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District Heating and Cooling

Annex III Project 09

The Research / IEA DHC Annexes / 1990-1993 / Annex III / Annex III Project 09

Promotional manual for District Energy Systems

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Purpose of the manual

District heating and cooling (DHC) systems are well proven approaches for meeting the thermal energy requirements of buildings in an efficient and reliable manner. DHC systems compete in the market for thermal energy services with individual building technologies. Competitive success for DHC is determined by the extent to which the district system approach is preferred by decision makers to individual building heating and cooling options which are available.

The installation and operation of DHC systems can provide significant economic, energy and environmental benefits to the community in which they are located as well as to the customers of the system. Both the extent and desirability of these social benefits are being increasingly recognized by many national governments. This recognition has been translated into support for DHC systems by many governments and energy-related organizations.

In recent years, the International Energy Agency (IEA), through the District Heating Implementing Agreement, has provided support to many technology development projects related to district energy systems. The technology development project supported by the IEA and national government have made significant contributions related to technical issues of DHC system design and operation.

It has become increasingly clear, however, that the most significant obstacles to the implementation of new or expanded district energy systems can come from institutional rather than technical issues. The goal of this district energy system promotion manual is to address one set of institutional issues, those which are related to the effective promotion of new or expanded district systems.

Proponents of major district system project may work for several possible types of organizations. In many cases, the general manager of an existing system will take the initiative to identify a major expansion project. In other cases, an older system which requires renovation may be purchased and revitalized by a DHC company. Other project proponents may be elected officials or administrative managers within municipal governments.

What all of these project proponents have in common is the challenge of gaining support for their district system concept from a diverse group of organizations whose interests may be affected by its implementation. May different types of organizations, such as municipal governments, utilities, owners and managers of large buildings and private developers, are affected by district systems. Each of these organizations has its own mandate, interests and method for making commitments for capital investments. Each also has its perceptions and, in many cases, misperceptions of district heating and cooling systems.

A major challenge exists, therefore, for the proponent or "champion" of a district system project to gain the acceptance and support from this diverse set of organizations for a project being proposed. Similarly, an established DHC system must also maintain support for its ongoing operations from those groups whose interests it affects. Gaining support for a new district system or maintaining support for an established system requires the effective promotion of the benefits of the district system approach in general and the proposed or established DHC system in particular. More specifically, the proponent must clearly and credibly communicate the ways in which district systems can contribute to meeting each group's self-interest.

Most of the people who are involved with district heating and cooling have a sound understanding of the technology and are eager to operate a business which provides efficient, reliable thermal energy to their subscribers. However, many do not have experience in marketing and promotion and have difficulty seeing themselves in the role of promoters. It is not surprising that the business disciplines required to organize and deliver activities to persuade others of the merits of district systems are quite different from the technical disciplines required to plan, install and operate the system itself.

The IEA has therefor identified the need to provide practical assistance to those people who are attempting to solicit support for proposed or established district energy systems. The most useful form for this assistance has been judged to be a promotion manual.

The purpose of the promotion manual which follows is to help promoters and developers first identify the groups which must be approached and then organize a set of targeted promotion activities which will communicate the most factual and persuasive evidence available. Through these activities, the promotion objectives of awareness, credibility and ultimately support for the project being developed can be achieved among the target groups and organizations.

In order to organize promotion activities, it is important to understand that three types of decisions determine the degree of success of district systems in penetrating the market for thermal energy services. These three types of decisions provide the basis for organization of this manual:

  1. First, building owners must decide to connect and remain connected to the DHC network. They must be persuaded that their needs will be better met through connection to the district system than through individual building systems. The decision process of building owners and how promotion activities can influence this process are discussed in Part C of this manual.
  2. Second, the DHC system itself must be conceived, implemented and supported on an ongoing basis. For municipal systems, many organizations and business firms, various municipal government departments, political officials and the electric and gas utilities serving the community, are affected by the implementation of a DHC system.

    The decision makers in each of these groups must be persuaded that a district system represents a sound approach. The steps associated with the establishment and continued viability of district systems and the role of promotion in this process are discussed in Part D.

  3. Third, the attractiveness of district systems to decision makers is strongly influenced by governments policies and programs at the state/provincial, national and international levels. These policies and programs can take several forms:
    • Regulatory measures, such as energy efficiency standards or environmental controls
    • Economic instruments, such as taxes, subsidies and price controls
    • Informational programs, which can distribute data on technologies or provide moral support for technologies viewed as desirable. As discussed in Part E of this manual, the net result of these policies and programs can be either to enhance or to inhibit the market prospects for district systems.

Planning a Promotion Campaign

The term "promotion" can have different meanings in everyday usage. Furthermore, it is possible to confuse promotion with the terms "marketing" and "sales". For the purpose of this manual, a simple definition of promotion will be followed, a definition which is consistent with that found in marketing courses and textbooks.

Promotion consists of communication which is initiated between district system developers and operators and those groups whose interests are affected by the district system operation. The purpose of these communication activities is to influence the attitudes and decision behaviour of these groups in order to maintain or increase their level of understanding, acceptance and support for district systems. Due to the nature of many promotion activities, sales and public relations can be seen as major components of promotion.

Promotion can be seen as one of several activities performed within the more general function of marketing. In addition to promotion, marketing is concerned with such issues as the determination of a district system's competitive positioning, setting priorities among new customer prospects, establishing a customer service orientation and managing the system's pricing policy.

A promotion plan is required to organize an effective set of promotion activities. To prepare a promotion plan, the developer or operator of a DHC system must carry out four steps:

  1. Identify target groups for promotion activities and understand their current attitudes and behaviour patterns.
  2. Establish realistic promotion objectives based on current attitudes and behaviour patterns of the target group.
  3. Select the specific promotion activities to reach the objectives.
  4. Utilize the most persuasive benefits and examples in communication activities.