HEIDI JUHLER

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COUNTRY BY COUNTRY / 2013 SurveyNorway - 2

NORWAY

District Heating

KEY FIGURES

2011 2009 2007

Total installed District Heat capacity (in MWth) 2,893 MW 2,305 MW 1,900 MW

Trench length in km for transport and distribution network (one way)

1,334 1,100 900

Estimation of total investment in District Heating and Cooling (Euro)

213 M Euro 145 M Euro 100 M Euro

Estimation of number of jobs in the District Heating sector 1,600 1,100 900

New connections to District Heating (Heat sales in TJ) 1,440 TJ

Number of District Heating utilities 100 70

Number of District Heating systems 120 90

DISTRICT HEATING SALES TO CUSTOMERS IN TJ

2011 2009 2007

Residential sector 2,910 2,793 1,944

Industrial sector 2,079 2,587 2,160

Services and other 8,870 7,980 6,696

TOTAL 13,859 13,360 10,800

AVERAGE DISTRICT HEATING PRICE IN EUR/GJ

2011 2009 2007

EUR/GJ (excl. VAT) 16 20.8 18

1

District Heating sales to customers (in TJ)

TJ

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HEAT SALES TURNOVER

Total District Heat Sales (in TJ)

Average District Heating Price (in EUR/GJ)

Heat sales Turnover (in Million EUR)*

2011 13,859 16 221.7

2009 13,360 20.8 277.8

2007 10,800 18.0 194.4

* Product value of the first and second column

ENERGY SUPPLY COMPOSITION FOR DISTRICT HEAT GENERATED

2011 2009 2007

Source In TJ In % In TJ In % In TJ In %

In cogeneration

Coal and coal products 245 1.6% 230 1.47% 198 1.71%

Renewables

Combustible renewables 2,958 18.9% 2,600 16.60% 1,900 16.4%

Waste 5,953 38% 5,400 34.48% 4,100 35.32%

Renewable Electricity 1,998 12.7% 1,300 8.30% 1,195 10.30%

Heat pumps (output) 1,489 9.5% 1,500 9.58% 903 7.78%

Industrial surplus heat 788 5% 1,400 8.94% 700 6.03%

Natural gas 916 5.8% 830 5.30% 615 5.30%

Oil and petroleum products 1,327 8.5% 1,100 7.02% 800 6.89%

Electricity 1,300 8.30% 1,195 10.30%

TOTAL 15,674 100% 15,660 100% 11,606 100%

The three different categories are defined as follows:1. “Other“ - covers heat-only boilers, electricity and one-third of the heat originating from heat pumps. 2. “Direct Renewable“ - covers the use of renewables in heat-only boilers and installations other than CHP.3. “Recycled heat“ - includes surplus heat from electricity production (CHP), waste-to-energy plants,

and industrial processes independently from the fuel used for the primary process. Two-thirds of the energy delivered by heat pumps are also considered as recycled heat.

Energy supply composition of generated District Heat

Other1

Direct Renewable2

Recycled Heat3

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FUEL USE FOR DISTRICT HEATING OVER THE LAST 10 YEARS

SUMMARY OF THE NATIONAL DISTRICT HEATING MARKET The total size of the national market for heat in terms of power generated was about 65 TWh/ 234 PJ, including the industrial sector, in 2011.

The District Heating and Cooling market came to 4 TWh / 14.4 PJ, i.e. 6% of the heatmarket. The District Heating and Cooling market has grown steadily, peaking in 2010, but fell in 2011 due to a mild winter and a surplus of electricity from hydropower, which accounts for more than 50% of the market for heat.

NATIONAL LEGISLATIVE FRAMEWORK HAVING AN IMPACT ON DISTRICT HEATINGThe Energy Act: concessions for District Heating companies (1986) connected to municipal energy planning systems to establish local District Heating networks as a supplement to the electricity system, using surplus heat and renewable resources. A regulation of prices to protect customers.

The Planning and Building Act: a building code from 2010 to bring down the amount of heating generated by fossil fuels and electricity. Electrical and fossil fuel heating is banned in all buildings over 500m2. A minimum of 60% of energy must come from renewable heat in all buildings over 500m2 and a minimum of 40% for buildings below 500 m2. There is an obligation to connect to a District Heating network. There is a ban on fossil fuels in new and renovated buildings.

A tax deduction for electricity is available for District Heating production and for the NOx tax.

EXISTING DRIVING FORCES AND/OR OPPORTUNITIES THAT FAVOUR AN EXPANSION OF DISTRICT HEATING There is a financial support scheme for District Heating and Cooling systems and for converting from fossil to renewable energies.

Planning for financial support is being done to switch from electrical to renewable energy in existing buildings.

Development of fuel use for District Heating

TWh

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EXISTING BARRIERS TO THE EXPANSION OF DISTRICT HEATING1. Energy efficiency targets with a new building code from 2015: All new houses and buildings are to be of passive house

standard. This might reduce the energy flexibility of the system, as electrical heating is once again the favourite source of heating.

2. Energy labelling system: discriminating District Heating and Cooling and bioenergy. A two-year process with authorities and organisations to agree upon terms.

3. The poor network of in-house waterborne systems is a barrier for expanding District Heating.

4. The green certificate system for electricity reduces the capital for District Heating expansion.

5. The environmental taxes are important, but not efficient enough to make changes and ensure better profitability from using renewable energy.

6. The lack of knowledge and interest about District Heating in major parts of the energy authorities, of the media and the population is a barrier to making the right decisions and provides fuel for myths about District Heating as an old-fashioned technology and a burden for customers.

