Controlling upward energy price pressures through energy company and property sector cooperation

14 March 2019

District heating companies have again raised their prices in the current heating season and it is the occupants of residential buildings who foot the bill. SATO Technical Director Jari Kanervo proposes that energy companies and the property sector both accept responsibility. Kanervo believes that property sector actors should work together with energy producers towards sustainable energy management solutions, for example by capitalising on IoT technologies.


According to Jari Kanervo, Technical Director at rental housing provider SATO, individual energy conservation projects often seek to sub-optimise consumption without taking combined effects into account, and their benefits therefore tend to be short-lived. One rising trend, for example, is the use of exhaust air heat pumps for heating purposes. Kanervo says that while this may allow most of the property's energy needs to be inexpensively met for the most part of the year, demand will nonetheless spike when the weather turns cold and the property must then turn to district heating companies. Selling energy only in the cold season is not profitable for district heating companies, however, and this is reflected in the prices they charge.

- Since demand rises rapidly in the cold season, district heating companies need to turn on back-up power plants, which makes energy production considerably more expensive and steps up the adverse environmental impacts of heat production. District heat pricing is to a considerable extent based on transient peak output that may only last for a few hours, and this is problematic. At the same time, changes in pricing structure geared to  place greater emphasis on base fees materially reduce the return on traditional energy consumption investments and thus inevitably impact on the volume of energy investments. Increased cooperation, for example by jointly developing local hybrids for energy and heat production, could address this issue, Kanervo muses.

The most recent hikes in the price of district heat were seen this winter in Helsinki, where heat became nearly one-fifth more expensive overnight. Kanervo emphasises that the repeated increases in the price of district heat are paid by the entire property sector and ultimately by the occupants of residential buildings, in the form of either higher maintenance charges or higher rents.** **

Joint optimisation through artificial intelligence

Kanervo highlights developments in IoT technologies and the utilisation of real-time environmental data from buildings in conjunction with localised weather forecasts, which have already proved their reliability. According to Kanervo, property sector actors and district heating companies should join forces to make use of data accumulated by both properties and energy companies to allow the comprehensive optimisation of heat distribution to residential buildings. Such optimisation should be directly reflected in the cost of residential heating.

- If we know the time of day when the price of energy and residential buildings' energy consumption are at their lowest, the buildings can be brought to a slight degree of excess heating at that time, for example in the early hours of the morning, and the excess heat can then be used for heating at the time of day when energy prices are at their highest. Various heat pump solutions and domestic hot water tanks would also be excellent tools for shifting energy production away from peak consumption, but locating a mutually acceptable implementation model has proved challenging to date. Within even the foreseeable future, heat pumps and tanks could also serve as balancing power in electricity consumption and thus property owners, too, could profit from their contribution to power grid balancing, Kanervo continues.

Building-specific environmental data and artificial intelligence are already used at SATO buildings to even out energy consumption. The utilisation of data available from energy companies would nonetheless open up entirely new possibilities for optimisation.

Kanervo estimates that its smart energy management solution has allowed SATO to improve the energy efficiency of its buildings by as much as 3.5% from a year before, and this has brought down energy expenditures. Last year, as many as 10,000 SATO homes were already hooked up to an energy management system that is based on real-time environmental data, and the figure is set to double in the current year.  

For more information please contact:

SATO Corporation
Jari Kanervo, Technical Director, phone 044 555 1111,