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District Heating and Cooling

Annex XIV Project 07

The Research / IEA DHC Annexes / 2023-2026 / Annex XIV / Annex XIV Project 07

Can a sustainable DH business model be decisive for future competitiveness?

Project summary

To date, ample research has addressed one component of the DH business model, namely the price model. It is, however, only one out of several components of the business model. Other components are found both on the customer and heat supply side. On the customer side, aspects like value, segments, relationships and communication channels must be accounted for. On the heat supply side, key resources and activities need to be undertaken and key partners must be linked to the activity of DH companies.

Research on DH business models has, to date, mainly focused on understanding the inclusion of new technologies and collaboration forms with new stakeholders. From such studies, it has been identified that new values from, for example, the inclusion of low temperature waste heat are not capitalized on in the business model established for the low-temperature investment. Instead, the conventional, high temperature business model is applied and, as a result, the profitability of the low-temperature DH business case is eroded. DH companies are facing competition from alternative heat suppliers and to forgo possibilities to capitalize on values that can be generated is not efficient.

Earlier work has shown that the ability of value chains of DH companies to generate sustainable values is focusing on economic and environmental sustainability, whereas values generated from social sustainability are fragmented. The issue addressed in this project is to identify what social values can be generated in a DH value chain and how the inclusion of such values in the business model would change existing business models. The topic is addressed by studying a case company on a new DH market (Canada). The suggested research will focus on adding the dimension of social sustainability to a company developing its DH BM and strategic plans. A new DH market has been selected as it is known that mature markets are characterized by lock in effects resulting from infrastructure investments undertaken for many decades. A new DH market should be exposed to a lower level of lock in effects, making it increasingly feasible to identify how additions/ removals from the value chain and business models can strengthen social value.

Target audience and specific issues

  • DH companies

Deliverables / Outcomes

  • Final report with executive summary

  • A peer reviewed publication in a scientific journal

  • A podcast series of 3 podcasts during the lifetime of the project 

  • A final event.

Project lead

Lund University
John Ericssons väg 4
223 63 Lund

Dr. Kristina Lygnerud
Email: kristina.lygnerud@energy.lth.se

Partner Organizations

  • Danish Board of District Heating (DBDH), Denmark

  • Lonsdale Energy Corporation, Canada

  • Vito, Belgium