# A Critical Review of District Heating and District Cooling Socioeconomic and Environmental Benefits

S. Ahmed, Edoardo Croci, Annamaria Bagaini

► To cite this version:

S. Ahmed, Edoardo Croci, Annamaria Bagaini. A Critical Review of District Heating and District Cooling Socioeconomic and Environmental Benefits. 14th Doctoral Conference on Computing, Electrical and Industrial Systems (DoCEIS), Jul 2023, Monte Da Caparica, Portugal. pp.3-18, 10.1007/978-3-031-36007-7_1. hal-05473068

HAL Id: hal-05473068

https://inria.hal.science/hal-05473068v1

Submitted on 23 Jan 2026

HAL is a multi-disciplinary open access
archive for the deposit and dissemination of sci-
entific research documents, whether they are pub-
lished or not. The documents may come from
teaching and research institutions in France or
abroad, or from public or private research centers.

L'archive ouverte pluridisciplinaire HAL, est
destinée au dépôt et à la diffusion de documents
scientifiques de niveau recherche, publiés ou non,
émanant des établissements d'enseignement et de
recherche français ou étrangers, des laboratoires
publics ou privés.

<figure><img src="image_1.png" /></figure>

Distributed under a Creative Commons CC BY 4.0 - Attribution - International License
<figure><img src="image_2.png" /></figure>

ifip

International Federation for Information Processing

This document is the original author manuscript of a paper submitted to an IFIP
conference proceedings or other IFIP publication by Springer Nature. As such, there
may be some differences in the official published version of the paper. Such
differences, if any, are usually due to reformatting during preparation for publication or
minor corrections made by the author(s) during final proofreading of the publication
manuscript.
<figure><img src="image_3.png" /></figure>

# A Critical Review of District Heating and District Cooling Socioeconomic and Environmental Benefits

S. M. Masum Ahmed(*), Edoardo Croci, and Annamaria Bagaini

Centre for Research on Geography, Resources, Environment, Energy and Networks (GREEN),
Bocconi University, Via Guglielmo Roentgen, 1, 20136 Milan, Italy

masum.ahmed@unibocconi.it

**Abstract.** Heating energy demand accounts for almost 50% of global final energy consumption. The cooling demand is also rising, accounting for 16% of the building sector's final electricity consumption. District heating and cooling (DH-DC) can significantly reduce overall energy consumption and CO₂ emissions considering the use of green sources and new technologies. Identifying and assessing the benefits generated by DH-DC is crucial for supporting policymakers and driving sustainable financing. This paper aims to identify and categorise DH-DC benefits through a literature review focusing on methods to assess them. In this review, 35 research works have been considered and analysed. Benefits identified in the literature broke down into four categories: benefits for the energy system, end-users, environment, and society. Benefits are well recognised in the literature; however, most studies focused on qualitative analysis with a low impact on DH-DC project assessment. Results will be used to design a new integrated assessment framework.

**Keywords:** District Energy System · Benefits Assessment · Energy Turn · Policy Recommendation

## 1 Introduction

Energy demand is escalating driven by increasing global populations and fast-growing economies. According to the Energy Information Administration (EIA) of the United States (US), global energy demand will increase by 47% over the next 30 years [1]. Buildings are responsible for about a third of global energy consumption and a quarter of CO₂ emissions [2]. Almost half of the energy demand for buildings is used for space and water heating and less in cooking [1]. Cooling demand is also growing, accounting for 16% of the building sector's final electricity consumption [3]. District heating and cooling (DH-DC) is considered one of the viable options to reduce overall energy consumption and CO₂ emissions of buildings and meet the Paris Agreement goals [4–6].

A district heating (DH) system is comprised of a pipeline network that connects several buildings and provides heat using centralized heat generation facilities [7]. “District cooling is the cooling equivalent of district heating” [8], by transporting cooled water to
buildings. DH-DC system provides several energy services, including space heating, air conditioning, and domestic hot water (DHW) [7, 8]. China, Russia, and Europe cover almost 90% of the world's DH energy production [9]. An estimation of the total length of distribution pipelines is 600,000 km around the globe and 200,000 km in the European Union [10]. While the biggest DH network is located in China [9]. Globally, there are around 6,000 active DH networks and only 115 DC systems located in Europe [11].

DH-DC systems evolved through the years, increasing their performance and their efficiency. Looking at DH systems, in the first generation (1GDH) heat was supplied from a central station and delivered to consumers utilizing a network of pipes. The first commercially available DH was established in the US in the 1880s, using steam as a heat carrier [12]. Afterwards, the second-generation DH (2GDH) was established massively in Europe in the 1930s, using superheated water as a heat carrier [12]. A crucial development of DH happened in Scandinavian countries, which is considered as third generation DH (3GDH) in the 1980s. It worked by reducing the temperature of the heat carrier to lower than 100 °C [12]. Key features of 3GDH are having various heat sources and a network of pre-insulated pipes into the ground. In fourth generation DH (4GDH) in the 2020s, the supply temperature was reduced compared to 3GDH, at a 60–70 °C range. Additionally, heat pumps and CHP units of 4GDH have great efficiencies than 3GDH at these lower temperature levels [12]. The fifth generation DH (5GDH) concept is built with a thermal network which delivers and extracts heat at very low temperatures. In 5GDH, heat pumps operated bidirectionally to meet both the heating and cooling demands of end-users. Key features of 5GDH are thermal storage (using the ground as storage), reduced thermal losses (negligible at very low temperatures), and the possibility of using uninsulated pipelines [12].

