IDEAS home Printed from
   My bibliography  Save this article

A review of the pricing mechanisms for district heating systems


  • Li, Hailong
  • Sun, Qie
  • Zhang, Qi
  • Wallin, Fredrik


Heating represents the largest proportion of energy use as supplied to consumers across all end energy uses. Therefore, there is huge potential for energy savings in the heating sector in order to reduce the emission of CO2. District heating (DH) has been considered an efficient, environmentally friendly and cost-effective method for heating in buildings, and is playing an important role in the mitigation of climate change. In the interest of fairness and in the highly competitive market the DH companies operate, there is a strong need to develop a novel heat pricing mechanism in order to promote sustainable development of DH systems. In this paper, existing methods and models regarding heat pricing have been reviewed. The features of different pricing mechanisms have been analysed, including advantages and disadvantages. Insights into developing an advanced pricing mechanism for DH systems have been offered.

Suggested Citation

  • Li, Hailong & Sun, Qie & Zhang, Qi & Wallin, Fredrik, 2015. "A review of the pricing mechanisms for district heating systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 56-65.
  • Handle: RePEc:eee:rensus:v:42:y:2015:i:c:p:56-65
    DOI: 10.1016/j.rser.2014.10.003

    Download full text from publisher

    File URL:
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. Björkqvist, Olof & Idefeldt, Jim & Larsson, Aron, 2010. "Risk assessment of new pricing strategies in the district heating market: A case study at Sundsvall Energi AB," Energy Policy, Elsevier, vol. 38(5), pages 2171-2178, May.
    2. Karlsson, Asa & Gustavsson, Leif, 2003. "External costs and taxes in heat supply systems," Energy Policy, Elsevier, vol. 31(14), pages 1541-1560, November.
    3. Fahlén, E. & Ahlgren, E.O., 2010. "Accounting for external costs in a study of a Swedish district-heating system - An assessment of environmental policies," Energy Policy, Elsevier, vol. 38(9), pages 4909-4920, September.
    4. Henning, Dag, 1997. "MODEST—An energy-system optimisation model applicable to local utilities and countries," Energy, Elsevier, vol. 22(12), pages 1135-1150.
    5. Korppoo, Anna & Korobova, Nina, 2012. "Modernizing residential heating in Russia: End-use practices, legal developments, and future prospects," Energy Policy, Elsevier, vol. 42(C), pages 213-220.
    6. Schramm, Gunter, 1991. "Marginal cost pricing revisited," Energy Economics, Elsevier, vol. 13(4), pages 245-249, October.
    7. Rezaie, Behnaz & Rosen, Marc A., 2012. "District heating and cooling: Review of technology and potential enhancements," Applied Energy, Elsevier, vol. 93(C), pages 2-10.
    8. Andersson, M., 1994. "Shadow prices for heat generation in time-dependent and dynamic energy systems," Energy, Elsevier, vol. 19(12), pages 1205-1211.
    9. Della Valle, Anna P., 1988. "Short-run versus long-run marginal cost pricing," Energy Economics, Elsevier, vol. 10(4), pages 283-286, October.
    10. Zhang, Junli & Ge, Bin & Xu, Hongsheng, 2013. "An equivalent marginal cost-pricing model for the district heating market," Energy Policy, Elsevier, vol. 63(C), pages 1224-1232.
    11. Poputoaia, Diana & Bouzarovski, Stefan, 2010. "Regulating district heating in Romania: Legislative challenges and energy efficiency barriers," Energy Policy, Elsevier, vol. 38(7), pages 3820-3829, July.
    12. Verbruggen, Aviel, 1983. "Cogeneration -- allocation of joint costs," Energy Policy, Elsevier, vol. 11(2), pages 171-176, June.
    13. Westin, Paul & Lagergren, Fredrik, 2002. "Re-regulating district heating in Sweden," Energy Policy, Elsevier, vol. 30(7), pages 583-596, June.
    14. Linden, Mikael & Peltola-Ojala, Päivi, 2010. "The deregulation effects of Finnish electricity markets on district heating prices," Energy Economics, Elsevier, vol. 32(5), pages 1191-1198, September.
    15. Sjödin, Jörgen & Henning, Dag, 2004. "Calculating the marginal costs of a district-heating utility," Applied Energy, Elsevier, vol. 78(1), pages 1-18, May.
    16. Difs, Kristina & Trygg, Louise, 2009. "Pricing district heating by marginal cost," Energy Policy, Elsevier, vol. 37(2), pages 606-616, February.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Song, Jingjing & Wallin, Fredrik & Li, Hailong, 2017. "District heating cost fluctuation caused by price model shift," Applied Energy, Elsevier, vol. 194(C), pages 715-724.
    2. Sayegh, M.A. & Danielewicz, J. & Nannou, T. & Miniewicz, M. & Jadwiszczak, P. & Piekarska, K. & Jouhara, H., 2017. "Trends of European research and development in district heating technologies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 68(P2), pages 1183-1192.
    3. repec:eee:appene:v:221:y:2018:i:c:p:308-318 is not listed on IDEAS
    4. Chmielewski, Adrian & Gumiński, Robert & Mączak, Jędrzej & Radkowski, Stanisław & Szulim, Przemysław, 2016. "Aspects of balanced development of RES and distributed micro-cogeneration use in Poland: Case study of a µCHP with Stirling engine," Renewable and Sustainable Energy Reviews, Elsevier, vol. 60(C), pages 930-952.
    5. repec:eee:energy:v:135:y:2017:i:c:p:788-798 is not listed on IDEAS
    6. Lake, Andrew & Rezaie, Behanz & Beyerlein, Steven, 2017. "Review of district heating and cooling systems for a sustainable future," Renewable and Sustainable Energy Reviews, Elsevier, vol. 67(C), pages 417-425.
    7. repec:eee:eneeco:v:71:y:2018:i:c:p:411-420 is not listed on IDEAS
    8. Colmenar-Santos, Antonio & Rosales-Asensio, Enrique & Borge-Diez, David & Collado-Fernández, Eduardo, 2016. "Evaluation of the cost of using power plant reject heat in low-temperature district heating and cooling networks," Applied Energy, Elsevier, vol. 162(C), pages 892-907.
    9. repec:eee:energy:v:153:y:2018:i:c:p:170-184 is not listed on IDEAS
    10. Shamshirband, Shahaboddin & Petković, Dalibor & Enayatifar, Rasul & Hanan Abdullah, Abdul & Marković, Dušan & Lee, Malrey & Ahmad, Rodina, 2015. "Heat load prediction in district heating systems with adaptive neuro-fuzzy method," Renewable and Sustainable Energy Reviews, Elsevier, vol. 48(C), pages 760-767.
    11. repec:eee:energy:v:153:y:2018:i:c:p:136-148 is not listed on IDEAS
    12. repec:eee:appene:v:202:y:2017:i:c:p:248-258 is not listed on IDEAS
    13. Li, Yu & Rezgui, Yacine & Zhu, Hanxing, 2017. "District heating and cooling optimization and enhancement – Towards integration of renewables, storage and smart grid," Renewable and Sustainable Energy Reviews, Elsevier, vol. 72(C), pages 281-294.


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:rensus:v:42:y:2015:i:c:p:56-65. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.