Source: Euroheat&Power" style="float: right; margin: 0px 0px 15px 15px; width: 250px;">

Retrofitting and optimizing existing district energy systems

This Solution supports local governments in retrofitting existing district heating systems to make them more modern, energy efficient and cost-effective. It is applicable to old systems – from small to large - facing difficulties and which are owned, operated or regulated by the local government.

As other infrastructure, to be able to deliver expected performance levels district energy systems need adequate operation, maintenance and replacement at the end of useful life. For funding to be available for this, a sound business model must be put in place to ensure an adequate customer base and steady revenue streams.

The key roles local governments can play in the implementation of this Solution are:

  • promoting modern technologies/systems/practices such as combined heat and power generation (CHP), smart systems and improved automated control
  • facilitating the use of local renewable resources and waste heat
  • reviewing metering policies, tariff regulation and other policies and regulations to remove barriers and incentivize modern district energy
  • contributing to a sound business model
  • facilitating access to funding for needed retrofitting works.

It is also important to explore opportunities related with the cycles of renovation of existing buildings.

Motivation / Relevance

Old existing district energy systems may face inefficient heat production, transmission and distribution, costs that exceed revenue and declining sales. Examples of this are frequent in transition economies, where although district heating covers 60% of the heating and hot water needs, numerous difficulties exist, largely associated with the political and socio-economic past (IEA, 2004) [1].

The root causes of the sector’s dilemma in often related excess production capacity, uneven playing field and inadequate legal framework, poor customer focus and low efficiency in production, transmission, distribution and consumption of heat. Policy and market reform and private sector participation may help to tackle these challenges.


Figure 1 – Heat venting to the atmosphere in an urban center. Source: Euroheat&Power



Main impacts

  • Reduce and stop public debt and financial losses associated with old and poorly performing district energy systems.
  • Where fossil fuels are replaced:
    • Air quality improvement and associated public health impacts
    • More reliable energy supply
    • Reduced fossil fuel imports and more energy security
    • Reduced socio-economic impacts of fossil fuels’ price volatility
    • Reduced fuel poverty
    • Local wealth retention through the use of locally available energy resources
    • Climate change mitigation
  • District energy marketing and business development
  • Creation of new work places for district energy refurbishment increases income level and amount of collected taxes
  • Incentivize rational use of heat on the production and consumption sides

Benefits and Co-Benefits

  • Replacement of old and outdated technologies
  • Increased efficiency in the use of primary energy
  • Reduction of fossil fuels consumption
  • Reduction of air pollution associated with burning of fossil fuels, such as sulphur dioxide (SO2), nitrogen oxides (NOx) and particulates
  • Increase use of local renewable resources and waste heat
  • Lower costs of the district heating production and distribution  
  • Improve energy utility’s ability to collect heat charges and tariffs
  • Contribute to more affordable and reliable energy services
  • Improve protection of end-users experiencing fuel poverty
  • Substantial contribution to meeting city-wide GHG reduction targets
  • Decreased heat loss into the atmosphere, minimizing the urban heat-island effect
  • More equitable and just distribution of costs among consumers by introducing consumption-based payment


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.