Looking at DC systems evolution, the first generation DC (1GDC) pipeline refrigeration systems were unveiled in the US in the 1890s [13]. 1GDC consisted of centralised condensers and decentralised evaporators (decentralised evaporators and centralised evaporators using refrigerant and brine, respectively, as a carrier) [13]. Sequentially, a major shift occurred as the second generation DC (2GDC), where old distributing fluid substitutes to water in the US in the 1960s [13]. The third generation district cooling (3GDC) was launched in France and Sweden in the 1990s, where several cooling sources were available, including cold from absorption chillers and natural cold sources [13]. Alternatively, fourth generation district cooling (4GDC) emerged first in Denmark in the 2020s. 4GDC comprises various energy (electricity and heating) sectors by employing centralised and decentralised technologies, including electric heat pumps, absorption heat pumps, natural sources, and cold storage facilities to satisfy buildings cooling demands [13]. 5GDC heat operated bidirectionally to meet the cooling demands of end-users. 5GDC operating temperature range is between –5 to 20 °C. There are several crucial features of 5GDH, e.g. very low temperature network, thermal storage, and enhancing network performance by reducing thermal losses [12].

The source of the DH-DC system, including geothermal, solar thermal, biomass, petroleum products, natural gas, coal, surface or groundwater, etc., and the technology used (internal combustion, steam cycles, gas turbines, combined cycles, chillers, etc.) mainly depend on the resources available on-site. Furthermore, one of the most remarkable aspects of this technology is its ability to recover and exploit heat/cold produced
by third-party sources on site; if not converted into the distribution network, it should
be dispersed [14]. Considering that fossil fuels still supply more than 60% of the energy
needed in buildings by using autonomous heating/cooling systems, the replacement of
those with DH-DC can increase energy saving and efficiency and reduce the overall
CO2 emissions [1-4]. Indeed, a DH-DC system allows energy production with greater
efficiency compared to autonomous heating/cooling systems using the same resource.
Moreover, a DH-DC system can lead to significant environmental benefits, allowing a
reduction of both local harmful pollutants (e.g., nitrogen oxides, sulphur oxides, par-
ticulates, etc.) and GHG emissions. Besides, when DH-DC systems are integrated with
other technologies, it can generate additional benefits [15].

Emerging technologies such as IoT, digital twin, cloud computing and cyber phys-
ical system (CPS) can indeed be exploited, especially in the new generations (5GDH
and 4GDC) of DH-DC systems, to reduce energy consumption, increase smart energy
management, integrate renewables and distributed energy sources [16]. Among them,
CPS can play a decisive role in this sector [16]. There are several benefits that could be
generated by CPS in the DH-DC systems, such as improving energy efficiency, facilitat-
ing the decarbonisation process and reducing costs of network maintenance and energy
bills for users [17], however, this is an untapped research sector.

Although benefits generated by DH-DC systems are well recognised by the literature [18–25], considering economic, social, and environmental benefits, those are not per- formed by all projects to the same extent. Understanding which project generated higher benefits is crucial for driving sustainable financing as stated and encouraged by the EU taxonomy (EU taxonomy is a classification method that produces an environmentally sustainable economic practices [26]). The main objective of this work is to identify and categorise DH-DC system benefits by looking at the literature with a focus on approaches and methods applied to measure them. In this work, the relationship between CPS and DH-DC systems is also analysed. We found that benefits are clearly recognised but a significant research gap exists in terms of benefits assessment. The novelty of this work is understanding how DH-DC benefits recognised in the literature are measured to develop a new integrated assessment framework that can be used to evaluate the socioeconomic and environmental sustainability of DH-DC projects.

The paper is organised into five different sections. Section 2 is devoted to the relation-
ship between District Energy System and Cyber Physical System. Section 3 describes
the methodology of the work. In Sect. 4, the results are analysed and discussed. Finally,
Sect. 5 concludes the paper.

## 2 Relationship Between District Energy System and Cyber Physical System

A cyber-physical system (CPS) is an interconnection between a computer and a physical
system. The “cyber-physical systems” concept was introduced for the first time in 2006
by Helen Gill of the National Science Foundation in the US [27]. There are several appli-
cations of CPS, including DH-DC systems, automotive systems, industrial automation,
home automation, smart grid, HVAC systems, security system, water treatment plants,
and traffic control systems [28].
Considering the application of CPS in the DH-DC systems, it can help to enhance the overall DH-DC performance by improving energy efficiency and efficient maintenance management [29]. Thermal energy storage facilities can be exploited as much as possible with CPS, which also improves the stability of the system during the scarcity of renewables. Furthermore, CPS can be utilized to find problems without human intervention for finding faults in the DH-DC system, which reduces a lot of effort and money. Basically, the cost of maintenance will be reduced with consequent benefits for the energy supplier and the final users in terms of reduced bills. The integration of CPS in DH-DC can also improve the reliability and cybersecurity of DH-DC systems with derived benefits in terms of energy generation and supply, energy efficiency, the safety of occupants and CO2 reduction.

