Monetary incentives encourage switch from oil and electric heating to renewable energy

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A brand-new oil-burning furnace shines in the boiler room of the home of Markku Kohonen in Haukipudas. The house, which was built nearly 40 years ago, will be heated with oil for the next decades as well.
      Kohonen pondered for a long time whether he should switch to wood pellets or a heat pump.
      “The heat pump was the most attractive, but pretty soon I understood that with the price that I would have to pay to set up a well for the heat in the ground, I would be able to heat my house with oil for quite a few years”, he says.
     
From January next year EUR 30 million will be earmarked as subsidies for owners of single-family houses, or proprietors of row houses, and apartment buildings who switch to renewable energy for heating.
      Renewable sources include heat energy taken from the ground or water with heat pumps. Wood pellets or other wood-based fuels can also be considered renewable energy.
      “It is also possible to use so-called hybrid solutions, such as systems using solar energy and, and air or water heat pumps”, says engineer Katja Outinen of the Ministry of the Environment.
     
Not even the state investment subsidy would have affected Kohonen’s decision to stay with oil.
      “I had to reject pellets because they are so cumbersome. If you don’t build a massive storage silo, you have to drag sacks of them all the time, about once a week. With oil, you just place an order twice a year.”
      Finding a place to store the pellets also felt problematic. “If I would have put them in the attic, it would have required an expensive rebuilding of the structure. My wife, for her part, would not have liked it if the silo had been put on the terrace next to the boiler room.”
     
Now Kohonen ponders what the attitude of the state will be to oil heating in the future. “Will there be punitive taxes, for instance? On the other hand, I have confidence that the possible decisions will not come into effect immediately.
      Many others are expected to choose something completely different. The Ministry of the Environment estimates that there will be enough money for about 10,000 households.
     
The percentage of costs to be covered by the subsidy is to be decided in September or October. The Ministry of the Environment estimates the average subsidy will be EUR 3,000.
      The amount will depend on what kind of a heating system will be replaced.
      The most expensive move will be to switch from direct electric heating to some other heating method. In a detached house this means that piping and radiators will have to be installed at a cost of EUR 4,000 - 5,000. On top of that, a heat pump system taking heat from the ground can cost between EUR 12,000 and 18,000, depending on the surrounding soil.
      It is significantly cheaper to switch from oil heating to an air and water heat pump system. The whole conversion costs between EUR 8,000 and EUR 12,000.
     
Changing from oil to wood pellets costs about EUR 12,000.
      The prospect of state subsidies in the near future could cause a market disturbance in the field. Director Petri Koivula of the Finnish Heath Pump Association fears that sales of heat pumps could grind to a halt for about six months and then experience a massive surge.
      “The subsidies should continue during the next government term as well, so that Finland might be able to meet its obligations in using renewable energy”, Koivula says.


Previously in HS International Edition:
  Wood energy alters rural landscape (16.8.2010)
  Helsinki´s Hanasaari B power plant to close down by 2025, Vuosaari to receive new unit (13.1.2010)
  Renewable energy targets pose problems for cities (25.2.2008)

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