Investing in heating networks must become more attractive, says Caspar Boendermaker, business development specialist at BNG Bank. He advocates a national guarantee fund so that municipalities can borrow more cheaply. And he offers a step-by-step plan. ‘We can significantly reduce the hurdles in realizing heating networks. That has to be the case, because not everyone is a top hurdler like Femke Bol.’
National guarantee fund
Heat networks may no longer be solely in the hands of private parties. This is what the cabinet recently decided. The new Collective Heat Supply Act even stipulates that the majority of shareholders must consist of public parties. ‘And so many municipalities are now thinking about how they can invest responsibly,’ says Caspar Boendermaker of BNG Bank. He calls the financial hurdles still high. ‘A heating network requires a lot of risk-bearing capacity.’ But something can be done about this with a national guarantee fund. ‘It would be good if that happens. With such a fund you can ensure lower financing costs, thanks to the guarantee, and this makes it possible for heating networks to make an attractive offer to residents.’
The plea for a national guarantee fund is contained in a plan that BNG Bank has drawn up together with the VNG. It also describes what else is needed to ‘make the heat transition a success’. Because a guarantee fund alone does not remove the risks of investments in heating networks. Boendermaker highlights a few points.
Clear rules of the game
For example, BNG Bank advocates clear rules for determining the heat price. The rates for a heating network must be cost-based and they must be transparent and explainable. Inspiration for this can be drawn from the water supply sector, Boendermaker explains. ‘The resident always pays the cost price for water. However, you pay more in South Holland than in Brabant, because of the more expensive water treatment. No one doubts it, because all costs and profits can be found in the annual reports. You can calculate it yourself and contact the regulator ACM if it is not correct.’
Transparent, explainable and cost-based rates are a basic condition. But before you decide on a heating network, you still have to do an analysis: is it indeed the cheapest solution for this neighborhood? Or is it smarter to let the residents heat the house with electrical installations, such as a heat pump?’ A convincing answer is needed to get residents to connect, according to Boendermaker. ‘And the more people participate in the heating network, the cheaper it becomes for everyone.’
But how do you know whether a heating network is the cheapest solution for a neighborhood? That is still difficult to determine. ‘The comparison is always made on the basis of different figures and calculation methods. There is a need for a standard methodology, with prices and inflation figures to be determined annually. Then everyone calculates and compares in the same way and it also becomes more transparent.’ A standard methodology also makes it possible to determine which social effects can be included in a calculation and how.
Coordinate subsidies
It is also important to properly align the subsidies with the municipal transition visions for heat, the BNG business developer emphasizes. ‘If a heating network is the cheapest solution for residents in a neighborhood, make sure that subsidies are possible on the connection costs of a heating network, but not on the purchase of a heat pump. And vice versa.’
Another potential risk with a heating network concerns the dependence on a large heat source. If the gas price rises, the price of heat from a heating network will also rise due to a legal link. That risk can largely be avoided. ‘Require that each heating network have multiple heat sources, so that the cheapest source can always be chosen and sufficient heat can always be supplied. Where possible, it is a good idea to also provide your own heat storage. This means you always have an extra source at hand and you can fill the heat storage mainly at cheaper times.’
Accelerate transition
The new Collective Heat Supply Act appears to be able to accelerate the heat transition. A guarantee fund is an important instrument, according to BNG Bank and the VNG. There is then a national organization that assesses all heating network projects. With a guarantee from the guarantee fund, heating companies can finance themselves more cheaply. ‘This makes the cost even lower and the resident even happier,’ says Boendermaker. He sees Denmark as an inspiring vision of the future. ‘Most Danes are already connected and everyone who joins the heating network is overjoyed. It is much cheaper and you have security for many more years. That’s what we need to do in the Netherlands too.’