In the long run, CPS can potentially give more benefits than the traditional DH-DC system [16]. However, in literature, such benefits were considered only partially with few scientific works considering this integration. The literature is limited regarding the benefits of CPS in DH-DC. Results show that some benefits emerge and there is a need to increase the knowledge about the integration of CPS in DH-DC and also in terms of measuring and evaluating those benefits. We will develop an assessment framework for evaluating DH-DC projects defining suitable and consistent methodologies to measure them. This is an open topic that needs to be enlarged. The poor literature existing in this regard is an opportunity to increase knowledge and open a new research line. This work will contribute to understanding the existing gaps in recognising the relevance of integrating “DH-DC system” and “cyber-physical systems”.

## 3 Methodology

In order to identify the most recurring DH-DC benefits, we perform a literature review. DH and DC produce similar benefits and are treated at the same level. Moreover, benefits generated by DC systems alone are less explored in literature since heating is usually more energy-consuming. For those reasons, we concentrate the analysis only on DH system. At first, we conducted a literature search with the aim to discover studies investigating and assessing DH benefits from different points of view. We used the Scopus database by exploring a set of keywords, also considering CPS integration. The search was conducted on existing literature using four keywords: “district heating”, “district heating” and “benefit”, “district heating” and “benefit” and “economics”, “district heating” and “benefit” and “Cyber physical”. Only the last 16 years of research (2007–2022) are considered for this literature review. A total of 35 research works have been considered, including scientific papers, conference papers and reports. Through the literature review, we identified the most recurring DH benefits that emerged in the selected research works. Benefits have been categorised according to their features based on the European Network of Transmission System Operators for Electricity (ENTSO-E) district heating benefit framework [30], namely benefits for the energy system, benefits for the environment, benefits for the user and benefits for society. Finally, we evaluated benefits identified according to the method adopted to quantify/measure them, namely “qualitative method (I)”, “quantitative method (Q)”, and “monetisation method (M)”.
# 4 Results and Discussion

## 4.1 “DH Benefits” Literature Analysis

An analysis was conducted on scientific studies regarding DH and their capacity to generate benefits by using the Scopus database. It can be observed in Fig. 1. That DH research started growing in the 1980s, and then after 2005, the research work increased drastically. After 2005 more research papers were found considering and analysing benefits generated by those systems, with a strong increase after 2015 following the Paris Agreement and the increased concerns regarding heating and cooling system energy consumption and related CO2 emissions.

Looking at papers focused on DH benefit economic assessment, a very low number of papers emerged in the literature. Finally, the integration of DH benefits and Cyber-physical systems seem less considered in the literature, with only 5 papers conducting research on it, starting in 2015 (Fig. 1).

<figure><img src="image_4.png" /><figcaption>Fig. 1. Annual evolution of the scientific literature concerning DH [Data processed by Scopus].</figcaption></figure>

Figure 2 illustrates scientific studies by research fields. The highest portion of the research conducted was related to energy and engineering research fields, followed by “Environmental science”. In “Economic, Econometrics and Finance” and “Social science”, papers are quite limited to less than 2% of the total sample. Other research fields, e.g. “Business, Management and Accounting” and “Decision Sciences”, were also barely considered in the literature.
<figure><img src="image_5.png" /><figcaption>Fig. 2. Scientific studies by study area [Data processed by Scopus].</figcaption></figure>

## 4.2 DH Benefits Identification and Categorization

Through the literature review, we could identify several benefits generated by DH, considering environmental, social and economic benefits. DH benefits are well described in the literature that mainly comes from Asian and European countries where those systems are well developed, in particular: Austria, China, Croatia, Denmark, Estonia, Finland, Germany, Italy, Japan, South Korea, Netherlands, Poland, Russia, Sweden, UK, and the US.

Based on the ENTSO-E benefit framework [30], we categorised the benefits into 4 categories, namely 1) benefits for the energy system, 2) benefits for the environment, 3) benefits for the user and 4) benefits for society. Since the aim of this paper is understanding also the methods/approaches to measure and evaluate them, in the following part, each category is described, and each benefit is analysed in terms of frequency of appearance in the literature and the method adopted to quantify and measure it, according to 3 method types, i.e. “qualitative method (I)”, “quantitative method (Q)”, and “monetisation method (M)”.

**Benefits for the Energy System.** DH systems can be very important for the energy system to gain several benefits. After analysing the current literature, several benefits are identified for the energy system, including energy efficiency, flexibility (not depending on one specific source), RES integration, scaling of peaks in demand - reduction of energy demand, reduction of power consumption primary sources, security supplies, electric security system, stabilization system (heat storage), and storage possibilities. Those benefits are found in 23 scientific works among the selected resources. Energy efficiency was considered as a key benefit in 11 research however, only 2 works developed a method
to monetise and quantify it, while in 9 works, this benefit was identified but not further analysed. The flexibility of energy sources was identified as a benefit in 3 sources, yet one developed a method to monetise it. Besides, RES integration was found as a benefit in 6 research. In 4 studies, this benefit was only identified, not monetised or quantified. Similarly, “scaling of peaks in demand - reduction of energy demand” was noticed as a benefit in 2 works, without implementing any method to qualify or monetise it. The “reduction of power consumption primary sources” was found as a benefit in 15 works, where 2 studies developed a method for benefit monetization by adopting the avoided cost method, and 6 quantified benefits. “Security supplies” is monetised only by one research among 5 papers that mentioned it as a key benefit. “Electric security systems” was found in 5 studies, whereas two of them developed a method to monetise it. The benefit “stabilization system (heat storage)” was quantified, and “storage possibilities resources” was only identified without any further analyses. Further analysis of DH system benefits for the energy system is summarized in Table 1.

