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Contracts, business models and barriers to investing in low temperature district heating projects

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  • Lygnerud, Kristina
  • Wheatcroft, Edward
  • Wynn, Henry

Abstract

Approximately 1.2 EJ of energy are potentially available for recovery each year from urban heat sources in the EU. This corresponds to more than 10 percent of the EU’s total energy demand for heat and hot water. There are, however, a number of challenges to be met before urban waste heat recovery can be performed on a wide scale. This paper focuses on the non-technical issues related to urban waste heat recovery and is written on the basis of opinions gathered from stakeholders in the field. Three non-technical issues are focused upon. First, a number of important barriers to wide scale urban waste recovery are identified, and where applicable, recommendations are made regarding how to overcome these barriers. Second, important issues and challenges regarding contract design are identified and discussed. Key elements of heat supply contracts between the district heating company and the owner of the waste heat are described. Finally, the impact on business models of properties specific to urban waste heat recovery are discussed. Data were collected from two separate sources, both related to the ReUseHeat Horizon 2020 project, which addresses the application of urban waste heat recovery in existing district heating networks. First, a number of interviews with stakeholders were carried out. Second, information was collected from demonstrator sites involved in the ReUseHeat project. It was concluded that, for urban waste heat recovery to be taken up on a wide scale, there is still a large amount of work to do to overcome these major issues. This paper is novel in that key non-technical issues of urban waste heat recovery are discussed from the perspective of a large sample of actual stakeholders and practitioners in the field.

Suggested Citation

  • Lygnerud, Kristina & Wheatcroft, Edward & Wynn, Henry, 2019. "Contracts, business models and barriers to investing in low temperature district heating projects," LSE Research Online Documents on Economics 101286, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:101286
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    File URL: http://eprints.lse.ac.uk/101286/
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    References listed on IDEAS

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    Cited by:

    1. Gjoka, Kristian & Rismanchi, Behzad & Crawford, Robert H., 2023. "Fifth-generation district heating and cooling systems: A review of recent advancements and implementation barriers," Renewable and Sustainable Energy Reviews, Elsevier, vol. 171(C).
    2. Jodeiri, A.M. & Goldsworthy, M.J. & Buffa, S. & Cozzini, M., 2022. "Role of sustainable heat sources in transition towards fourth generation district heating – A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 158(C).
    3. Gjoka, Kristian & Rismanchi, Behzad & Crawford, Robert H., 2024. "Fifth-generation district heating and cooling: Opportunities and implementation challenges in a mild climate," Energy, Elsevier, vol. 286(C).
    4. Yao, Shuai & Wu, Jianzhong & Qadrdan, Meysam, 2024. "A state-of-the-art analysis and perspectives on the 4th/5th generation district heating and cooling systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 202(C).
    5. Wheatcroft, Edward & Wynn, Henry P. & Lygnerud, Kristina & Bonvicini, Giorgio & Bonvicini, Giorgio & Lenote, Daniela, 2020. "The role of low temperature waste heat recovery in achieving 2050 goals: a policy positioning paper," LSE Research Online Documents on Economics 104136, London School of Economics and Political Science, LSE Library.
    6. Edward Wheatcroft & Henry P. Wynn & Victoria Volodina & Chris J. Dent & Kristina Lygnerud, 2021. "Model-Based Contract Design for Low Energy Waste Heat Contracts: The Route to Pricing," Energies, MDPI, vol. 14(12), pages 1-15, June.
    7. Antoine Fontaine & Laurence Rocher, 2021. "Energy recovery on the agenda. Waste heat: a matter of public policy and social science concern," Post-Print halshs-02971862, HAL.
    8. Jerez Monsalves, Juan & Bergaentzlé, Claire & Keles, Dogan, 2024. "Waste-heat recovery utilisation for district heating systems under diverse pricing schemes: A bi-level modelling approach," Applied Energy, Elsevier, vol. 375(C).
    9. Volodina, Victoria & Wheatcroft, Edward & Wynn, Henry, 2022. "Comparing district heating options under uncertainty using stochastic ordering," LSE Research Online Documents on Economics 114292, London School of Economics and Political Science, LSE Library.
    10. Siddique, Muhammad Bilal & Nielsen, Per Sieverts & Rosendal, Mathias Berg & Jensen, Ida Græsted & Keles, Dogan, 2023. "Impacts of earlier natural gas phase-out & heat-saving policies on district heating and the energy system," Energy Policy, Elsevier, vol. 174(C).
    11. Edward Wheatcroft & Henry Wynn & Kristina Lygnerud & Giorgio Bonvicini, 2019. "The role of low temperature waste heat recovery in achieving 2050 goals: a policy positioning paper," Papers 1912.06558, arXiv.org.
    12. Kleinertz, Britta & Gruber, Katharina, 2022. "District heating supply transformation – strategies, measures, and status quo of network operators’ transformation phase," Energy, Elsevier, vol. 239(PB).
    13. Edward Wheatcroft & Henry Wynn & Kristina Lygnerud & Giorgio Bonvicini & Daniela Leonte, 2020. "The Role of Low Temperature Waste Heat Recovery in Achieving 2050 Goals: A Policy Positioning Paper," Energies, MDPI, vol. 13(8), pages 1-19, April.
    14. Vannoni, Alberto & Sorce, Alessandro & Traverso, Alberto & Fausto Massardo, Aristide, 2023. "Large size heat pumps advanced cost functions introducing the impact of design COP on capital costs," Energy, Elsevier, vol. 284(C).

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    More about this item

    Keywords

    urban waste heat recovery; contracts; barriers; business models;
    All these keywords.

    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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    This paper has been announced in the following NEP Reports:

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