District heating prices 15-20 percent cheaper than last year

Heating plant in Tallinn.
Heating plant in Tallinn. Source: Siim Lõvi /ERR

District heating prices will drop by an average of 15 percent this winter, and even by 20 percent in Tallinn, as wood chips and natural gas are significantly cheaper this year.

The district heating season usually starts in mid-September but was pushed back by the milder than warmer than expected weather.

However, due to the sharp drop in temperatures this week, Utilitas said the number of people turning on the heating has doubled compared to the summer. 

The price of natural gas has dropped from €170 per megawatt hour to €40 this year, which has caused prices to drop. Approximately 20 percent of the fuel used to in district heating is natural gas.

"Since the end of the last heating season, we have reduced the price twice, and today we are about 20 percent lower than in the previous heating season," said Utilitas Tallinn chairman of the board Robert Kitt.

The price of natural gas may stay at around €40 per megawatt hour this winter, as storage tanks are full and consumption is low.

"October will also be rather warm and the forecast is that this winter as a whole, at least in much of Europe, will be rather warm. This means that there are no shortages in sight, but rather a surplus of gas. At current future prices, prices may not rise this winter," said Margus Kaasik, chairman of the board of Eesti Gaas.

"Of course, the period is long and still lies ahead, but in the coming months there seems to be a stable outlook (on price)," he added.

Wood chips have also fallen in price and are approximately 50 percent cheaper. Overall, bills are expected to be lower across Estonia this year.

This is reflected in cost requests submitted to the Competition Authority.  

"If we compare the end of last year, what the average marginal prices for district heating were and what they are now, the average fall across the country is somewhere between 14 and 15 percent. Of the 170 or so network districts across Estonia, two-thirds will certainly be affected by the price change, and it is still going in a downward direction," said Margus Kasepalu, head of the authority's Energy Department.

"What we are still working on is Tartu and Pärnu – also big areas – and our calculations show that the price could even come down by a couple of cents, and we are in close correspondence with them," he added.

Compared to last winter, at the current gas price, even houses with local gas heating will be several times cheaper.

"As a whole, we are talking about three or four times [cheaper], which is quite significant. And if we have a warm winter, that could have an additional impact.," said Kaasik.


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Editor: Marko Tooming, Helen Wright

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