Cost Calculations

Because all systems are site specific and can differ greatly, the most appropriate way to evaluate the cost of a district heating system does not attempt to quantify all of the costs of components, infrastructure and development; rather it works backwards from the following known values to calculate the maximum possible capital investment into the project:

  1. Heat demand of the district considered (kWh/year, D)
  2. Buy price of fuel/electricity (p/kWh, B)
  3. Sell price of heat/electricity (p/kWh, S)
  4. Yearly maintenance cost of the system (£,M)
  5. Required payback period (years, n)
  6. Interest on the capital investment (%/100, R)

Inputting these into the following formula:

main equation for cost calculations

Where C is the maximum loan possible to break even after the required payback period. Using this method, different systems can be evaluated for the same district; systems with a larger value for C will be more profitable for the project developer.

The following image is an example of these values within the cost calculator within the tool:

cost tool illustration

Figure 1: Screenshot from the "cost" tab of the tool