Linking Heat and Electricity Systems

Co-generation technologies and efficient district heating and cooling (DHC) networks, which offer significant environmental and energy security benefits, can serve as flexible tools to bridge electrical and thermal energy systems. Yet despite these advantages and successful implementation in some countries, to date, global deployment has been limited. This publication examines some of the reasons behind the slow progress, including local energy market conditions failing to ensure energy prices that reflect generation costs, and a lack of long-term visibility of energy policy and poor strategic planning for heating and cooling infrastructure. The report uses three case studies where co-generation has been successfully deployed in industrial applications, and three case studies of efficient DHC systems to inform this analysis. Based on this analysis, the report provides policy recommendations intended to help policy makers better understand the drivers of deployment of co-generation and DHC systems, and overcome policy and market barriers to increased cost-effective penetration of these efficient energy options.