District Heating primarily focuses on supplying low- and medium-temperature heat demands (i.e. space heating and hot tap water preparation), by "recycling" upgraded waste heat from CHP plants, industrial processes and waste incineration. DHC systems are also increasingly being used as a way to introduce renewable energy resources into heat and electricity sectors. This heat serves to warm up water which is transported via a well-insulated network of pipes to the customer premises. It can cover heat demands in residential, public, and commercial buildings as well as low-temperature industrial heat demands. A heat exchanger serves as interface between the district heating network and the building's own radiator and hot tap water system. District cooling takes advantage of natural cooling from deep water resources as well as the conversion of waste heat via absorption chillers.

The Diversity of Resources Used by District Heating and Cooling Systems

In most cases, the decision to install a CHP plant as part of a DHC system will hinge on the same factors as for an industrial installation, including: the timing and nature of the thermal load, fuel availability, and opportunities for the economic use of the electricity. However, population density is also a key consideration, because DHC systems rely on a concentrated demand for space heating/conditioning. This is important because of the need to minimise the distances that heat can be transported, and due to the high costs of installing heat distribution systems.

Countries with the largest number of heating degree days tend to have the greatest penetration of district heating. Moreover, due to the highly capital-intensive nature of these systems, DHC supports a greater level of local government involvement in providing services. As a result, DHC systems may be communally owned, but funded by public and/or municipal authorities. District cooling is being increasingly pursued as an alternative to conventional electricity- or gas-driven air conditioning systems. Due to the use of resources that would otherwise be wasted or difficult to use, district cooling systems reach efficiencies that are between 5 and 10 times higher than with traditional electricity-driven equipments. They can contribute to avoid electricity peak loads during cooling season, offering policy makers cost savings and reliability benefits.

- CASE STUDY: FINLAND, A COMMUNITY APPROACH TO CHP AND DHC INTEGRATION

Finland demonstrates how to utilize local solutions and careful CHP/DHC planning to optimize fuel use. The country has aggressively pursued DH and CHP integration, mostly through limited municipality companies. These companies maintain DH networks, produce heat and electricity and market it to their customers, as well as the Nordic market. As part of Finland's investment in the efficient use of fuels, CHP has been promoted and integrated into the DH network. As a result, district heating made up almost 50% of the space heating market in the year 2001, with 75% of the heat supplied by CHP plants. In addition, over 70% of fossil and biomass electricity generation comes from CHP.

The national government provides, on a limited basis, a subsidy for small-scale CHP generation, but even this subsidy is less than the one for renewable technologies like wind. Innovative energy sector regulations allow DH companies to set their own heat tariffs, and customers are free to purchase competing systems, making it essential that DH be a cost-competitive source of heat. Doubtless, one of the key drivers of success in creating high-CHP penetration was the construction of a modern, efficient and accessible district heating network, as well as the ability to sell electricity to the grid.

Helsinki has over 50 year’s of experience with DHC and CHP. The market share of DH is over 92% of the heating demand in the city (or 7 TWh/a) and the CHP share of this exceeds 92% annually. The amount of CHP-generated electricity is larger than the need in the capital, so Helsinki Energy sells lot of electricity to the Nordic market. The origins of the system were built on a market-economy basis, without any subsidies. Recently, DC has also been developed and now forms part of the tri-gen system, which has been expanding rapidly. In 2005 Helsinki Energy had 32 MW of installed DC capacity, with projections to grow to 250 MW by 2020. The success of DHC and CHP in Finland shows that when planned well, DHC networks combined with CHP can be very successful, even in a liberalised energy market. More information can be found here.