District Heating

District heating distributes heat and hot water to residential, commercial and public buildings over a large area, often a town or city. This system of heating has been used for many years in Europe, especially Scandinavia, as well as in North America, China, and the countries of the Former Soviet Union. The greatest benefit of district heating is in generating economies of scale compared to the cost of individual heating systems. However, many systems today are inefficient and outdated due to obsolete equipment and lack of capital investment. This has led to high losses in heat production and distribution, and inefficiencies are compounded by the use of expensive fossil fuels. Simple efficiency upgrades can greatly enhance system performance and financial profitability, while reducing heat costs for end-users and environmental emissions.

How do Projects Work?

-Triggers for Projects: District heating upgrades are usually triggered by: i) unaffordable heat costs for customers, typically due to poor technical condition of the system or use of costly fossil fuels; ii) unreliable supply of heat caused by poor technical performance; and, iii) negative environmental impact caused by the fuel used, e.g. low quality brown coal.

-Two types of sub-projects: Upgrades usually involve: i) the replacement or retrofit of the heat source (boilers); and, ii) upgrades to the heat distribution network (pipelines and heat exchanger stations). Boiler replacements may include fuel-switching to replace use of fossil fuels (coal, heating oil and natural gas) with cleaner burning and economical alternatives, such as renewable biomass.

-Additional revenue streams: District heating systems may be connected to industrial facilities that generate waste heat as a by-product of production processes. This heat can be sold to generate additional income streams. In some cases, co-generation units (combined generation of heat and electricity) can also be installed to increase overall efficiency and generate revenues from electricity sales.

For more information about our work see Sustainable Energy Finance or contact us.