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District Heating and Cooling

Annex XIII Project 06

The Research / IEA DHC Annexes / 2020-2023 / Annex XIII / Annex XIII Project 06

The district heating business model 2050

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Project summary

The district energy business cannot be developed further by technical improvement, only. Future impact and changes will also come from updated and innovative business models and financing schemes.

In this project, the researchers will address necessary business model and financing changes for the 2050 business case of district energy. They combine academics with expertise on business model development in district energy and on unlocking finance for district energy with practitioners (one district energy provider, two cities and one industry organization). The research area is business and finance.

The specific issues that will be addressed are to: (i) identify the conditions for the district energy business case in 2050 and the necessary business logic to support it and to (ii) develop an understanding amongst investors on the role that DHC investments can have in the EU’s Action Plan for Financing Sustainable Growth and the EU’s Green Deal.

To identify the future business conditions existing policy and regulation aiming at 2050 (like the Paris Agreement), future competition to district energy, changes in resources and activities for generating heat and hot water to meet future customer demand (reflecting the demand from conventional customers of heat and hot water, prosumers and cooperative solutions) are accounted for.

Two possible, future business models for district energy are prototyped and validated by means of input from practitioners in the network of the industry organization Danish Board of District Heating (DBDH) promoting district energy internationally. When the validation is finalized, the business models will be assessed by a Sustainability Balanced Scorecard (SBSC), providing an indication on the sustainability impact (e.g. carbon footprint reduction) of the developed solution, its economic impact (e.g. return on investment (ROI), cash flows, pay-back-period) and the related risks; resulting in a comprehensive bankability assessment.

With this information available, information will be collected from investors on how to finance this kind of investment. By means of dialogue an understanding amongst investors of the DHC investment is established.

Target groups

  • Policy makers
  • District energy practitioners
  • District energy investors

...interested in green energy.

Deliverables / Outcomes

  • Report on promising district heating business models in 2050

Project lead

IVL, the Swedish Environment Research Institute
Box 21060
100 31 Stockholm

Dr. Kristina Lygnerud
Phone: +46727086626
E-Mail: kristina.lygnerud@ivl.se

Project partners

  • Albertslund Municipality, Denmark
  • DBDH (Danish Board of District Heating), Denmark
  • Stuttgart University of Applied Sciences, Germany
  • Veolia, Germany
  • Nice Metropolis, France