Business Models for District Heating

must be understood by users as well as suppliers

A key element is the acceptance of such an advanced energy supply system by users as well as by suppliers. The development of new business models and service concepts that are attractive to both is part of the project.

The basic terminology of business concepts in energy districts, as well as the market needs of stakeholders, was elaborated in an extra deliverable report: Concepts, stakeholders and value chains in smart energy business and services.

Currently, the marginal price of electricity is determined by demand and supply on a national level. In times of a large supply from e.g. an offshore wind farm, electricity prices on the power exchange market will be low (and may even be negative) while in times of high demand, prices will be higher. Balance responsible parties (BRPs) can trade the energy by day-ahead or by intraday market mechanisms. Currently consumers typically pay a flat tariff, but this is expected to change to ToU (Time of Use) pricing, critical peak pricing or even real-time tariffs.

In a future district we can imagine different groups of energy consumers, producers and 'prosumers' (both producers and consumers). On a district level, the match between the supply and demand of energy is managed by the 'Multi Commodity Matcher' using an automated pricing mechanism. As the district is connected to the national electricity grid, the national electricity price also affects the local electricity prices in the district.

'Prosumers' within the district are assumed to have a certain amount of flexibility in their consumption and production of energy. This flexibility in the timing and extent of production and consumption is a new aspect in the energy market and it can be incorporated into new business models.

A total of 15 business concepts were identified aimed at various stakeholders such as energy retailers, balancing responsible parties (BRPs) and transmission system operators (TSOs). The main business models are summarised in the table below.


Case Parties Objective
1 Retailer / BRP maximise the margin between purchases and sales of energy
2 Prosumers - aggregated reduce energy bill - buy at low prices
3 Balancing Responsible Party - BRP reduce imbalances in portfolio
4 Distribution System Operator - DSO peak shaving - avoiding capacity limits
5 Transmission System Operator - TSO reduce imbalance at national level


At present, work focuses on producing business agents that represent each of these business cases, so they can be applied in the simulation platform.