To the rehabilitation strategy of district heating in economies in transition

Abstract

Rehabilitation of district heating systems in the economies in transition requires private sector participation due to insufficiency of the resources of the local authorities and the international financing institutions. The investment needs of rehabilitating the district heating systems is Russia, for instance, are estimated at US$ 70 billion by year 2030. In order to address some of the barriers faced by the private sector, an analysis of the already completed rehabilitation cases, financed by the World Bank, and development of a strategic planning tool using the results of the analyses was considered useful. The model was developed in four stages as follows: (i) A simple linear regression analysis of the material measures, e.g. the investments, and the obtained economic benefits of the completed projects has provided estimates about the relations between the individual measures and the related benefits. The author has had a rare opportunity to participate in preparing and analyzing the database of the World Bank, the largest co-financier of the rehabilitation cases so far, comprising the analysis results of the completed rehabilitation cases, mainly located in Poland. (ii) Regarding the obtained benefits of rehabilitation, the impact of the immaterial measures has been substantial on the success of the rehabilitation cases. In order to create quantitative estimates of the benefits of the immaterial measures for model building, a questionnaire analysis was carried out among the key specialists in the district heating enterprises, in which such a comprehensive rehabilitation had been completed recently. Each specialist was requested to personally assess how much of the measured quantitative economic benefits was gained by the material measures compared with immaterial measures, on which areas of knowledge the benefits were achieved and which sources had produced the benefits. Given the overall economy of the rehabilitation case, the benefits of the immaterial measures could be estimated in quantitative terms. (iii) Using the analyzed information about the benefits provided by both material and immaterial measures, a model consisting of LP and NLP was created by means of the GAMS programming tool. (iv) The model performance has been demonstrated in a fictive Russian DH system. Due to the basis of analyzed data and the testing results, the model may offer encouraging opportunities to assist private sector and other financiers in planning district heating rehabilitation in economies in transition on strategic level.