<table><caption>**Table 1.** DH system benefits for the energy system according to coherent literature.</caption><thead><tr><th>DH Benefit</th><th>Assessment approach</th><th>References</th><th>Methodology</th><th>Geographic area</th></tr></thead><tbody><tr><td rowspan="3">Energy efficiency</td><td>I</td><td>[14, 20, 31–37]</td><td>–</td><td>Europe, UK, Sweden, Croatia, General, China</td></tr><tr><td>M</td><td>[21]</td><td>Report case studies</td><td>US</td></tr><tr><td>Q</td><td>[38]</td><td>–</td><td>Estonia</td></tr><tr><td rowspan="3">Flexibility (not depending on one specific source)</td><td>Q</td><td>[36]</td><td>–</td><td>Italy</td></tr><tr><td>I</td><td>[39]</td><td>–</td><td>Europe</td></tr><tr><td>M</td><td>[40]</td><td>–</td><td>Germany</td></tr><tr><td rowspan="3">RES integration</td><td>I</td><td>[37, 39, 41, 42]</td><td>–</td><td>Italy, China, Europe</td></tr><tr><td>Q</td><td>[31]</td><td>–</td><td>Italy, China, Europe</td></tr><tr><td>M</td><td>[40]</td><td>–</td><td>Germany</td></tr><tr><td>Scaling of peaks in demand - Reduction of energy demand</td><td>I</td><td>[20, 32]</td><td>–</td><td>UK, Europe</td></tr></tbody></table>

(continued)
<table><caption>**Table 1.** (continued)</caption><thead><tr><th>DH Benefit</th><th>Assessment approach</th><th>References</th><th>Methodology</th><th>Geographic area</th></tr></thead><tbody><tr><td rowspan="3">Reduction of power consumption primary sources</td><td>I</td><td>[14, 20, 37, 39, 40, 43, 44]</td><td>–</td><td>Sweden, Croatia, General, Europe, Austria, China</td></tr><tr><td>Q</td><td>[36, 41, 43, 45–47]</td><td>–</td><td>Italy, Europe, Sweden</td></tr><tr><td>M</td><td>[18]<br>[22]</td><td>Avoided cost<br>Avoided cost</td><td>EU<br>South Korea</td></tr><tr><td rowspan="2">Security supplies</td><td>I</td><td>[14, 20, 21, 40]</td><td>–</td><td>Croatia, US, Europe, Austria</td></tr><tr><td>M</td><td>[48]</td><td>Report case studies</td><td>EU</td></tr><tr><td rowspan="2">Electric security system</td><td>M</td><td>[21]<br>[48]</td><td>Avoided cost<br>–</td><td>US<br>EU</td></tr><tr><td>I</td><td>[19, 32, 38]</td><td>–</td><td>UK, Estonia</td></tr><tr><td>Stabilization system (heat storage)</td><td>Q</td><td>[49]</td><td>–</td><td>EU</td></tr><tr><td>Storage possibilities</td><td>I</td><td>[21]</td><td>–</td><td>US</td></tr></tbody></table>

**Benefits for the End User.** DH systems can be very significant for the end user to acquire several benefits. Total 9 scientific works identified benefits for the end users among selected resources. Those benefits are comfort, average risk avoided in the house, more relationship between consumer and producer, lower maintenance cost, reduction of pollutants associated with health issues, space saving (engaged by technologies for heat production), vibration reduction, heat supply security, and decreased system cost. “Comfort” was found as a benefit in 3 works where 2 works developed 2 methods to monetise by adopting “willingness to pay (WAP)” and “hedonic pricing”, respectively. Besides, “average risk avoided in the house” is monetised in one research by adopting the WAP method. However, 3 benefits “more relationship between consumer and producer”, “lower maintenance cost”, and “reduction of pollutants associated with health issues” were only identified, not monetised or quantified further. “Heat supply security” was identified as a benefit in 3 works; however not further quantified. In addition, 3 resources identified “space saving (engaged by technologies for heat production)”, where 2 works monetised the benefit. “Decreasing the system cost” is another crucial benefit for the
<table><caption>**Table 2.** DH system benefits for the end user according to coherent literature.</caption><thead><tr><th>DH Benefit</th><th>Assessment approach</th><th>References</th><th>Methodology</th><th>Geographic area</th></tr></thead><tbody><tr><td rowspan="3">Comfort</td><td>I</td><td>[14]</td><td>–</td><td>Croatia</td></tr><tr><td rowspan="2">M</td><td>[50]</td><td>WAP</td><td>South Korea</td></tr><tr><td>[18]</td><td>Hedonic pricing</td><td>Europe</td></tr><tr><td rowspan="2">Average risk avoided in the house</td><td>I</td><td>[39]</td><td>–</td><td>Europe</td></tr><tr><td>M</td><td>[51]</td><td>WAP</td><td>South Korea</td></tr><tr><td>More relationship between consumer and producer</td><td>I</td><td>[39]</td><td>–</td><td>Europe</td></tr><tr><td>Lower maintenance cost</td><td>I</td><td>[39, 41]</td><td>–</td><td>Italy, Europe</td></tr><tr><td>Reduction of pollutants associated with health issues</td><td>I</td><td>[21]</td><td>–</td><td>US</td></tr><tr><td rowspan="2">Space saving (engaged by technologies for heat production), vibration reduction</td><td>M</td><td>[51]<br>[21]</td><td>WAP<br>Report case studies</td><td>South Korea<br>US</td></tr><tr><td>I</td><td>[39]</td><td>–</td><td>Europe</td></tr><tr><td>Heat supply security</td><td>I</td><td>[38, 39, 41]</td><td>–</td><td>Italy, Estonia, Europe</td></tr><tr><td>Decreases the system cost</td><td>M</td><td>[23]</td><td>–</td><td>Denmark</td></tr></tbody></table>

end user, and it is monetised only once. More analysis of DH system benefits for the end user is performed in Table 2.

