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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

Listed author(s):
  • 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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  1. Vine, Edward, 2005. "An international survey of the energy service company (ESCO) industry," Energy Policy, Elsevier, vol. 33(5), pages 691-704, March.
  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. 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.
  4. Kelly, S. & Pollitt, M.G., 2009. "Making Combined Heat and Power District Heating(CHP-DH) networks in the United Kingdom economically viable: a comparative approach," Cambridge Working Papers in Economics 0945, Faculty of Economics, University of Cambridge.
  5. 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.
  6. Woodman, Bridget & Baker, Philip, 2008. "Regulatory frameworks for decentralised energy," Energy Policy, Elsevier, vol. 36(12), pages 4527-4531, December.
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