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DISTRICT HEATING FINANCING AND OWNERSHIP
By Laxmi J Rao, Director, International District Energy Association
GETTING TECHNOLOGY, FINANCE, BUSINESS MODELS AND GOVERNANCE RIGHT
District energy (DE) systems have provided dependable service and valuable benefits to owners, operators and customers over many decades. Hundreds of systems in cities, communities and campuses worldwide continue to expand to keep up with growth in customer demand and are modernizing to
leverage efficiency and newer sources of energy. Older systems are being revitalized to maintain reliable services, enhance efficiency and reduce carbon intensity. DE technology is well understood, yet many well- intentioned projects do not complete the journey from conceptual design to operation. From time to time, existing systems face the challenge of retaining customers in the face of competition from other building-based thermal sources. Securing a vibrant future for the district energy industry requires that systems
deliver value, meet business and community objectives, attract positive attention and stand out as examples of industry best practice. While rare, systems that may fail during their journey through the system lifecycle impose not only a cost on stakeholders but can have a negative impact on the brand of DE. While feasibility studies establish the technical and economic viability of a project, they do not always provide the full path forward to project delivery and sustained operation. Technology design and selection are important aspects of any district energy project, but even more critical is building a business model that incorporates and balances stakeholder objectives with appropriate ownership, financing and governance strategies to take the project from concept to providing services, future expansion, modernization and even a sale or acquisition. DISTRICT ENERGY LIFE CYCLE DE systems can have a lengthy trajectory from concept to realization and then continue to be in service for fifty years or more, often experiencing phases of expansion, renewal, modernization and evolution in ownership
Typical stages of a district energy system lifecycle.
E N E R G Y A N D E N V I R O N M E N T
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