Practices

JRC Technical Report – Analysis of Member States' rules for allocating heating, cooling and hot water costs

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Analysis of Member States' rules for allocating heating, cooling and hot water costs in multi-apartment/purpose buildings supplied from collective systems

 

 

The purpose of this report by the Joint Research Centre (JRC) is to provide a systematic overview of the existing thermal cost allocation rules in Member States (MS), characterising them in term of key features, such as the permitted/recommended ranges of share of variable cost allocated according to readings from individual metering devices, use of correction factors and minimum and maximum thresholds etc. The outcome of this report might be used to guide Member States in designing/revising their thermal energy cost allocation rules.

 

From the JRC assessment, in sixteen MS rules on the allocation of space heating or hot water consumption in multi-apartment buildings supplied from a central heating system have been put in place.

 

According to the analysis, the majority of MS introduced cost allocation schemes with a significant share (e.g. 50%-70%) based in metered consumption. This is in line with the current evidence that savings have been found in cases where a substantial proportion of costs have been allocated based on measured consumption. In some Eastern Countries , the share of fixed costs are higher than the average (≥ 60%). This can be in part explained by their specific climatic and building stock conditions (e.g. higher average heating distribution system energy losses, limited individual heating control devices). Nevertheless, allocation rules with a low consumption based cost share can be an insufficient incentive for energy efficient behaviour and can limit the reduction of energy consumption in multi-apartment buildings.

 

Some MS allow for some flexibility in the choice of the distribution of variable/fixed costs (e.g. depending on dwelling size and level of consumption in the German case), that can be agreed, case by case, between landlord and final customer within certain limits.

 

Other MS use a different approach, dividing the heating expenses on the base of voluntary consumptions, measured with heat meters, and non-voluntary consumption, independent of user behaviour; the share of variable and fixed costs is thus calculated case by case per building. This method is more complex than the others and, for the Italian case, requires a building energy audit to be implemented by an energy expert.

 

In the majority of the MS analysed, the same cost allocation principle used for space heating is applied to hot water consumption.

 

In order to take into account that in multi-apartment buildings, some dwellings are naturally colder due to their unfavourable location and that thermal energy can leak between the apartments, several countries include adjustment to their billing system in order to avoid that the move to an individual cost allocation system may be seen as unfair. Different countries apply diverse approaches to this heat cost allocation aspect (e.g. use of specific correction coefficients, introduction of minimum and maximum limits to the share of costs allocated to an individual unit).

 

The use of correction factors for the allocation of heating costs in multi-apartment buildings is mandatory in Denmark, Czech Republic and Lithuania, it is forbidden in Austria, Germany and Italy, while in France and Poland their application is voluntary.

 

As regards common area heat cost allocation rules, some MS include their heating costs in the total cost for heating and then allocate it to tenants according to the existing allocation rules; others  distribute these costs according to individual dwelling property area (m2).

 

In order to enforce their application and prevent illegal behaviour (e.g. not allowing meter readings or meter tampering), well designed individual heat cost allocation rules should also include appropriate and effective penalties/incentives. For instance, in Slovenia, dwellings for which consumption could not be measured, not because of a technical fault, but because the access is not allowed by the occupant or a device had been tampered with, are charged 300% of the average consumption.

 

In its final remark, the report concludes that there is no one solution that fits all. Different thermal cost allocation methods shall be used in different countries considering their specific characteristics, in term of climate, building stock, typical heating distribution systems and user habits.

 

 

You can download the report from the relevant JRC webpage at the link below.