Work

Business Models and Financial Viability of Heat Cooperatives for District Heating Decarbonisation: A Financial Feasibility Case Study from the HeatCOOP Project

Year: 2026

Type: article

Abstract: Heating and cooling account for roughly half of EU final energy demand, yet the decarbonisation of community-led district heating remains underrepresented in the finance literature. This paper examines the financial viability of heat cooperative business models through a three-model typology (administrative, leasing, asset) developed within the HeatCOOP project, applied to a financial feasibility analysis of two Slovenian biomass district heating projects. Both adopt the asset model via a public–private concession framework; capital expenditures range from €617,000 to €1.87 million and annual heat delivery from 1100 to 3300 MWh. Sensitivity analysis across grant rates of 0–65% shows that the subsidy rate is the dominant financial viability determinant: all four variants achieve positive net present value and internal rate of return of 7.3–7.8% at approximately 45% subsidy, while none are viable without public co-financing. The levelised cost of heat ranges from 85–97 €/MWh on a private basis to 114–134 €/MWh on an unsubsidised full-cost basis. Comparison with fourteen European benchmark cases shows that public subsidy functions not as a market-failure correction but as a structural substitute for cooperative member capital in environments where the cooperative tradition is nascent—with direct implications for subsidy programme design targeting cooperative district heating.

Source: Energies

DOI: 10.3390/en19174011

Authors: Gašper Stegnar, Katarina Trstenjak, Damir Staničić

Institution: Jožef Stefan Institute

Language: English

Topic: Integrated Energy Systems Optimization

Subfield: Electrical and Electronic Engineering

Field: Engineering

Domain: Physical Sciences

SDGs: Affordable and clean energy, Climate action

Open Access status: gold

Estimated APC paid: $3,137