**Benefits of Environment.** DH systems can be very important for the environment to obtain several benefits. We found environmental benefits in 27 resources, those benefits are environmental and health damage avoided, resource recovery from waste, CO₂ reduction, CO₂ reduction equivalent, reduced consumption of water resources, and reduction of pollutants (no CO₂). Among them, 2 benefits “CO₂ reduction equivalent” and “reducing consumption of water resources” were quantified the benefits but not monetised. 21 sources identified “CO₂ reduction” as the highest among environmental benefits for DH; however, 11 works quantified the benefits and 3 works monetised by utilizing avoided cost, shadow price and ICR methods, respectively. In addition, avoided cost was applied to monetise the benefit “environment and health damage avoided” in one research work. The benefits “resource recovery from waste”, and “reduction of pollutants (no CO₂)” were quantified in 2 studies. Besides, the “reduction of pollutants (no CO₂)” was also
<table><caption>**Table 3.** DH system benefits of environment according to coherent literature.</caption><thead><tr><th>DH Benefit</th><th>Assessment approach</th><th>References</th><th>Methodology</th><th>Geographic area</th></tr></thead><tbody><tr><td>Environmental and health damage avoided</td><td>M</td><td>[48]</td><td>Avoided cost (damage factor)</td><td>EU</td></tr><tr><td>Resource recovery from waste</td><td>I</td><td>[31, 39];</td><td>–</td><td>Europe</td></tr><tr><td rowspan="3">CO<sub>2</sub> reduction</td><td>I</td><td>[10, 20, 32, 39, 42, 52, 53]</td><td>–</td><td>UK, General, Italy, Denmark, Europe</td></tr><tr><td>Q</td><td>[14, 22, 33, 36, 38, 41, 43, 45, 46, 49, 54]</td><td>–</td><td>Croatia, Sweden, Italy, South Korea, Estonia, Europe</td></tr><tr><td>M</td><td>[18]<br/>[37]<br/>[47]</td><td>Avoided cost, shadow price<br/>ICR<br/>Tool (EnergyPLAN)</td><td>Europe<br/>China<br/>Europe</td></tr><tr><td>CO<sub>2</sub> reduction equivalent</td><td>Q</td><td>[24, 34, 36, 54]</td><td>–</td><td>Sweden; Europe</td></tr><tr><td>Reducing consumption of water resources</td><td>Q</td><td>[37]</td><td>–</td><td>China</td></tr><tr><td rowspan="3">Reduction of pollutants (no CO<sub>2</sub>)</td><td>I</td><td>[39, 44, 52]</td><td>–</td><td>Denmark, General</td></tr><tr><td>Q</td><td>[14, 37]</td><td>–</td><td>Croatia, China</td></tr><tr><td>M</td><td>[25]</td><td>Avoided cost, Pollution tax, Tool (Crystal Ball)</td><td>China</td></tr></tbody></table>

monetised with avoided cost and pollution tax methods. Table 3 provides an overview of further investigation of environmental benefits of DH system.

**Benefits for the Society.** Different benefits can be obtained by utilizing DH systems. Overall, 7 scientific works considered numerous benefits of DH for the society such as health damage avoided, impacts on macroeconomics / local economy recovery (GDP,
growth and employment derived from investments and energy efficiency), exploitation of local resources, and reduction of energy poverty. After analysing selected works, 2 benefits, “Reduction of energy poverty” and “Exploitation of local resources” were identified and not further quantified or monetised. The “impacts macroeconomics/local economy recovery” is regarded as an essential benefit, and it’s monetized in 2 research by employing the “input-output model” and software (MOVE2social). Table 4 describes the analysis of DH system benefits for the society.

<table><caption>**Table 4.** DH system benefits for the society according to coherent literature.</caption><thead><tr><th>DH Benefit</th><th>Assessment approach</th><th>References</th><th>Methodology</th><th>Geographic area</th></tr></thead><tbody><tr><td>Health damage avoided</td><td>M</td><td>[48]</td><td>Avoided cost (damage factor)</td><td>EU</td></tr><tr><td rowspan="4">Impacts on macroeconomics/local economy recovery (GDP, growth and employment derived from investments and energy efficiency)</td><td>I</td><td>[21, 32, 38]</td><td>–</td><td>US, UK, Estonia</td></tr><tr><td>M</td><td>[48]</td><td>Input-output model</td><td>EU</td></tr><tr><td>M</td><td>[19]</td><td>Tool (MOVE2social)</td><td>Austria</td></tr><tr><td>Q</td><td>[11]</td><td>–</td><td>Denmark</td></tr><tr><td>Exploitation of local resources</td><td>I</td><td>[39]</td><td>–</td><td>Europe</td></tr><tr><td>Reduction of energy poverty</td><td>I</td><td>[32]</td><td>–</td><td>UK</td></tr></tbody></table>

Following the analysis of the scientific and grey literature, it is possible to state that the most assessed benefits – i.e. with methods that quantify and monetise them – are the benefits for the energy system: improvements in energy efficiency and primary energy consumption. The environmental benefits that are measured and monetised refer to the “reduction of emissions” (CO₂ reduction taken into consideration) and the “reduction of pollutants”. Among the methodologies for monetisation, the major methods are the avoided cost (savings obtained by applying DH-DC instead of another technology) and WAP (willingness to pay for DH as an alternative to other technology).

