In recent years, district heating and CHP (combined heat and power generation) have made their way to a technology that is increasingly recognised as a key solution for achieving European energy policy goals at the local levels. This increased attention has entailed higher expectations towards effective incentive mechanisms for investments in district heating, (DH), and CHP production but also towards enhancing energy efficiency and the degree of competition in local heat markets.
Meanwhile the main part of DH systems in Eastern Europe are in urgent need for major refurbishment that enables meeting the new EU energy policy requirements and make sure that the best-in-class ambitions are met. Consequently many countries are engaged in ongoing political and regulatory discussions over best-practice market designs and pricing methodologies for district heating.
As a principal rule, a DH company should always face effective and appropriate economical incentives to supply competitive district heating, to secure heat supply, to develop technically optimised DH system and to seek those low-cost and sustainable sources of heat production, that are the most beneficial from both the whole DH system and customer perspectives.
Furthermore, a DH company should have incentives to optimise the lifecycle of network and production assets as well as to look for a long-term balance between annual maintenance and periodical replacement investments.