Good governance and the regulation of the district heating market

Abstract

This chapter discusses how the fundamental values of energy democracy and energy justice and the principles of good governance can play a role in developing a more consistent approach towards the regulation of the energy sector and, more in particular, in dealing with the challenges of regulating the heat transition in the Netherlands in a just way. Energy justice and energy democracy are energy specific concepts that are gaining influence when interpreting and applying the principles of good governance in the energy sector. Both concepts are based on the awareness that the energy transition is a matter for all citizens of the European Union and should not be ignored by policymakers and independent regulators. The heat transition in the Netherlands significantly impacts the position of consumers, prosumers and vulnerable customers, as an ever-larger group of consumers will be disconnected from the gas grid and will be connected to heat networks. Energy democracy and energy justice and the principles of good governance are important values that should guide policy-makers in making choices that affect consumer participation and the protection of vulnerable customers in the heat transition. It is elaborated how energy democracy and energy justice and the principles of good governance indeed can provide a useful framework within which advantages and disadvantages can be weighed of regulatory choices to be made when modernising the regulation of the heat market in a just way. In particular, there remains a lot to gain in terms of flexible regulation and supervision as well as the facilitation of consumer/prosumer participation in the Netherlands. Because it is likely that most heat consumers will remain locked in for a relatively long time in natural monopolies facilitated by older generation heat networks and the lack of alternative heating, substantive consumer-participation could yield positive results regarding community engagement in heat network management and heat supply.