A century after the introduction of the first district heating system (DHS) on a commercial basis, the technology has still not become as widespread as it deserves to be. The role of district heating (DH) has meant not only comfort for its users but also less impact on the environment. At a time when the negative impact on climate of using energy and the liberalisation of energy markets are prominent issues, efficient DHS which are competitive both at national and international levels are needed. DH could be introduced at additional locations and existing networks could expand in areas with detached houses and industries. Combined heat and power (CHP) production promotes the integration of the Swedish DH sector with the rest of Europe.

A step that enhances the benefit of DH is co-operation in DH systems at local and regional levels. The established DHS in many Swedish municipalities make this step easier to implement. Industries and DH utilities may collaborate around heat supply by looking beyond their traditional boundaries, thereby promoting an efficient use of energy.

This study enlightens the importance of co-operation in DH systems using several real-world cases. The impact of the introduction of external cost, the deregulated power market, investments and various policy instruments on the energy systems is considered. Some of the cases indicate clear advantages even under current conditions whilst others are dependent on the future boundary conditions assumed. In most cases CHP production is encouraged as a result of interconnection of DH and industrial energy systems. The results of this study may serve to encourage decision makers to think in terms of co-operation.

The modelling of the regional and industrial energy system was carried out using an improved version of the MODEST energy system optimisation tool. The improvement of the modelling environment of the tool has substantially facilitated the system analysis work.

It should be mentioned that though co-operation could lead to lower costs and more efficient use of energy, other factors such as the relationships between the actors, may hinder a collaboration project. Independent techno-econornical analyses like these may help create a forum for discussion for the parties involved where other aspects of co-operation could be discussed.