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Decarbonising (sub-)urban districts through neighbourhood heating and cooling networks: Financing and organizational pathways Cover

Decarbonising (sub-)urban districts through neighbourhood heating and cooling networks: Financing and organizational pathways

Open Access
|Jul 2026

Figures & Tables

Figure 1

Gap closed by neighbourhood H&C networks.

Figure 2

Basic configuration of a neighbourhood H&C networks.

Figure 3

Status of identified neighbourhood H&C projects in the participating countries.

Table 1

Characterisation of “cold village heating” in Rech.

LOCATIONRECH IM AHRTAL, GERMANYSUPPLY TEMP.5–25°C
Year2024Heat SourceGround probe fields
Distance4 kmOperatorMunicipality
Buildings53, rural areaBillingCapacity Pricing
Figure 4

Construction phase of the anergy grid in the city of Rech (left) and exploiting of the borehole heat exchanger field (right) (Ngahan & Giel 2022).

Table 2

Characterisation of neighbourhood H&C network in Simon-Denk-Gasse, Vienna.

LOCATIONVIENNA, 9th DISTRICTSUPPLY TEMP.12°C
Year2025Heat SourceGroundwater well
DistanceOperatorSozialbau AG (housing cooperative)
Buildings5BillingDifferent for each building (depending on the applicable housing law)
Figure 5

Post-war buildings as a typical building type in Simon-Denk-Gasse, Vienna, and the properties in the street block (Photo credit: SOZIALBAU AG).

Figure 6

Assignment of roles and responsibilities related to the development of a neighbourhood H&C network.

Table 3

Bottom-up and top-down approaches.

BOTTOM-UPTOP-DOWN
Property owner modelMunicipal utility model
Heating community modelEnergy service model
Table 4

Advantages and disadvantages from the users’ perspective – property owner model.

ADVANTAGESDISADVANTAGES
  • Works well when a housing cooperative/large owner can bundle demand and creditworthiness.

  • Potentially easier financing if the lead owner has balance-sheet strength and can leverage grants/debt.

  • Power imbalance/dependency: connected neighbours depend on one supplier; needs strong contracts and consumer protection.

  • Complex private-law contracting

  • Limited scalability: works for small clusters; may be harder to expand without changing governance

Table 5

Advantages and disadvantages from the users’ perspective – heating community model.

ADVANTAGESDISADVANTAGES
  • Direct involvement of citizens, especially interested/affected heat customers possible

  • Full control/steering by the affected parties through membership in heating energy community

  • Higher acceptance may lead to higher connection rates and thus better economic viability

  • Possibility to combine with an electricity energy community

  • The contractor’s competitive risk is largely limited to the construction phase and warranty obligations

  • High coordination effort during the initiating phase

  • Technical and financial risk lies entirely with the heating energy community

  • Financing can be difficult for a newly established organisation (can be mitigated through a leasing model, where the community leases the appliances from investing building owners)

  • Optimising plant operation requires specific expertise (but this can be outsourced/purchased)

Table 6

Advantages and disadvantages from the municipal perspective – municipal utility model.

ADVANTAGESDISADVANTAGES
  • Utilizing local energy resources within a municipal utility framework makes them a public asset, ensuring equitable access and distribution within the community

  • Direct service provision for citizens

  • Municipality has full control over the overall project

  • Favourable financing conditions for the public sector

  • The contractor’s competitive risk is largely limited to the construction phase and warranty obligations

  • Large share of technical and economic risk rests with the municipality or the municipal utility

  • High effort and expertise required on the municipality’s side (preparation, investment, operation, marketing); adequate staff resources must be available, usually to be provided through a municipal utility

  • Sufficient financial strength of municipalities required

  • Limitation for smaller to medium municipalities that usually do not have their own municipal utilities

Table 7

Advantages and disadvantages from the municipal perspective – energy service model.

ADVANTAGESDISADVANTAGES
  • The energy service provider’s specific expertise typically leads to lower lifecycle costs

  • Economic and technical risk rests with the energy service provider

  • Optimisation of the system is in the provider’s own interest

  • The investment can be financed by the energy service provider

  • Lower staff/resource requirements on the municipality’s side

  • A long-term contractual relationship with narrowly defined exit scenarios creates a certain dependency (natural monopoly)

  • Public procurement requires specific know-how on the side of the municipality

  • A lack of bidders is possible

  • Competitive risk for the energy service provider (while the asset value of the investment is preserved)

  • Financing conditions are usually less favourable than those of a municipality (however, this depends on the municipality’s financial leeway)

Figure 7

Decision tree for selecting organisational models in neighbourhood H&C projects (source: e7 GmbH).

Table 8

Overview and evaluation of possible billing models and associated district heating technologies.

BILLING MODELSYSTEMDESCRIPTIONPROPERTY BOUNDARY (5GDHC)EVALUATION
Fixed + variableLow–temperature and anergy networksFixed base price covering O&M, plus charge per kWh heat.
Most common for DH.
Heat contracting possible.
Condenser
Evaporator
+ stable revenue, consumption incentive
– metering and accounting necessary
VariableLow–temperature networksVariable pricing of kWh heat and network usage efficiency.
Heat contracting possible.
+ consumption and efficiency incentive, transparency
– complex metering, accounting and tariff calculation
Fixedpassive anergy networksFixed charge based on peak capacity. Energy costs of decentral HPs are paid by consumer.
No heat contracting possible.
Evaporator+ simple accounting, no metering necessary, low operator risk, individual HP installation
– no regard of network load
Flat rateLow–temperature and anergy networksAll–inclusive heating and cooling, monthly pricing according to estimated consumption/living area.Condenser+ maximum simplicity, predictable costs for consumers, bundled electricity and HP purchasing
– no consumption or efficiency incentive, cross–subsidisation risk
Language: English
Page range: 16 - 16
Submitted on: Mar 19, 2026
Accepted on: May 19, 2026
Published on: Jul 21, 2026
Published by: European Council for an Energy Efficient Economy (eceee)
In partnership with: Paradigm Publishing Services

© 2026 Klemens Leutgöb, Rachel Leutgöb, Martin Pehnt, Jakob Metz, Sebastian Blömer, published by European Council for an Energy Efficient Economy (eceee)
This work is licensed under the Creative Commons Attribution 4.0 License.