Competitiveness of district heating in Denmark

District heating plays a central role in Denmark’s lowcarbon energy strategy, but competitive pressures require ongoing reform to ensure affordable and efficient heat supply. In 2024, an impact assessment using the TIMESVarmelast model explored how alternative approaches to allocating heatproduction loads could influence future heat prices and production patterns in the Greater Copenhagen area.

The study compared the current costminimisation approach with a pricebased contract system, testing outcomes under 2030 market conditions. The analysis showed that pricebased allocation would consistently dispatch the cheapest available plants, leading to lower average heating prices, greater use of heat pumps and electric boilers, and reduced reliance on fossilfuelbased thermal plants. These insights are directly relevant to municipal and national authorities considering reforms to districtheating regulation and market design to support decarbonisation, costeffectiveness, and consumer affordability.