District heating is a means of providing heat to many buildings from a single source. The most obvious example is a block of flats with a boiler in the basement that delivers heat to all residences.

The idea extends to small communities such as BedZED (Beddington Zero Energy Development) in the London Borough of Sutton, and even to whole towns. In Denmark, Austria and Germany, the idea and the protocol are well established and, in some areas, reinforced with legislation. In the UK, more communities are now investigating it as an alternative to conventional heating methods.

District heating is a more efficient use of fuel — even fossil fuel. These large-scale schemes tend to be a long-term investment as the capital cost is relatively high: the plant is expensive, as is the infrastructure needed to deliver the heat to the individual houses. As a consequence, new schemes tend to be powered by renewable energy – biomass and/or solar – where the advantages of a low-cost fuel are added to the efficiency, administration, running cost and CO₂ benefits.

Beyond District Heating

Co-generation is the production of heat and electricity from the same fuel — often called combined heat and power (CHP). Small-scale co-generation plants are currently limited to fossil fuels – gas and diesel oil – but typically achieve efficiency levels of over 90%.

Considering that the electricity coming out of a power point in a home represents as little as 27% of the energy that went into the power station, the efficiency difference is obvious. A natural gas-fired co-generation plant will be producing heat and electricity at a cost of around 6.3p/kWh (assuming 90% efficiency), compared to around 6p for heat and 13p/kWh for electricity in a conventional Grid-powered situation.

A typical scheme may use solar thermal energy as the principal heat source. In one Canadian example, solar energy is gathered in panels on garage roofs and heat is stored for use by the small community. Short-term storage (up to four days) is in a bank of hot water cylinders, while excess summer heat is stored in the underground rock to provide long-term heat storage, which can be extracted by heat pumps in winter. In this way, the community has a year-round supply of heat energy from a truly zero-carbon source.

Schemes using renewable energy are usually very large in scale; involving 150 dwellings or more. This is necessary to justify the high capital cost involved, and so the payback can be counted in decades.

Government figures indicate that less than 1% of UK housing developments are suitable for biomass-fuelled CHP plants. To overcome this, the Danish model is to build a biomass-fuelled power station that allows (and often requires) new developments to tap into it. Each development will then only need to bear the cost of the infrastructure, while the purchase of energy from the power station (will eventually) pay for the plant. As the capacity for energy in the power station is taken up, new capacity can be added at a relatively low additional cost.

A similar scheme to the Danish model has been set up in Aberdeen with the local authority creating an independent, not-for-profit company (Aberdeen Heat and Power Company Ltd) that operates three schemes in the city and supplies over 1,200 domestic, commercial and leisure properties, with biomass as the main fuel source.

Micro-Scale Options

There are also a number of small/micro- scale options. The XRGI® co-generation plant from the Danish company EC Power uses an internal combustion engine running on natural gas to provide electricity and heat. The range of machines will support from one to 10 typical modern houses, and will be sized to meet the predicted electrical base load (essentially all those things that are running most of the time).

Ideally, the machine will run for 24 hours per day, and running at the electrical base load level means that the heat output is reduced. This in turn usually means that a supporting boiler is needed — although this can make use of water pre-heated by the CHP plant.

The reasoning behind this sort of system is that it does not qualify for either Feed-in Tariffs (FiTs) or the Renewable Heat Incentive (RHI), and the wholesale market for electricity is currently very poor. This rather complex set-up therefore means that the immediate needs are met, but there is no excess heat and minimum excess electricity.

A 15kW capacity EC Power CHP plant will cost around £50,000 installed and would support six to eight houses. Allow around £1,500 per house for the heat distribution system, and the capital cost is less than £8,000 per house for eight houses.

Running costs for a Grid-connected house with a 200m² floor area built to Building Regulations standards will be roughly £1,800 per year for heat, hot water and electricity (varying with occupancy). Supplying that same energy from this sort of CHP plant will cost around £1,200 per year.

Alternatively, a wood pellet boiler, like those from the Windhager BioWIN range, would support very small district heating schemes. The capital cost for a system to support just two houses could be 25-30% more than a similar boiler supplying a single house, and the installation would qualify for the non-domestic RHI tariff.

This sort of machine can be cascaded – with a number of boilers linked together – notionally supporting any number of houses. But, the capital cost of more than three or four machines (over about 100kW capacity) tends to be more than for boilers designed specifically for that scale.

Care and Ownership

A single source of supply tends to mean a single point of responsibility. Someone has to run the plant, organise fuel deliveries, pay bills, arrange maintenance, and the like. And that responsibility tends to reside with ownership.

Therein lies the problem. Does ownership lie with one, all or none of the properties? The answer is often to set up a separate company that owns and operates the plant, with each property owning shares (transferred when the property is sold), with the company selling energy to the properties. Administration costs can be easily accounted for and responsibility can be allocated on a rota basis.


For two or even three properties in common ownership, installing a cost-effective district heating scheme is not too arduous. The equipment needed is readily available and there are benefits of scale, reduced capital and running costs, and potentially an increased income from the RHI.

Move beyond that and it becomes something of a different proposition, requiring a bit more imagination and determination. The figures work out well for big schemes (over 150 dwellings) but it is the middle ground (10-100 properties) where the problems lie.

Co-generation is all about the maths. There is no micro-scale biomass plant currently available (although that may change in the next year or two) and solar power is prohibitively expensive. This leaves only fossil fuel systems and, as these do not qualify for FiTs or RHI tariffs, then the economics becomes very close. Typically for those small schemes, co-generation in the form of an individual photovoltaic thermal system provides a better, more cost-effective answer.

District heating using renewable energy at the microscale is readily available and, with the benefit of the RHI makes far better financial sense than individual systems — you just have to get over the ownership issue.

Check out ukdea.org.uk for more information on district heating.

Case Study

The Southampton District Energy Scheme (SDES) is a tri-generation scheme that has been delivering heat, cooling and electricity to its users for over 25 years. The scheme supports 45 commercial and residential buildings in both public and private sectors, in a single community in the city.

The scheme taps into an underground geothermal aquifer using boreholes at 1.7km deep. This hot water is pumped to the surface where its heat is extracted via heat exchangers.

The bottom line:

  • Saves 10,000 tonnes of CO₂ annually
  • Produces 40,000MWh of heat per year
  • Produces 26,000MWh of electricity per year
  • Produces 7,000MWh of chilled water
  • 14km of insulated distribution pipe
  • Serves buildings within a 2km radius
  • Just 1°C temperature loss per km of pipe

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