District energy is not a new idea. But it has found new relevance in a world seeking practical solutions to the energy transition and climate change. It can simultaneously reduce emissions as well as boost the uptake of renewables.

What is district energy?

Modern district energy systems combine district heating, district cooling with combined heat and power, thermal storage, heat pumps and/or decentralised energy. They are increasingly climate resilient and low carbon, allowing the:

  • Recovery and distribution of surplus and low-grade heat and cold to end-users (e.g., previously unused waste heat from industry or power stations, waste water and use of natural water reserves such as lakes, rivers);
  • Storage of large amounts of energy – such as surplus wind power or surplus heat in the summer – at the lowest cost compared to other energy storage options;
  • Integration and balancing of a large share of variable renewable power – for example, through conversion to heat and stored for use seasonally or during peak thermal demand.

It is time for a redefinition of District Energy. It is no longer exclusively about heat or surplus energy, the traditional drivers of district energy. It's about local production matched to local use – and not only at a building level, but also at the neighbourhood and city level. It's about sharing energy between buildings. And it's about resource efficient neighbourhoods and resilient cities. District energy is an approach to applying technologies to co-ordinate the production and supply of heat, cool, domestic hot water and power to optimise energy efficiency and local resource use.

Although shares of district energy systems (DES) are expanding and several national and local governments are setting policies and targets, there are still long-standing barriers to greater deployment of modern DES. These barriers include:
  • Lack of awareness and misperceptions
  • Local and institutional capacity for coordinating DES development.
  • Lack of holistic planning policies that integrate energy and DES.
  • Incentives and accounting methods that are not harmonized.
  • Commercial viability of DES unproven in some markets.
  • High project development costs.
  • Lack of data on heating and cooling consumption in cities.
One of the first activities of the Initiative was the publication of best practice guidance for cities and national governments to overcome these barriers through four chapters on technology, local policy, business models and national policies and regulations, and a fifth chapter describing a methodology for cities to develop modern district energy. This United Nations Environment Program (UNEP) flagship publication is entitled ‘District Energy in Cities. Unlocking the Potential of Energy Efficiency and Renewables’ and was launched in February 2015. The publication is based on interviews, surveys and consultations with nearly 150 respondents from 65 cities around the world in order to gather expert and local stakeholder perspectives.
Among the core component of the transition to a sustainable energy future are the integration of energy efficiency and renewable energy technologies, and the need to use 'system thinking" when addressing challenges in the energy, transport, buildings and industry sectors. Tackling the energy transition will require the intelligent use of synergies, flexibility in demand, and both short- and long- term energy storage
solutions across different economic sectors, along with the new approaches to a governance. This publication District Energy in Cities: Unlocking the Potential of Energy Efficiency and Renewable Energy, provides a glimpse into what integration and systems thinking looks like in practice for heating and cooling networks, and showcases the central role for cities in the energy transition.

Modern District Energy Systems (DES) will enable Frankfurt to achieve 100% renewable energy by 2050. Through DES, the city will improve energy efficiency, be able to switch from fossil fuels, use waste heat and provide balancing for variable renewable energy sources.

Accelerating the uptake of energy efficiency and renewable energy in the global energy mix is the single biggest contribution to keep global temperature rise under 2 degrees Celsius (°C) and to reap the multiple benefits of an inclusive green Economy.


In Dubai, air conditioning represents 70% of electricity consumption. This led the city to develop the world's largest district cooling network, which by 2030 will expand to meet 40% of the city's cooling demand. District cooling is halving Dubai's electricity use for cooling and also reducing its consumption of fresh water through use of treated sewage effluent.

  • 1.1 Introduction to district energy?
  • 1.2 Why district energy?
  • 1.3 Energy Efficiency
  • 1.4 Renewable Energy
  • 1.5 Costs
  • 1.6 Catalysts

Tokyo is maximizing energy efficiency in its district energy systems through the use of waste incineration, waste heat from buildings and metro stations, heat pumps connected to local water sources and solar thermal. Land- use planning and policies require developers of new areas to assess the new opportunities for cost-effective modern district energy to identify a cheaper next available sustainable heat or cooling option.

  • 2.1 The role of local governments
  • 2.2 Local government as planner and regulator
  • 2.3 Local government as facilitator: enabling action to leverage finance
  • 2.4 Local government as provider and consumer
  • 2.5 Local government as a coordinator and advocate

The City of Vancouver for the 2010 Winter Olympics, developed a publicly owned district heating utility that captures waste heat from sewage. The financial structuring of the project proved the commercial viability of district heating in Vancouver and has encouraged private sector development of district heating elsewhere in the city.

  • 3.1 Introduction
  • 3.2 The "wholly public" business model
  • 3.3 The "hybrid public and private" business model
  • 3.4 The "private" business model
  • 3.5 Expanding the business model via additional innovative practices

In China, pollution penalties play an important role in driving the modernization of district energy systems, which currently meet 30% of heat demand. Anshan's investment in a transmission line to integrate the city's isolated boilers and to capture surplus waste heat is projected to have three- year payback period due to the avoided penalties on pollution and to a 1.2 million ton reduction in annual coal use.

  • 4.1 Introduction
  • 4.2 De-risking investment
  • 4.3 Economic competitiveness a level playing field and multiple benefits
  • 4.4 Vertical integration

An estimated 400 million people are expected to move to India's urban centres by 2050, increasing cooling demand and putting strain on the power system. In Mumbai, an estimated 40% of the city's electricity demand for cooling. India is developing district cooling in Gujarat International Finance Tec- City (GIFT City) as a replicable demonstration project.

  • 5.1 Why?
  • 5.2 When?
  • 5.3 What?
  • 5.4 How?
  • 5.5 Concluding remarks
  • 5.6 Further areas of research