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An assessment of the present and future opportunities for combined heat and power with district heating (CHP-DH) in the United Kingdom

By Scott Kelly and Michael Pollitt


As global fuel reserves are depleted, alternative and more efficient forms of energy generation and delivery will be required. Combined heat and power with district heating (CHP-DH) provides an alternative energy production and delivery mechanism that is less resource intensive, more efficient and provides greater energy security than many popular alternatives. It will be shown that the economic viability of CHP-DH networks depends on several principles, namely (1) the optimisation of engineering and design principles; (2) organisational and regulatory frameworks; (3) financial and economic factors. It was found that in the long term DH is competitive with other energy supply and distribution technologies such as electricity and gas. However, in the short to medium term it is shown that economic risk, regulatory uncertainty and lock-in of existing technology are the most significant barriers to CHP-DH development. This research suggests that under the present regulatory and economic paradigm, the infrastructure required for DH networks remains financially prohibitive; the implementation of government policies are complicated and impose high transaction costs, while engineering solutions are frequently not implemented or economically optimised. If CHP-DH is going to play any part in meeting climate change targets then collaboration between public and private organisations will be required. It is clear from this analysis that strong local government involvement is therefore necessary for the co-ordination, leadership and infrastructural deployment of CHP-DH.Combined heat and power Energy sevice company District heating

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