Energy giant Vattenfall is to stop installing district heating schemes in existing residential property because of the cost and the likely impact on consumers, the Telegraaf reported on Friday.

The company, owned by the Swedish state, told the paper it had been forced to take the decision because of “deteriorating market conditions”. The cost of city heating is too expensive to be attractive to consumers, the spokesman said.

Amsterdam recently had to spend €4 million compensating 2,000 households faced with spiraling city heating costs, because they had no alternative. Plans for district heating schemes have also been halted in both the Dutch capital and Rotterdam.

City and district heating schemes use surplus heat generated by industry or from burning waste and are seen as an important part of the transition to cleaner energy.

The previous cabinet wanted to double the number of households connected to a city heating scheme to one million in the coming seven years. City heating schemes are central to Dutch plans to switch away from gas as an energy source.

However, the new government has already said that it will abandon the previous government’s commitment to phasing out gas-fired central heating boilers.