District heating costs in single-family houses—from initial investment to the end of its life cycle
It is advisable to do several calculations of the total cost of various heating systems when choosing which heating system to use. When choosing a heating system for single-family houses, the choice is usually made between district heating, ground source heat, and various heat pumps, which have grown in popularity as forms of heating in recent years.
“The advantage that district heating has over other heating sources is its low life cycle cost. The low cost of district heating is due to, among other things, a flat consumer price, the reliability of heating, and low maintenance costs. In addition, the district heating network connection fee is low considering the long operating life of the system,” states Markku Sutinen, Customer Relations Manager of Oulun Energia’s heating services.
Both the well-designed district heating network, operated by Oulun Energia, and the production based on renewable energy sources further reduce the consumer price in Oulu, where district heating is among Finland’s most affordable when comparing prices in big cities.
“National coverage focuses mainly on the price level of the Greater Helsinki area, which gives a false impression of the cost of district heating here in Oulu, for example,” Sutinen notes.
In the case of ground source heating and heat pumps, the costs are significantly higher due to the capital required for the initial investment, maintenance of the equipment, and the impact of changes in electricity prices on the heating invoice. District heating is protected from changes in the price of electricity because it is produced entirely locally and is not directly linked to international pricing, unlike electricity, for example.
In properties with district heating, only a few watts of electricity is used for heating and warm water, to operate the pumps and to run the automated system, while ground source heating uses about 1/3 of the heating energy consumed for heating. For example, a property with ground source heating that uses 18 MWh of heating energy requires about 6,000 kWh of electric energy to operate.
“You should test out the total cost of heating using different medians of exchange electricity, as the effects can be notable. In the last two years, the increase in the price of electricity has been reflected especially in ground source heat and electrically heated properties as a rise in heating costs,” Sutinen outlines.
For example, in a 240 m2 detached house, renovating the heating system from electric heating to district heating decreased the total consumption of electricity by more than a quarter.
The cost of district heating in construction
In Oulu, district heating has long been a popular form of heating for single-family houses, and it is widely available in Oulu’s city centre and urban areas. The district heating network is being built with the growing Oulu region and currently new district heating areas include, for example, the Hiukkavaara and Jääkärinkangas residential areas.
Investments in construction, such as the connection fee for district heating, HPAC design, and the procurement and installation of the heat distribution centre, are included in calculating the cost of district heating.
For single-family houses, the price of the district heating connection is calculated from the size of the property and the contracted water flow and the length of the connecting cable, both available in the heating plan. The connection fee for a single-family house starts from EUR 2,900, which includes 10 metres of connection cable. Additional metres of connection cable from the border of the property to the heat distribution centre cost EUR 60 per metre.
Using Oulun Energia’s Turnkey Service, a heat distribution centre connected to district heating costs EUR 3,800 on average for a single-family house. Connecting to district heating and the equipment and its installation therefore has a cost starting from EUR 6,700 for single-family houses.
Operating costs of district heating
In addition, the life cycle costs of district heating include fixed annual fees, as well as any maintenance and repair costs. The contracted water flow of district heating, i.e., the basis for the fixed fee, is rated according to the maximum heat demand of the property. In Oulu, the temperature for the rating is -32°C.
The fixed fee of district heating for single-family houses is EUR 463.74/year on average. The unit rate is EUR 66.61/MWh. The average annual consumption of a customer is 18 MWh (based on the standardised house set by Finnish Energy), which makes the average price EUR 92.37/MWh.
The total operating cost of district heating for single-family houses is thus around EUR 140/month.
“In general, the costs of district heating are very moderate. The technology used in district heating is long-lasting. And if necessary, it is easy and fast to get the standard-sized spare parts. The heat distribution centre does not require any separate maintenance and the technical operating life of the unit is approximately 25 years,” Sutinen outlines.