A SHOWCASE DISTRICT HEATING SCHEME Hafslund Varme is the largest District Heating provider and system in Norway, with a concession for the city of Oslo. It serves approximately 60,000 units in the residential sector and 1,000 customers in the service sector. A major owner of it is the Municipality of Oslo.

To accelerate District Heating in Oslo in accordance with local and national climate objectives, a programme was launched in 2006. Thanks to that in Oslo in 2010 a growth in District Heating production of nearly 80% from 1,000 GWh to nearly 1,800 GWh was achieved, with the goal of exceeding 2 TWh before 2020. Furthermore, more than 180 million Euro have been invested in District Heating and Cooling – into base load from renewable and recovered heat. The peak load is being converted from fossil natural gas and fuel oil, with the goal to decarbonise District Heating in Oslo before 2016. The target is reduced local air pollution by reduced use of fuel oil by 50 million litres/year and reduced NOx emissions, corresponding to 60,000 cars covering a distance of 15,000 km/year.

2 Heat market

TOTAL HEAT DEMAND FOR 2011

Sector In TJ

Residential sector 108,000

Services and other sector 72,000

Industrial sector (space heat + process heat) 54,000

TOTAL 234,000

Total heat demand per sector

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CITIZENS SERVED BY DISTRICT HEATING

Number of citizens served by District Heating 35,000

Total number of citizens 5,000,000

SHARE OF ENERGY SOURCES USED TO SATISFY HEAT DEMAND IN THE RESIDENTIAL, SERVICES AND OTHER SECTORS COMBINED FOR 2011

Source In %

District Heating 6%

Natural gas 7%

Electricity 41%

Oil / Petroleum products 17%

Renewables and others 19%

Heat pumps 10%

TOTAL 100%

Electricity is the dominant source of energy for heating space and water. Oil boilers in the residential and service sector are being converted to District Heating and other renewable sources. Most of the oil boilers are still in the industrial sector. There is a total ban for oil heating from 2020. Energy efficiency targets with a passive house standard from 2015 might be a menace for District Heating and Cooling if the ban on electrical heating in larger buildings is abandoned.

Share of citizens served by District Heating

Energy sources used to satisfy heat demand

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3 District Cooling

KEY FIGURES

2011 2009 2007

Total installed District Cooling capacity (in MWth) 126.2 89.7 75.3

Total District Cooling sales (in MWh) 122,711 108,514 80,810

District Cooling trench length in km for transport and distribution network (one way)

53 50 45

District Cooling market development

Development of installed District Cooling capacity (in MWth)

MW

th

Development of District Cooling sales (in MWh)

MW

h

District Cooling trench length development (one way km)

km

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FUEL SOURCES USED BY DISTRICT COOLING NETWORKS IN 2011

Type of production In % in MWh

Compression chilling 7.0 % 8,188

Absorption chilling

Waste (outside cogeneration) 8.8 % 11,565

Free Cooling 9.2 % 11,298

Heat pump 75.0 % 99,075

TOTAL 100.0 % 132,137

DISTRICT COOLING DEVELOPMENT OVER THE LAST FIVE YEARS 2006 2011The District Cooling market is small, but growing. From 2006 to 2011, installed capacity has doubled and sales have increased by 160%, mostly in the service sector. The number of District Cooling enterprises has only increased from 8 to 11.

EXISTING DRIVING FORCES AND/OR OPPORTUNITIES THAT FAVOUR AN EXPANSION OF DISTRICT COOLINGThe District Cooling market is unregulated, as the market for cooling is smaller in Norway than in other European countries. Climate changes have led to colder summers. But the targets for passive houses will slightly increase the need for cooling in buildings and there is demand from the market. District Heating companies have to develop plans for District Cooling. There is a competition from other providers with local cooling systems.

EXISTING BARRIERS TO THE EXPANSION OF DISTRICT COOLING1. Competition with local cooling systems.

2. Investment support for District Cooling systems is new and equal to District Heating.

3. Actual guidelines for buildings are favourable to local systems.

4. The barrier is the lack of infrastructure in cities and in buildings, combined with the cold climate.

There is a small but growing market for cooling. The main source will be local heat pumps in buildings. There are no statistics for the cooling market.

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4 CHP in electricity generation

PERCENTAGE OF CHP IN ELECTRICITY GENERATION IN 2011: 1%

CHP/District Heat

Fuel sources used for CHP In TJ

Coal and coal products 248,216

TOTAL 248,216

DEVELOPMENTS CONCERNING CHP OVER THE LAST FIVE YEARS 2006 2011 There is some CHP in the industrial sector (0.09%), but not for electricity generation in Norway, except for Svalbard.

5 Climate conditions and energy use of buildings

NUMBER OF HEATING DEGREE DAYS IN 2012: 4,302, based on a base indoor temperature of 17°C.

DESCRIPTION OF THE CLIMATIC CONDITIONS Norway has three climate zones. Inland climate: dry and cold winters, between -10 to -40 degrees C, dry and warm summers. Coastal climate: mild winters, warm summers, rain. Polar climate: same variations between inland and coastal climates. The climate changes are expected to lead to warmer winters and more rain, but this winter and last winter have been colder than usual. The Nordic countries and Russia must expect extreme cold in winters to come. The summers have been wet and cold for the last five years. The period where there is demand for heat seems to have increased.

AVERAGE ENERGY USE OF BUILDINGS PER SQUARE METER IN THE YEAR 2011Average 201 kWh/ m² for heating.

NATIONAL DISTRICT HEATING ASSOCIATION

Norwegian District Heating AssociationNorsk FjernvarmePb 7184 majorstuen, 0307 Oslo, NorwayTel.: +47 916 37 125www.fjernvarme.no

Contact Person: Heidi Juhler E-mail: hmjuhler@energinorge.no