In general, the number of studies monetising the benefit generated by DH systems was significantly less than studies evaluating benefits in a qualitative way. Moreveor, Tables 1, 2, 3 and 4 are significantly related to one another and can be utilized to better recognize the advantages of DH systems while assessing a DH project’s benefits. According to our results, it is necessary to develop a compressive assessment framework to monetise and quantify benefits, in order to help policymakers and stakeholders in decision-making and in driving finance towards sustainable DH projects. This can guide municipalities, generation companies, service providers, and users in undertaking better decision-making by looking at the effective impacts.
## 4.3 Categorising Benefits of Using the District Energy System and Cyber Physical System Together

Cyber physical system definition is well defined in the literature, but analysis of benefits in DH-DC systems is quite limited. Through the literature review we found that several benefits of the DH-DC system can be acquired with the help of CPS for stakeholders, planners and users. Various benefits could be generated by CPS in the DH-DC systems, such as enhancing energy efficiency, facilitating the decarbonisation process and decreasing energy bills for users. In this work, benefits generated by the integration of DH-DC systems and CPS are categorised into four different categories (i) benefits for the energy system: energy management, storage possibilities, system stabilization, RES integration and flexibility, (ii) benefits for end users: enhance safety awareness, security alert system, energy efficiency (reducing energy cost), thermal comfort and low maintenance cost, (iii) environmental benefits: CO2 reduction, and reduction of pollutants excluding CO2, and (iv) benefits for society: maintenance management, safety measurement, employability, damage avoided for the environment and health (multiple pollutants), investment opportunities, reduction of energy poverty and exploitation of local resources. These benefits can be acquired by integrating CPS with DH-DC system in the future. As limited research work is conducted in this sector, in future, we can integrate CPS with DH-DC and conduct more research to grasp the possibilities of technologies in this sector to quantify the benefits of DH-DC.

# 5 Conclusions and Further Work

This study aims to identify and categorize the benefits of DH-DC systems. A review of scientific literature has been conducted by utilizing the Scopus database and using 4 keywords: "district heating", "district heating" and "benefit", "district heating" and "benefit" and "economics", and "district heating" and "benefit" and "Cyber physical". Overall, 35 research works are included in this review. We also analysed scientific studies by research field and found that energy, engineering, and environmental science had the highest portion of papers, while the economic research field rarely considers this topic. Benefits identified were categorised into four categories using the ENTSO-E benefit assessment framework, namely benefits for the energy system, end-users, environment, and society. Benefits for the energy system include: increased energy efficiency; increased security supplies; increased the safety of the electrical system; waste heat recovery. Environmental benefits include: reduction of CO2 emissions; reduction of local pollutants; environmental and health damage avoided. Benefits for the user include: increased thermal comfort; lower maintenance cost; heat supply security; space savings. Benefits for society include: impacts macroeconomics; exploitation of local resources; reduction of energy poverty.

Moreover, benefits were analysed by looking at the methods adopted to quantify and monetise them, namely: qualitative method (I), quantitative method (Q), or monetisation method (M). After analysing the literature, we observed only a few works quantified or monetised the benefits of DH-DC; more papers were conducted using a qualitative approach to analyse them. Results will be used to develop an innovative assessment framework to quantify benefits, which will provide operational support for analysing the
benefits generated by DH-DC system as it can support stakeholders in decision-making, and investors in driving financing towards sustainable projects. Moreover, the untapped potential of CPS in DH-DC systems could be integrated as well in future to improve energy planning, energy management, maintenance check and many more applications. Furthermore, new opportunities can be obtained from DH-DC system; for example, new business models can be introduced by utilizing 5GDH and/or 4GDC technology and CPS. As a result, more businesses and job opportunities will be created for society.

**Acknowledgments.** This project has received funding from SmartGYsum project which is the European Union's Horizon 2020 research and innovation programme under the Marie Skłodowska-Curie grant agreement no. 955614.

## References

1. Global energy demand to grow 47% by 2050, with oil still top source: US EIA | S&P Global Commodity Insights. https://www.spglobal.com/commodityinsights/en/market-insights/lat est-news/oil/100621-global-energy-demand-to-grow-47-by-2050-with-oil-still-top-source- us-eia. Accessed 13 Feb 2023

2. Heating - Fuels & Technologies – IEA. https://www.iea.org/fuels-and-technologies/heating. Accessed 15 Feb 2023

3. Cooling - Fuels & Technologies – IEA. https://www.iea.org/fuels-and-technologies/cooling. Accessed 13 Feb 2023

4. Global CO₂ emissions rebounded to their highest level in history in 2021 - News – IEA. https://www.iea.org/news/global-co2-emissions-rebounded-to-their-highest- level-in-history-in-2021. Accessed 17 Feb 2023

5. Rezaie, B., Rosen, M.A.: District heating and cooling: review of technology and potential enhancements. Appl. Energy **93**, 2 (2012). https://doi.org/10.1016/j.apenergy.2011.04.020

