REWARDHeat

Interest in sustainable investments is growing continuously. Against this background, the project aims to investigate the extent to which local heating networks can be developed as a new asset class in the field of sustainable investments and how investors can be attracted. Due to the high investment volumes and the long-term investment horizon, the focus is on public institutions and various institutional investors (e.g. investment funds, insurance companies, pension funds).

First, the various projects are analysed with regard to their risk/return ratio and their sustainability effects, and innovative financing concepts are developed. An exchange with potential investors is also planned.

In view of the significant increase in extreme weather events as a result of man-made climate change, there is a growing need to decarbonise the heat supply of buildings, which are responsible for around 35% of CO2 emissions. District Heating and Cooling Networks (DHCN) are of particular importance in this context.

Building on more technology-oriented work packages and work packages focussing on ‘bankability’ and business models for DHCN, the HFT-coordinated work package ‘Attracting Investors towards the DHC Sector’ developed approaches for financing the EU-wide expansion of DHCN via the capital market. Against the backdrop of high deficits and debt in public budgets, the mobilisation of private capital via the capital markets is gaining considerable relevance. Using literature analyses, surveys, interviews with experts and workshops, specific financing approaches and instruments were developed along the life cycle of infrastructure projects that not only adequately take into account the phase-specific investment risk, but also explicitly consider the requirements of the EU Sustainable Finance Regulation (e.g. EU taxonomy).

The target systems of (institutional) investors were also taken into account and it was worked out which investors would favour which financing instruments to provide the required capital. In this context, a particular focus was placed on blended finance approaches, in which the public sector improves the risk/return ratio of DHCN projects by providing guarantees, which increases their attractiveness from an investor's perspective. Against the background of municipal heating planning, the results of the project are relevant for the expansion of DHCN in Germany, especially in Baden-Württemberg, in the years 2024ff.

(Interim) results of the project were presented and discussed at various conferences (face-to-face, online, hybrid) and in lectures. Various papers, articles in scientific journals and position papers were also published.

Co-financed by the European Union

This project has received funding from the European Union's Horizon 2020 research and innovation programme under grant agreement No. 857811