Unlike the price of electricity and gas, the price of district heating is not formed in market conditions, but is approved by the Competition Authority. The district heating sector has undergone a very significant development during the last decade. For example, if in 2008 the Tallinn district heating network produced heat almost 100% from natural gas, now the share of gas in heat production has decreased to about 30%. Similarly, the consumption of gas and liquid fuel has also decreased in other district heating networks. Among the larger district heating networks, Tartu and Pärnu are predominantly based on wood pellets, and Narva and Kohtla-Järve-Jõhvi network area are predominantly based on oil shale and shale gas. The heating undertakings of the county centres also mainly use wood pellets. The share of undertakings where either gas or shale oil is used as the only fuel has dropped to five percent. There are 170 district heating regions with established maximum price of heat approved by the Competition Authority, of which 137 have a sales volume of less than 10,000 MWh per year. Figure 1 shows an overview of the district heating sector, which shows the Tallinn district heating network to have the largest share of sales volume (39.4%). Tartu, Narva, Kohtla-Järve-Jõhvi network regions and Pärnu district heating networks also have a major impact. The share of the remaining networks remains significantly smaller. For example, the share of larger county centres (Võru, Kuressaare and Viljandi) is less than 2%.

Figure 1. Overview of sales volume shares of district heating network regions.

In 2022 the Competition Authority approved the maximum price of heat in 150 network areas and with some exceptions, the price increased. In dozens of network areas, the maximum price of heat was approved several times during the year, in some areas even several times in one month. On average, the maximum price of heat in network areas increased by around 20% in 2022. The increase in the maximum price of heat in 2022 has primarily been caused by a significant increase in the prices of fuels used in heat production (natural gas, wood pellets, shale oil etc), as well as electricity and CO2 emission units. The dynamics of fuel prices in the years 2015–2021 and the growth curves for the months of May, November and December 2022 indicated in Figure X, shows that the prices of fuel and electricity have multiplied. However, at the end of the year, ie in December 2022, the prices of both natural gas and shale oil will be falling (at the same time, the price of natural gas by orders of magnitude), which is why, for example, the maximum prices of heat in network areas producing heat from 100% gas have already decreased significantly. When the fuel market stabilises, a price drop can also be expected in network areas producing heat from other fuels.

Figure 2. Fuel prices €/MWh and CO2 price €/t

In terms of district heating, it is important to continue the transition to renewable energy, as well as to reduce the proportion of natural gas and oil. In conditions of high energy prices, energy saving becomes significantly more profitable.