ABSTRACT

This chapter discusses the variety of business models used by developers of district heating in the context of liberalised energy markets. It highlights the way that different business structures are made more, or less, feasible by regulatory and incentive frameworks. The relatively high capital costs of heat network infrastructure mean that network configuration is both a crucial, and highly variable, dimension of district heating business models. The ratio of heat supply to sunk investment tends to be higher for schemes in areas of high heat density, supplying a mix of user groups. Heat network economics tend to mean that larger networks have lower average costs than smaller systems. In liberalised energy markets, where there is an established higher carbon heat alternative, the absence of a regulatory framework specific to new district heating infrastructure limits the scope for effective development and attainment of the scale and scope economies of the technology.