There are over 600 cases in Finland where local SMEs have helped municipalities, companies and individuals stop heating with fossil fuels–especially oil. Companies are generating 1,5 TWh of energy and creating €50M in turnover. The total thermal capacity for these boilers is around 370 MW.
Heating with bioenergy has a long tradition in a country of over 20 million hectares of forests. Nevertheless, from the 1960’s to 1990’s, oil heating gained wide popularity. Early 1990’s entrepreneurs – mainly from farming and machine contracting – began wondering how to offer heating services to a variety of customers to make it easier for them to get renewable, locally based energy. The solution they came up with was a heating entrepreneurship business model.
Bioheat entrepreneur offers the customer an easy solution, most often by investing on behalf of the customer, in a boiler, produce or purchasing of local bioenergy feedstocks and maintaining the boiler. This allows customers to heat their business or homes easily without worrying about maintenance or investment. The heating price is stable as well, with the price indexed on the prices of heating oil, wood chips and consumer prices Statistic Finland collects.
Heating entrepreneurs are often maintaining small and medium size heating networks – few hundred meters to few kilometers, which they often invest in, build and maintain themselves.
Over the years, the government has actively helped entrepreneurs through investment aid and forestry politics to make bioenergy more competitive against low oil prices. In recent years, the price of oil has steadily been rising due to tax policy and global market prices which has made bioheat a true market success.
A recent study shows that such support for these activities is wise: the economic impact of a bioheat entrepreneur company, as 5000 MWh of oil heating is replaced, is for state over €200.000 and for local economy over €300.000 while creating 2,5 jobs.
The most suitable locations for bioheat networks have already been built. However, there are plenty of individual oil heating on individual building and within industry solution. Here these SME’s are facing the rising competitor from national and global industry service companies. The common feature for both is that their favoured source of energy is bioenergy.
Prospects are good for the entrepreneurs to grow and more to come in. At the same time they struggle with a constricting financial environment when seeking new clients and investments. The pay back time for investments is typically between 8-15 years, which private banks have started to see a too long time.
Increasing regulation for the sector, mainly related to emissions and to show sustainability of their feedstocks is also well debated among the entrepreneurs.
For more information, you can refer to the following presentation.