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regulated, while others do regulate the price of heat. The study present overviews and discuss different tariff- setting methodologies as well as support Mechanisms for DH/CHP. Although very different, the main principles of tariff setting is listed below: › Cost-plus, where the operator is compensated for the cost of operating the DH system with a fixed percentage of profit built in, which the operator must use to pay for upgrades. › Return on investment, where the operator is compensated for operating expenses, depreciation on longer-term investments, as well as a return on invested capital to be included in the base for tariff determination. › Tariff indexation or price cap, where prices are set to cover the costs of the preceding year multiplied by an index that reflects a change in specific conditions (such as rising fuel costs) as well as an expected annual efficiency gain. › Benchmarking, which allows prices to be established based on a review of a group of peer heat suppliers and thus incentivizes the more-efficient (and penalizes the less- efficient) heat suppliers in the group. Well-designed policies can incentivize heat suppliers, network operators, and end-users to save costs and energy. The contractual relationship between heat suppliers and consumers should clearly define that heat-generating enterprises are responsible for providing heat of sufficient quality and for contracting network operators (in cases where the DH sources are not part of the company or the waste heat is procured from third parties) to distribute the heat.
heating is produced by an energy efficient CHP unit or if heating is produced by utilising waste heating from an industrial plant (for example a steel or cement plant) or from waste incineration. Danish experiences show that when evaluating the feasibility of DH, it is important to compare and consider the costs over the full lifetime of a heating supply system (DH versus the alternative individual heat supply option). In many cases, DH is the most feasible solution in a full lifecycle analysis. Hence, infrastructure investments will be recovered after some years by lower annual costs. The use of high quality components, although initially increasing capital cost, usually results in lower annual costs. Therefore, in many cases, a lower lifetime cost due to lower maintenance costs and longer lifetime can be achieved with the use of high quality components. This also leads to lower annual heating costs for the heating consumers. It is important to incorporate that the technical lifetime of a high quality DH network typically is 40-50 years. A recent study carried out for the International Finance Cooperation (IFC), i.e. the project "Unlocking the potential for Private Sector Participation in District Heating" represent a comprehensive data basis for central and eastern Europe covering district heating systems in Croatia as well as Bosnia and Herzegovina, Kosovo, Serbia, Ukraine and Mongolia. This study reveals that, considering policy framework and business models, there are a number of different options. For example, some countries oblige connections of new buildings to a district heating network, but in other countries it is voluntary. In some countries the price-setting for district heating is not
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