The competitiveness of present and future district heating systems can be at risk when residential and service sector heat demands are expected to decrease in the future. In this study, the future competitiveness of district heating has been examined by an in depth analysis of the distribution capital cost at various city characteristics, city sizes, and heat demands. Hereby, this study explores an important market condition often neglected or badly recognised in traditional comparisons between centralised and decentralised heat supply.

By a new theoretical approach, the traditional and empirical expression for linear heat density is transformed into an analytical expression that allows modelling of future distribution capital cost levels also in areas where no district heating exists today. The independent variables in this new analytical expression are population density, specific building space, specific heat demand and effective width.

Model input data has primarily been collected from national and European statistical sources on heat use, city populations, city districts and residential living areas. Study objects were 83 cities in Belgium, Germany, France, and the Netherlands. The average heat market share for district heat within these cities was 21 % during 2006.

The main conclusion is that the future estimated capital costs for district heat distribution in the study cities are rather low, since the cities are very dense. At the current situation, a market share of 60 % can be reached with a marginal distribution capital cost of only 2.1 €/GJ, corresponding to an average distribution capital cost of 1.6 €/GJ. The most favourable conditions appear in large cities and in inner city areas. In the future, there is a lower risk for reduced competitiveness due to reduced heat demands in these areas, since the increased distribution capital cost is low compared to the typical prices of district heat and competing heat supply. However, district heating will lose competitiveness in low heat density areas. Hence, reduced heat demands in high heat density areas are not a general barrier for district heating in the future. © 2010 Elsevier Ltd.

One key concept when assessing network investment cost levels for district heating systems is the linear heat density. In contrast to a traditional way of expressing this quantity entirely on the basis of empirical data, a recently developed analytical approach has made it possible to estimate linear heat densities on the basis of demographic data categories. A vital complementing quantity in this analytical approach is the concept of effective width.

Effective width describes the relationship between a given land area and the length of the district heating pipe network within this area. When modelling distribution capital cost levels by use of land area values for plot ratio calculations, there is a potential bias of overestimating distribution capital cost levels in low dense park city areas (e < 0.3). Since these areas often include land area sections without any housing, avoiding overestimations of network investment costs demand some kind of corrective mechanism.

By use of calculated effective width values, a compensating effect at low plot ratio levels is achieved, and, hence, renders lower anticipated distribution capital cost levels in low dense park city areas.

Increased recovery of excess heat from thermal power generation and industrial processes has great potential to reduce primary energy demands in EU27. In this study, current excess heat utilisation levels by means of district heat distribution are assessed and expressed by concepts such as recovery efficiency, heat recovery rate, and heat utilisation rate. For two chosen excess heat activities, current average EU27 heat recovery levels are compared to currently best Member State practices, whereby future potentials of European excess heat recovery and utilisation are estimated. The principle of sequential energy supply is elaborated to capture the conceptual idea of excess heat recovery in district heating systems as a structural and organisational energy efficiency measure. The general conditions discussed concerning expansion of heat recovery into district heating systems include infrastructure investments in district heating networks, collaboration agreements, maintained value chains, policy support, world market energy prices, allocation of synergy benefits, and local initiatives. The main conclusion from this study is that a future fourfold increase of current EU27 excess heat utilisation by means of district heat distribution to residential and service sectors is conceived as plausible if applying best Member State practice. This estimation is higher than the threefold increase with respect to direct feasible distribution costs estimated by the same authors in a previous study. Hence, no direct barriers appear with respect to available heat sources or feasible distribution costs for expansion of district heating within EU27. © 2012 Elsevier Ltd.