DH2050 project

The district energy business cannot be developed further by technical improvement, only. Future impact and changes will also come from updated and innovative business models and financing schemes. In this project, we will address necessary business model and financing changes for the 2050 business case of district energy.
e combine academics with expertise on business model development in district energy and on unlocking finance for district energy with practitioners (one district energy provider, two cities and one industry organization). The research area is business and finance. The target groups are policy makers, district energy practitioners and investors (e.g. infrastructure investment funds, pension funds, insurance companies but also initiatives engaging the end-user like crowd funding) interested in green energy.

The specific issues that will be addressed are to: (i) identify the conditions for the district energy business case in 2050 and the necessary business logic to support it and to (ii) develop an understanding amongst investors on the role that DHC investments can have in the EU’s Action Plan for Financing Sustainable Growth and the EU’s Green Deal.

To identify the future business conditions existing policy and regulation aiming at 2050 (like the Paris Agreement), future competition to district energy, changes in resources and activities for generating heat and hot water to meet future customer demand (reflecting the demand from conventional customers of heat and hot water, prosumers and cooperative solutions) are accounted for. Two possible, future business models for district energy are prototyped and validated by means of input from practitioners in the network of the industry organization Danish Board of District Heating (DBDH) promoting district energy internationally. When the validation is finalized, the business models will be assessed by a Sustainability Balanced Scorecard (SBSC), providing an indication on the sustainability impact (e.g. carbon footprint reduction) of the developed solution, its economic impact (e.g. return on investment (ROI), cash flows, pay-back-period) and the related risks; resulting in a comprehensive bankability assessment. With this information available, information will be collected from investors on how to finance this kind of investment. By means of dialogue an understanding amongst investors of the DHC investment is established.

Key results of this research project were presented at the 8th International Conference on Smart Energy Systems in Aalborg (Denmark) in September 2022 and published in the journal Energy. (Interim) results were also discussed in workshops with expert groups and communicated to other relevant stakeholders through various social media channels.

Recommendations for action were formulated in the following areas

•    Digital integration for 2050 competitiveness: The energy industry should use digital solutions to ensure efficient customer behaviour.
•     Transforming business models: Energy companies should proactively engage with customers interested in innovation and fundamentally change their business models.
•     Move away from fossil fuels: Focus on just-in-time delivery of heat from local, diverse energy sources.
•     Collaboration between prosumers and suppliers: Smart digital systems are crucial for cooperation between prosumers and energy suppliers.
•     Investor involvement and capital market integration: Necessary understanding of technologies and business models for investors to open up the capital market to innovative business models.