6. The Paris Agreement | UNFCCC. https://unfccc.int/process-and-meetings/the-paris-agr eement. Accessed 20 Feb 2023

7. Toffanin, R., Curti, V., Barbato, M.C.: Impact of Legionella regulation on a 4th generation district heating substation energy use and cost: the case of a Swiss single-family household. Energy **228**, 120473 (2021). https://doi.org/10.1016/j.energy.2021.120473

8. District heating and cooling | Climate Technology Centre & Network | Tue (2017). https:// www.ctc-n.org/technologies/district-heating-and-cooling. Accessed 23 Feb 2023

9. District Heating – Analysis – IEA. https://www.iea.org/reports/district-heating. Accessed 23 Feb 2023

10. Werner, S.: International review of district heating and cooling. Energy **137**, 617–631 (2017). https://doi.org/10.1016/j.energy.2017.04.045

11. Buffa, S., Cozzini, M., D'Antoni, M., Baratieri, M., Fedrizzi, R.: 5th generation district heating and cooling systems: a review of existing cases in Europe (2019). https://doi.org/10.1016/j. rser.2018.12.059

12. Lund, H., et al.: Perspectives on fourth and fifth generation district heating. Energy **227**, 120520 (2021). https://doi.org/10.1016/j.energy.2021.120520

13. Østergaard, P.A., et al.: The four generations of district cooling - A categorization of the development in district cooling from origin to future prospect. Energy **253**, 124098 (2022). https://doi.org/10.1016/j.energy.2022.124098
14. Doračić, B., Novosel, T., Pukšec, T., Duić, N.: Evaluation of excess heat utilization in district heating systems by implementing levelized cost of excess heat. Energies (Basel) **11**, 575 (2018). https://doi.org/10.3390/en11030575

15. Gusmeroli, S.: Immagine in copertina: panorama di CityLife_Milano. (2018)

16. Inderwildi, O., Zhang, C., Wang, X., Kraft, M.: The impact of intelligent cyber-physical systems on the decarbonization of energy. Energy Environ Sci. **13**, 744–771 (2020). https://doi.org/10.1039/C9EE01919G

17. Inderwildi, O., Zhang, C., Kraft, M.: Cyber-Physical Systems in Decarbonisation. Presented at the (2022). https://doi.org/10.1007/978-3-030-86215-2_2

18. Davide, S.: Guide to cost-benefit analysis of investment projects: economic appraisal tool for cohesion policy 2014–2020. European Commission, Directorate-General for Regional and Urban policy (2015)

19. Moser, S., Mayrhofer, J., Schmidt, R.-R., Tichler, R.: Socioeconomic cost-benefit-analysis of seasonal heat storages in district heating systems with industrial waste heat integration. Energy **160**, 868–874 (2018). https://doi.org/10.1016/j.energy.2018.07.057

20. Werner, S.: Benefits with more District Heating and Cooling in Europe. Rome (2007)

21. US Department of Energy: Energy Efficiency and Energy Security Benefits of District Energy (2019)

22. Kim, H.-W., Dong, L., Choi, A.E.S., Fujii, M., Fujita, T., Park, H.-S.: Co-benefit potential of industrial and urban symbiosis using waste heat from industrial park in Ulsan Korea. Resour. Conserv. Recycl. **135**, 225–234 (2018). https://doi.org/10.1016/j.resconrec.2017.09.027

23. Sorknæs, P., Nielsen, S., Lund, H., Mathiesen, B.V., Moreno, D., Thellufsen, J.Z.: The benefits of 4th generation district heating and energy efficient datacentres. Energy **260**, 125215 (2022). https://doi.org/10.1016/j.energy.2022.125215

24. Djuric Ilic, D., Trygg, L.: Economic and environmental benefits of converting industrial processes to district heating. Energy Convers. Manag. **87**, 305–317 (2014). https://doi.org/10.1016/j.enconman.2014.07.025

25. Yan, Q., Qin, C.: Environmental and economic benefit analysis of an integrated heating system with geothermal energy—a case study in Xi’an China. Energies (Basel) **10**, 2090 (2017). https://doi.org/10.3390/en10122090

26. EU taxonomy for sustainable activities. https://finance.ec.europa.eu/sustainable-finance/tools-and-standards/eu-taxonomy-sustainable-activities_en. Accessed 27 Feb 2023

27. Krämer, B.J.: Evolution of cyber-physical systems: a brief review. In: Suh, S., Tanik, U., Carbone, J., Eroglu, A. (eds.) Applied Cyber-Physical Systems. pp. 1–3. Springer New York, New York, NY (2014). https://doi.org/10.1007/978-1-4614-7336-7_1

28. Lee, E.: The past, present and future of cyber-physical systems: a focus on models. Sensors **15**, 4837–4869 (2015). https://doi.org/10.3390/s150304837

29. Matsunaga, F., Zytkowski, V., Valle, P., Deschamps, F.: Optimization of energy efficiency in smart manufacturing through the application of cyber-physical systems and industry 4.0 technologies. J Energy Resour. Technol. **144**, (2022). https://doi.org/10.1115/1.4053868

30. ENTSO-E Guideline for Cost Benefit Analysis of Grid Development Projects (2015)

31. Connolly, D., et al.: Heat Roadmap Europe: combining district heating with heat savings to decarbonise the EU energy system. Energy Policy **65**, 475–489 (2014). https://doi.org/10.1016/j.enpol.2013.10.035

