Low-income residents struggle to replace costly oil heating

A report by Danish broadcaster DR highlights how low-income residents are being priced out of replacing oil heating systems. Gaby Neumann, who runs a course centre in Møborg south of Lemvig, says rising oil prices are forcing her to close her business during the winter.

Neumann welcomes groups for yoga, mindfulness and meditation at a former village school. She has operated the centre for five years, but only during the summer because keeping the building warm through the winter is too expensive.

“I am under pressure because my business cannot grow. I have to close during the winter, but I would like more visitors to use my centre,” Neumann said.

Her old oil-fired heating system cost around 25,000 kroner last winter just to keep the rooms above freezing. With oil prices rising sharply, she expects the bill to reach as much as 36,000 kroner this year.

“I would like to be green, but it is impossible for me to scrap the oil boiler,” she said.

Neumann would probably need more than a single heat pump to heat the building. A heat pump costs between 120,000 and 170,000 kroner, while a ground-source heating system would also require a major investment.

She can currently apply for up to 27,000 kroner through the government’s heat pump subsidy scheme.

“It is not enough. I do not have the money to invest,” she said.

Criticism of current subsidy scheme

Steffen Damsgaard, chairman of Landdistrikternes Fællesråd, said residents in rural districts with low property values and limited incomes should receive more support.

“People in rural districts must also be able to take part in the green transition. It is simply necessary to offer a much larger subsidy,” he said.

Damsgaard described the current first come, first served scheme, which provides subsidies of up to 27,000 kroner, as unfair. He said it largely benefits people who can already afford to make the investment themselves.

The Danish Economic Council has reached a similar conclusion. Its calculations show that two out of three subsidies are awarded to homeowners who would have bought a heat pump without financial support. Recipients are also largely homeowners with high incomes and higher education.

“It is a relatively expensive scheme for society because many heat pumps would have been installed anyway. And it is not targeted at people with lower incomes,” said environmental economist Jette Bredahl Jacobsen.

She said that even after receiving the 27,000-kroner subsidy, homeowners would still need to find at least 100,000 kroner to install a heat pump.

One option would be to target subsidies at people earning below a set income level, Jacobsen said. More favourable loan terms for low-income households could also help, as heat pumps would typically provide cheaper energy in the long term.

Minister working on new model

The government’s policy platform calls for a new and more targeted subsidy system to replace oil and gas heating systems.

Climate, energy and utilities minister Samira Nawa said the government wanted to support people with low incomes or low property values, but she did not give details of the model or eligibility thresholds.

“We want to ensure that financial circumstances do not prevent people from taking part in the green transition,” Nawa said.

She said she was currently working on a specific model to help households whose low incomes prevented them from making the switch.

“More than anything, I want us to retire oil and gas boilers,” Nawa said.