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District Heating Business Models and Policy Solutions: Financing Utilization of Low-Grade Industrial Excess Heat in the People’s Republic of China

In: Energy Efficiency Financing and Market-Based Instruments

Author

Listed:
  • Yang Liu

    (African Development Bank)

  • Shan Hu

    (Building Energy Research Center of Tsinghua University)

  • Brian Dean

    (Energy Efficiency and Cooling, Sustainable Energy for All)

  • Xilong Yao

    (Taiyuan University of Technology)

Abstract

The People’s Republic of China (PRC) has taken bold actions to utilize low-grade industrial excess heat to improve energy efficiency of districting heating systems since 2016. This study aims to draw policy insights into the PRC’s field experience with overcoming barriers to energy efficiency financing. First, we investigate split incentives, third-party access, and lack of heat resource mapping as key barriers of investing in district heating energy efficiency projects. Second, to enable the energy efficiency financing market, we analyze three business models: a utility-led model with third-party access, a heat production competition model, and an energy service company integrated model. The decision making in choosing these options in large part depends on the integration level of production, transmission, and distribution activities in a given district heating system. Third, the heat prices must signal new investments in district heating capacity adequacy. We suggest four options of excess heat pricing system cost, free-cost, a quantity target for clean heating, and indexing against the next best alternative. Finally, we conclude with policy implications to scale up energy efficiency financing in district heating. Although the analysis is specific for the PRC, the policy and financing issues are global opportunities for improving energy efficiency in district energy systems.

Suggested Citation

  • Yang Liu & Shan Hu & Brian Dean & Xilong Yao, 2021. "District Heating Business Models and Policy Solutions: Financing Utilization of Low-Grade Industrial Excess Heat in the People’s Republic of China," Economics, Law, and Institutions in Asia Pacific, in: Yang Liu & Farhad Taghizadeh-Hesary & Naoyuki Yoshino (ed.), Energy Efficiency Financing and Market-Based Instruments, chapter 0, pages 201-222, Springer.
    • Handle: RePEc:spr:eclchp:978-981-16-3599-1_9
    DOI: 10.1007/978-981-16-3599-1_9
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    More about this item

    Keywords

    Energy efficiency; District energy system; District heating; Excess heat;
    All these keywords.

    JEL classification:

    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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