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Starting district heating in existing cities and developments

District heating is a system that delivers space heating and hot water to multiple customers through a pipe network. The heat can be produced at a central plant or at multiple locations, using different fuels, including renewable energy and waste heat. District heating is hence technology-neutral or -agnostic. By replacing individual boilers in each building, the district heating system can deliver economies of scale.

This Solution supports local governments in planning for and implementing new district heating networks in existing urban areas, especially those with high heat demand density, mixed use buildings with diverse consumer types and loads, pre-existing buildings with central heating systems (particularly where the buildings’ boilers are reaching the end of their useful life) and planned redevelopments such as building renovation or roadworks for new utility installation. This Solution is most relevant for cities without district heating or with very low shares of district heating, however its recommendations are still relevant for cities with higher shares.

This Solution describes the process of identifying and supporting a district heating demonstration project. The Solution also recommends actions, policies and regulations to enable district heating expansion and encourage additional district heating development in the city, showcasing the crucial roles to delivering district heating projects. The policy options available to cities are often influenced by national frameworks and local governments mandates. This Solution outlines the best practices that local governments can take within their usual mandates and roles, which should take into account the diversity of national frameworks.

Motivation / Relevance

District heating can cost half as much as equivalent alternative technologies given certain market conditions and an appropriate density of demand [1]. District energy can also deliver multiple social, economic and environmental benefits, including increased energy security and lower exposure to fossil fuels price volatility.

Currently, space heating & cooling and hot water are estimated to account for roughly half of global energy consumption in buildings (IEA, 2011a) [1]. Even in the European Union the annual rate of energy-efficient renovation of existing building stock is not higher than 1-3% due to barriers such as disperse ownership and difficulty to coordinate home owners, high investment costs for deep renovation, lack of skilled labor force and lack of awareness. Where district energy is cost effective, such as in high-density mixed-use areas, it can reduce energy consumption and emissions from Buildings, in new and existing stock.

District energy makes it possible for existing buildings that are already connected, or can be connected in the future, to transition to 100% renewable heating and cooling without requiring expensive and disruptive building renovations. As such, district energy offers an expedite way to introduce change at scale.

In addition, district energy’s economies of scale enable the use of a wide variety of local and renewable energy sources that would not be cost effective for individual buildings. For example, in the City of Vancouver, while for single building and smaller system size the capital cost for avoiding one ton of carbon dioxide (CO2) typically ranges between $7,500 and $13,000 Canadian dollars, in district energy systems this cost comes down to around $4,000 Canadian dollars due to economies of scale.

Local governments play a crucial role in unlocking investment in district energy namely by integrating it in land use and energy infrastructure planning, thus optimizing energy infrastructure investments and addressing associated risks and costs, as well as creating local demonstration projects to raise awareness to district energy benefits and create confidence and mobilize the private sector [1].

Main impacts

General impacts of district energy:

  • Air quality improvement and associated public health impacts
  • More reliable energy supply which can use multiple energy sources


    Figure – City of Gothenburg district heating fuel diversification after oil crisis. Source: Göteborg Energi, 2016 in [25]

  • Energy security and reduced fossil fuel imports

    Figure – Güssing, Austria – Biomass district heating since 1996 reduced exposure to fossil fuel prices. Source: UN Environment, 2017 [24]

  • Reduced socio-economic impacts of fossil fuels’ price volatility
  • Reduced fuel poverty
  • Local wealth retention and economic development through the use of locally available energy resources
  • Increased green local jobs
  • Greening of local economy
  • ”Future-proofed” network (allows easy adoption of renewable energy and new technologies without the need to install equipment in each building)
  • Increased resilience of the energy system to natural and technological disaster
  • Climate change mitigation


Specific impacts of this Solution [1]:

  • Demonstrate the local commercial viability of modern district energy systems
  • Showcase socio-economic benefits of district energy to citizens, private building owners, developers and investors
  • Build local and institutional capacity on district energy and related policies
  • Contribute to district energy market development
  • Raise awareness and accelerate private sector engagement through investment and/or connection to district energy network. For example, a demonstration project led by the City of Vancouver made it easier to gain the confidence of institutional and private condominium developers.
  • Improved coordination of local stakeholders
  • Community engagement
  • Contribute to establishment of local utility with district energy skills and capacity

Benefits and Co-Benefits

At system’s scale:

  • Increased efficiency and economies of scale in the energy system
  • Increased use of local renewable resources and waste heat
  • Reduction of air pollutants associated with burning of fossil fuels, such as sulphur dioxide (SO2), nitrogen oxides (NOx) and particulates
  • Additional income opportunities for the local government
  • Greenhouse gas (GHG) emissions reduction


End-users directly benefit from:

  • Affordable and predictable energy costs
  • Reduction of pollution produced in the home or building
  • Improved safety as boilers, gas supply, etc. are kept out of the building

Space savings from not having individual thermal energy production (e.g., freeing up of lettable office space)


This Solution was jointly developed and peer-reviewed by ICLEI and the Global District Energy in Cities Initiative (DES Initiative) , which is coordinated by the United Nations Environment.

ICLEI acknowledges and recognizes all individual organizations and experts that kindly contributed their time and expertise to this Solution - for details please see the "Developer" section above and the "Supporters" webpage.

This Solution draws significantly upon the UN Environment publication: District Energy in Cities. For more information on the Global District Energy in Cities Initiative (DES Initiative) and to become a partner or learning city, please visit: www.districtenergyinitiative.org.

This initiative is the implementing mechanism for the SEforALL District Energy Accelerator.