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An assessment of the present and future opportunities for combined heat and power with district heating (CHP-DH) in the United Kingdom


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  • Kelly, Scott
  • Pollitt, Michael


As global fuel reserves are depleted, alternative and more efficient forms of energy generation and delivery will be required. Combined heat and power with district heating (CHP-DH) provides an alternative energy production and delivery mechanism that is less resource intensive, more efficient and provides greater energy security than many popular alternatives. It will be shown that the economic viability of CHP-DH networks depends on several principles, namely (1) the optimisation of engineering and design principles; (2) organisational and regulatory frameworks; (3) financial and economic factors. It was found that in the long term DH is competitive with other energy supply and distribution technologies such as electricity and gas. However, in the short to medium term it is shown that economic risk, regulatory uncertainty and lock-in of existing technology are the most significant barriers to CHP-DH development. This research suggests that under the present regulatory and economic paradigm, the infrastructure required for DH networks remains financially prohibitive; the implementation of government policies are complicated and impose high transaction costs, while engineering solutions are frequently not implemented or economically optimised. If CHP-DH is going to play any part in meeting climate change targets then collaboration between public and private organisations will be required. It is clear from this analysis that strong local government involvement is therefore necessary for the co-ordination, leadership and infrastructural deployment of CHP-DH.

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Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 38 (2010)
Issue (Month): 11 (November)
Pages: 6936-6945

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Handle: RePEc:eee:enepol:v:38:y:2010:i:11:p:6936-6945

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Keywords: Combined heat and power Energy sevice company District heating;


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  1. Babus'Haq, R.F. & Probert, S.D., 1994. "Combined heat-and-power market-penetration in the UK: Problems and opportunities," Applied Energy, Elsevier, vol. 48(4), pages 315-334.
  2. Pollitt, Michael, 2010. "Does electricity (and heat) network regulation have anything to learn from fixed line telecoms regulation?," Energy Policy, Elsevier, vol. 38(3), pages 1360-1371, March.
  3. Woodman, Bridget & Baker, Philip, 2008. "Regulatory frameworks for decentralised energy," Energy Policy, Elsevier, vol. 36(12), pages 4527-4531, December.
  4. Vine, Edward, 2005. "An international survey of the energy service company (ESCO) industry," Energy Policy, Elsevier, vol. 33(5), pages 691-704, March.
  5. Trygg, Louise & Amiri, Shahnaz, 2007. "European perspective on absorption cooling in a combined heat and power system - A case study of energy utility and industries in Sweden," Applied Energy, Elsevier, vol. 84(12), pages 1319-1337, December.
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Cited by:
  1. Connolly, D. & Lund, H. & Mathiesen, B.V. & Werner, S. & Möller, B. & Persson, U. & Boermans, T. & Trier, D. & Østergaard, P.A. & Nielsen, S., 2014. "Heat Roadmap Europe: Combining district heating with heat savings to decarbonise the EU energy system," Energy Policy, Elsevier, vol. 65(C), pages 475-489.
  2. Kelly, S. & Pollitt, M. & Crawford-Brown, D., 2012. "Building performance evaluation and certification in the UK: a critical review of SAP?," Cambridge Working Papers in Economics 1238, Faculty of Economics, University of Cambridge.


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