32. Kelly, S., Pollitt, M.: An assessment of the present and future opportunities for combined heat and power with district heating (CHP-DH) in the United Kingdom. Energy Policy **38**, 6936–6945 (2010). https://doi.org/10.1016/j.enpol.2010.07.010

33. Weinberger, G., Amiri, S., Moshfegh, B.: On the benefit of integration of a district heating system with industrial excess heat: an economic and environmental analysis. Appl. Energy **191**, 454–468 (2017). https://doi.org/10.1016/j.apenergy.2017.01.093
34. Olsson, L., Wetterlund, E., Söderström, M.: Assessing the climate impact of district heating systems with combined heat and power production and industrial excess heat. Resour. Conserv. Recycl. **96**, 31–39 (2015). https://doi.org/10.1016/j.resconrec.2015.01.006

35. Allan, G., Eromenko, I., Gilmartin, M., Kockar, I., McGregor, P.: The economics of distributed energy generation: a literature review. Renew. Sustain. Energy Rev. **42**, 543–556 (2015). https://doi.org/10.1016/j.rser.2014.07.064

36. Comodi, G., Lorenzetti, M., Salvi, D., Arteconi, A.: Criticalities of district heating in Southern Europe: lesson learned from a CHP-DH in Central Italy. Appl. Therm. Eng. **112**, 649–659 (2017). https://doi.org/10.1016/j.applthermaleng.2016.09.149

37. Fang, H., Xia, J., Zhu, K., Su, Y., Jiang, Y.: Industrial waste heat utilization for low temperature district heating. Energy Policy **62**, 236–246 (2013). https://doi.org/10.1016/j.enpol.2013.06.104

38. Volkova, A., Mashatin, V., Hlebnikov, A., Siirde, A.: Methodology for the improvement of large district heating networks. Environ. Climate Technol. **10**, 39–45 (2012). https://doi.org/10.2478/v10145-012-0009-7

39. Euroheat & Power. https://www.euroheat.org/. Accessed 17 Feb 2023

40. Schwaeppe, H., et al.: Analyzing intersectoral benefits of district heating in an integrated generation and transmission expansion planning model. Energies (Basel) **15**, 2314 (2022). https://doi.org/10.3390/en15072314

41. Noussan, M.: Performance indicators of District Heating Systems in Italy – Insights from a data analysis. Appl. Therm. Eng. **134**, 194–202 (2018). https://doi.org/10.1016/j.appltherm aleng.2018.01.125

42. Famiglietti, J., et al.: Environmental Life Cycle Assessment scenarios for a district heating network. An Italian case study. Energy Reports **7**, 368–379 (2021). https://doi.org/10.1016/j. egyr.2021.08.094

43. Broberg Viklund, S., Johansson, M.T.: Technologies for utilization of industrial excess heat: potentials for energy recovery and CO2 emission reduction. Energy Convers Manag. **77**, 369–379 (2014). https://doi.org/10.1016/j.enconman.2013.09.052

44. Rosada, J.: Characteristics of district heating - advantages and disadvantages. Energy Build. **12**, 163–171 (1988). https://doi.org/10.1016/0378-7788(88)90061-8

45. Ilaria, B.: Teleriscaldamento e sistemi energetici integrati: metodologia di valutazione dei benefici energetici ed ambientali e strumenti di incentivazione. Enea (2009)

46. Calise, F., D'Accadia, M., Barletta, C., Battaglia, V., Pfeifer, A., Duic, N.: Detailed modelling of the deep decarbonisation scenarios with demand response technologies in the heating and cooling sector: a case study for Italy. Energies (Basel) **10**, 1535 (2017). https://doi.org/10. 3390/en10101535

47. Lund, H., et al.: The status of 4th generation district heating: research and results. Energy **164**, 147–159 (2018). https://doi.org/10.1016/j.energy.2018.08.206

48. Jakubcionis, M., et al.: Best practices and informal guidance on how to implement the Comprehensive Assessment at Member State level. Publications Office of the European Union, Luxembourg (Luxembourg) (2015). https://doi.org/10.2790/79453

49. Connolly, D., Lund, H., Mathiesen, B.V.: Smart Energy Europe: The technical and economic impact of one potential 100% renewable energy scenario for the European Union. Renew. Sustain. Energy Rev. **60**, 1634–1653 (2016). https://doi.org/10.1016/j.rser.2016.02.025

50. Yoon, T., Ma, Y., Rhodes, C.: Individual Heating systems vs. District Heating systems: what will consumers pay for convenience? Energy Policy **86**, 73–81 (2015). https://doi.org/10.1016/j.enpol.2015.06.024

51. Kim, H.-J., Lim, S.-Y., Yoo, S.-H.: The convenience benefits of the district heating system over individual heating systems in korean households. Sustainability **9**, 1348 (2017). https://doi.org/10.3390/su9081348
52. Danish Energy Agency: District Heating Assessment Tool. (2016)

53. Werner, S.: Ecoheatcool WP4–Possibilities with more District Heating in Europe. www.ecoheatcool.org. Accessed 28 Feb 2023

54. Broberg Viklund, S., Karlsson, M.: Industrial excess heat use: systems analysis and CO2 emissions reduction. Appl. Energy. **152**, 189–197 (2015). https://doi.org/10.1016/j.apenergy.2014.12.023