Business organization demands changes in district heating sector: Everyone can see that something should be done

Last year, Odsherred Forsyning was placed under reconstruction with a debt of over one billion kroner, and the municipality has subsequently sued ten people from the company's former management and board of directors with a claim for provisional compensation of 50 million kroner. 

The case has had consequences for district heating customers in the area, who are facing price increases of up to 76 percent and demands for high termination benefits. The district heating customers have complained to both the Danish Utilities Supervisory Authority and the Danish Appeals Board about the handling.

The remarkable case has not only had consequences for citizens and local politicians. The case risks weakening confidence in the district heating sector overall, believes Troels Blicher Danielsen, CEO of Tekniq, which organizes technical installation and construction companies.

- The risk is that confidence in the entire sector will disappear. This applies not only to our members, but also to citizens in general, and it could ultimately have consequences for the entire green transition, he tells DK Nyt.

That is why the organization is proposing the introduction of requirements for professional boards of directors in utility companies:

- The sector works with enormously large and complex projects, and it requires that people with the right skills are in charge of the crucial decisions, says Troels Blicher Danielsen.

- Basically, I believe that the entire sector must be marketed so that there is real competition instead of monopoly, but introducing professional boards of directors is one of the low-hanging fruits.

Requires changes

Troels Blicher Danielsen points out that district heating companies in practice have a monopoly on the heat supply in their areas, which calls for additional requirements for the governance of the boards. And with a number of cases in mind, of which Odsherred is simply the most controversial, changes are necessary.

- Based solely on the cases that we have seen in the most recent city council term, where the case in Odsherred is the most glaring, it is clear that something is not as it should be, says Troels Blicher Danielsen.

- Right now there is enormous uncertainty for both citizens locally, but also in general for the rollout of district heating nationwide. If we are to restore trust in the sector, I therefore believe that the politicians at Christiansborg should look at the structures in the entire sector.

He also fears that the case in Odsherred may help spread concern about the consequences it could have for local politicians if they sit on the boards.

- When an entire board is summoned, we risk ending up in a situation where in the future no one wants to sit on the boards for fear that they could end up in a similar situation.

Danish District Heating: The case in Odsherred is an exception

At the trade organization Danish District Heating, which organizes most district heating companies in the country, political chief Rune Moesgaard acknowledges that the case in Odsherred is serious. But he warns against generalizations:

- Although the case in Odsherred is serious, it is important to remember that it is an exception and is not representative of the entire sector. The vast majority of district heating companies operate responsibly and deliver stable, green and cheap district heating to their customers.

Rune Moesgaard highlights that the sector is already subject to strict regulation:

- It is important to remember that the district heating sector is already subject to extensive regulation and control from the authorities. This naturally places certain demands on the boards of directors of the companies. And many of the municipal companies already have external board members, he tells DK Nyt.

In addition, Dansk Fjernvarme points out that the industry itself has established codes for good board work and is continuously working to evaluate the competencies and composition of the boards.

In addition, it can be pointed out that it helps to ensure local considerations and anchoring when local politicians sit at the board table. But when the situation develops, as it has in Odsherred, Troels Blicher Danielsen believes that it is not worth much.

- The citizens who have been squeezed in Odsherred are probably quite indifferent to the local anchoring of the board right now.