Reference scenario heating costs
Assuming the respondents to the survey are representative of the area, the following calculation holds:
Total household heating demand
- Oil consumption: 85 % of the population own oil-based boilers and consume 2 150 liters of oil a year. 0.85*290*2 150 = 528 700 liters of oil/year
- Additional oil consumption: 4.7 % own a combination of oil and electrical heating, consuming 1 763 liters of oil/year. 0.047*290*1 763 = 23 919 liters of oil/year
- Total oil consumption: 552 619 liters of oil annually = 5 526 MWh/year
- Electricity consumption: 10.3 % own electrical heating and consume 10.73 MWh annually. 0.103*290*10.73 = 320.51 MWh/year
- Additional electricity consumption: 4.7 % own a combination of electrical and oil-based heating and consume 9.79 MWh a year. 0.047*290*9.79 = 133.44 MWh/year.
- Additional electricity consumption: 85 % own oil-based boilers which use a minimum of 310 KWh/year per boiler. 0.85*290*310 = 76 415 KWh/year
- Total electricity consumption: 530.4 MWh/year
Total household fuel costs
For simplicity, we will only be using the fuel costs of the base year. For 2004, the Danish Energy Agency estimated fuel costs ad household to be 74.4 DKK/GJ for heating oil and 63.2 DKK/GJ for electrical heating. Both prices are adjusted for inflation and in the 2007 price level.
- An oil consumption of 5 526 MWh equals app. 19 894 GJ, which results in fuel costs of 1 480 084 DKK excluding taxation costs etc.
- An electricity consumption of 530.4 MWh equals app. 1 909 GJ, which results in fuel costs of 120 677 DKK excluding taxation etc.
- The above sums to total fuel costs for the area of 1 600 761 DKK in 2004.
Greenhouse gas emissions from existing heating
The DEA table from Introduction to Cost Benefit Analysis gives the emission coefficients for certain types of fuels used in private and district heating plant boilers. In order to keep things simple, we will ignore other emissions and only concentrate on CO2 in this example. For oil-based private boilers, consumption of 1 GJ emits 74 Kgs of CO2. For electrical heating generated from central power plants, consumption of 1 GJ emits 236 Kgs of CO2. (Note that prior to 2008, the DEA did not estimate CO2 emissions for electricity ab household, as the price of CO2 is included in the household cost of electricity. The value used in this example is the estimate from 2008.)
- For an oil consumption of 5 526 MWh/19 894 GJ, corresponding emissions are 1 472 156 Kgs of CO2 (1 472.2 tons of CO2).
- For an electricity consumption of 530 MWh/1 909 GJ, corresponding emissions are 450 524 Kgs of CO2 (451 tons of CO2).
- The above sums to a total of 1 923 tons of CO2 alone
Cost of emissions
Up until 2010, a CO2 tax of 25-90 DKK/ton existed for the light and heavy industries, but this was slowly phased out in favour of a CO2 quota price in 2010, with prices rising from 105 DKK/ton in 2010 to 290 DKK/ton in 2030 (2008 price level). For simplicity, a CO2 tax of 90 DKK is assumed for the entire period in this example. This tax has to be multiplied by the net social impact factor of 1.17, resulting in a net cost of 105.3 DKK/ton of CO2.
Disregarding the fact that electricity prices already include the payment of CO2 taxes, total costs of CO2 can be assumed as:
- 1 923*105.3 = 202 492 DKK annually