The report analyzes barriers to and opportunities for private sector participation in district heating (DH) in the Western Balkan countries of Bosnia and Herzegovina, Croatia, Kosovo, and Serbia, as well as in Mongolia and Ukraine. Specifically, the report analyzes the legal and regulatory frameworks for public-private partnerships (PPP) and for DH in each of the countries, including an overview of the primary and secondary legislation, PPP preparation and approval processes, institutional setup of the DH sector, heat tariff-setting procedures, etc. In addition, the report describes international best practice for various business models for private sector participation in DH and provides country-specific recommendations to improve the attractiveness of PPP in the DH sector. Finally, the report provides an estimation of the investment needs in the DH sector by country and indicates selected investment projects, which are conservatively assessed at $1.5 billion.
The report uses three case studies where co-generation has been successfully deployed in industrial applications, and three case studies of efficient district heating and cooling (DHC) systems to inform this analysis. These real-life examples demonstrate that long-term stability of energy efficiency rewarding policy strategy is one of the most important levers to unlock cost-effective deployment potential of these technologies. They also show that technical challenges posed by innovative and highly integrated DHC systems can be solved through cooperative effort, experience sharing and support to demonstrate pioneer networks. Based on this analysis, the report provides policy recommendations intended to help policymakers better understand the drivers of deployment of co-generation and DHC systems, and overcome policy and market barriers to increased cost-effective penetration of these efficient energy options.