District heating and cooling is the centralised generation and distribution of heating and cooling. Depending on local circumstances, networks can be both lower carbon and cheaper for consumers than an individual heating system. A district heating network allows a large number of individual consumers to access heat that has been produced from a number of sources such as: combined heat and power (CHP), large scale heat pumps, municipal waste incineration, biomass boilers or industrial waste heat recovery.
As countries move to incorporate more intermittent renewable sources of electricity such as solar PV and wind into existing electrical grids, district heating and cooling networks can fulfil an important balancing role. Along with large scale thermal storage, CHP plants can be operated at short notice to provide electricity when the sun stops shining or the wind stops blowing, and the heat produced can be stored for later use. Likewise, an electricity system with high renewables penetration can sometimes produce excess electricity when not needed, using this electricity for heat production and storing it for later use can help balance the grid.
Multiple ownership models exist for district heating networks, ranging from full state or municipal ownership, long term concession agreements with private operators for heat generation and distribution, “unbundled” networks with separate ownership of different network assets or a private owner/operator that bills and interacts directly with consumers.