competition in Northern Europe," Energy Policy, Elsevier, Elsevier, vol. 28(12), pages 857-866, October.
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Cited by:
  1. Zhang, Junli & Ge, Bin & Xu, Hongsheng, 2013. "An equivalent marginal cost-pricing model for the district heating market," Energy Policy, Elsevier, Elsevier, vol. 63(C), pages 1224-1232.
  2. Hammar, Henrik & Sjöström, Magnus, 2011. "Accounting for behavioral effects of increases in the carbon dioxide (CO2) tax in revenue estimation in Sweden," Energy Policy, Elsevier, Elsevier, vol. 39(10), pages 6672-6676, October.

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