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Integrating district energy into energy and urban planning

District energy is a system that delivers heat or cooling to multiple customers through a pipe network filled with hot water, or chilled water, circulated by pumps. The character of the built environment determines the feasibility of district energy systems (DES) to a large extent. Consideration of district energy in energy and urban planning processes can significantly contribute to achieving the heat load density necessary to ensure the cost effectiveness of the heat network. Urban planning can also mitigate load uncertainty for district energy by enabling phased development that balances generation and demand.

This Solution supports local governments in planning for and implementing district heating networks in new and existing development areas through integrated energy, land-use and infrastructure planning. This Solution also supports the definition of a long-term energy strategy for the city as a whole that maximizes the use of local energy resources and improves systems coherence, energy efficiency, reliability and affordability of heat and/or cooling through the inclusion of district energy.

This Solution is particularly relevant for cities that are developing new areas or redeveloping / densifying nodes in the city. It is also relevant for local governments that do not own or control energy utilities but whose powers include land use and urban planning, particularly governments with a mandate to reduce GHG emissions aiming to ensure that district heating is not “locked-out” due to the pattern of the built environment.

Highlighted best practices include embedding district energy into land-use and urban planning policies, regulations and administrative licensing procedures; raising awareness to the viability, benefits and business opportunities of district energy; engaging key stakeholders (e.g.: developers) including through negotiation; and creating incentives for integrating waste heat and local renewable energy sources.

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 diverse national frameworks.

Motivation / Relevance

In the competitive global market, there are economic advantages derived from integrated urban and energy planning. For example, the City of Toronto attracts developers of state-of-the-art buildings to populate a transit-oriented and walkable downtown district, serviced by the largest lake-source cooling system in the world. As a result the downtown attracts high-quality commercial and residential tenants (IDEA) [2].

Currently, space heating and cooling as well as hot water are estimated to account for roughly half of global energy consumption in buildings (IEA, 2011a) [1]. District heating can cost half as much as equivalent alternative technologies given certain market conditions and an appropriate density of demand, while fostering a wider use of renewable energy, with multiple benefits for the community and developers (UNEP, 2015) [2].

In a survey which targeted cities, industry and finance experts worldwide, local governments were ranked as the “most important” actor in catalyzing investment in district energy systems, playing a central role in addressing the associated risks and costs, namely through their planning and regulation powers [2] covered in this Solution.


Figure 1 – Relevance of integrating land use, urban, energy and infrastructure planning

Source: ICLEI and UN Environment, 2016.


Main impacts

  • Air quality improvement and associated public health impacts, due to energy-efficiency improvements and renewable energy use
  • More reliable energy supply which can use multiple technologies and fuels
  • Future-proofed network: allows easy adoption of renewable energy and new technologies without the need to install equipment in each building
  • Energy security and reduced fossil fuel imports, due to energy-efficiency improvements and renewable energy use
  • Reduced socio-economic impacts of fossil fuels` price volatility, due to energy-efficiency improvements and renewable energy use
  • Reduced fuel poverty, as district energy systems can provide low cost heat and if community-owned, can return profits to citizens.
  • Captures an increased portion of expenditures on energy locally
  • Provides local employment focused on green economy
  • Increased resilience of the energy system to natural or technological disasters, particularly if local energy sources are used
  • The levels of density that enable district energy also enable frequent service of transit and a pedestrian environment, illustrating the diversity of benefits that can be derived through high-density and integrated infrastructure planning
  • Contribution to mitigation of climate change

Benefits and Co-Benefits

  • Potential reduction of fossil fuels consumption through increased efficiency in primary energy use: on average coal power stations efficiency is 33 per cent [World Coal Association, 2014 in 1], while combined heat and power (CHP) plants are typically 80–90 per cent efficient [1].
  • Reduction of air pollution associated with burning of fossil fuels, such as sulphur dioxide (SO2), nitrogen oxides (NOx) and particulates, due to energy-efficiency improvements and renewable energy use.
  • Enables increased use of local renewable resources and waste heat, particularly those that are not technically or economically viable at the singe-building scale.
  • Additional income opportunities for the local government, either as revenues if the utility is a subsidiary or in the form of taxes.
  • Lower costs for the provision of energy, due to synergies, increased efficiency and economies of scale.
  • Affordable energy, consumer protection against price volatility and enhanced ability for local government to adopt measures targeting end-users experiencing fuel poverty.
  • Green local jobs to construct and operate the system.
  • Greenhouse gas (GHG) emissions reduction, due to efficiency improvements and renewable energy use.
  • Decreased heat loss into the atmosphere through increased efficiency of primary-energy use and waste heat recovery, minimizing the urban heat-island effect
  • End-users directly benefit from:
    • 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 equipment for thermal energy production (e.g., freeing up space for rental or sale)
    • Potential for income generation from building-level renewable hot water production through net metering.


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:

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