District heating in a time of change: From coal to modern technologies backed by new regulation

The transformation of the Czech district heating sector is, according to Jan Šefránek, chairman of the Energy Regulatory Office (ERÚ) Council, a crucial step towards meeting climate targets and ensuring sustainable and efficient heat supply. Since 2022, the Energy Regulatory Office (ERÚ) has been changing regulatory rules to support investment, transparency and a fairer distribution of costs among customers. Nevertheless, the district heating environment remains largely unstable for investors, with significant risks to their further investments.

According to Šefránek, the Czech district heating sector is undergoing fundamental changes in connection with the overall energy transition. The core objectives of this transformation are to reduce greenhouse gas emissions, use energy efficiently and deploy modern technologies. Unlike the electricity and gas sectors, however, district heating is highly local and diverse in terms of individual systems, creating a number of specific challenges.

Based on 2023 data, households account for 45 % of total heat consumption in district heating systems. Price fluctuations, which have been pronounced and frequent in recent years, therefore have a major social impact. District heating systems are highly developed in the Czech Republic, which is considered a competitive advantage for the country compared with other EU states. In a modern energy system, they represent an important source of flexibility – for example, when surplus renewable energy generation (RES) is used in electric boilers or heat pumps.