All experience and empirical data point the same way: go big on transmission pipes and stay lean on distribution pipes.
The last term in the equation expresses today’s value of the cost of upgrading at a later point in time. It takes the cost of upgrading to the larger dimension (civil works plus pipe), less the scrap value of the new pipe under straight-line depreciation, weights this by the probability that the upgrade is actually needed, and discounts the result back to present value over the number of years until the upgrade would occur. The nominal pipe costs are assumed to remain unchanged throughout the entire service life. Scenario B – Sizing the backbone for the future The cost of sizing the backbone for the future C future , today, can be expressed as C future = C other(D 1 ) +C pipe(D 1 ) Future-proof sizing is the better bet whenever C future is smaller than C tight – that is, whenever: C other(D 1 ) + C pipe(D 1 ) < C other(D 0 ) + C pipe(D 0 ) + p · —---———————— other(D 1 ) pipe(D 1 ) C + C - S(t) (1 + r) t
District heating pipes are built to last 50 years or more. Over that time, almost everything behind the original sizing decision can change. Neighbourhoods grow, buildings become better insulated, the service might expand, supply temperatures might decrease, and new heat sources appear in places nobody had mapped when the first pipes went into the ground. Separate local networks may even end up being connected to share production & storage capacity and spread risk. A transmission pipe sized “correctly” for today’s conditions is, almost by definition, sized for a system that will look very different in the future. Thinking long term means accepting that some pipes get paid for before their own numbers add up – because their real value isn’t in today’s business case, but in the option they create: to densify, expand, connect, and reach better heat sources when the moment comes. Holistic Thinking Denmark’s success with district heating is usually credited to its technology, but part of the story is this: at its best, heat planning has treated whole cities as a single continuous project, with the backbone – the transmission pipes – sized for where the system is heading, not only for where it stands today.
Below, we apply this equation to a concrete example using figures from a realized COWI reference project.
A Real-World Example
Consider a 2 km transmission line, built two ways.
Scenario A uses a DN150 twin pipe – a single insulated casing carrying both the supply and return pipes – sized tightly to today’s load.
When building a new network, there are two basic options for the backbone:
Scenario B sizes the same transmission line one step larger, DN200, to match the long-term plan.
Scenario A – size it “tightly” to today’s needs and upgrade it later if needed
From a specific COWI reference project in a sub-urban area, the pipe supply cost C pipe for a DN150 is €395/m, while the remaining civil works and installation costs C other amount to €1,630/m. This shows that the cost driver is not the pipe itself; it is the excavation, soil disposal, backfilling, reinstatement, traffic management, welding, and testing. In this example, these costs constitute approximately 80% of the total transmission line costs. It should be noted that civil works and installation costs C other for a district heating pipe are highly dependent on whether the area is rural or urban. In a rural area, civil works and installation costs typically make up a much smaller share than 80%, since rural areas tend to be less congested with existing underground infrastructure, can have unpaved surfaces, and benefit from cheaper traffic management, among other factors. For the same reference project, the pipe supply cost C pipe for a DN200 is €587/m, i.e. a unit cost premium of about 49% more for a DN200, compared to the DN150. The interesting point, and the key point here, is that the remaining civil works and installation cost C other for a DN200 amounts to only €1,697/m, equivalent to an increase of just 4%.
Scenario B – size it for the long-term plan from the outset
The central question is simple: which option is cheaper over the life of the asset?
Scenario A – Sizing the backbone tightly and upgrading later if needed
In general, the cost of a pipe can be split into two parts: C pipe the cost of the pipe itself (supply, fittings, valves, joints), and C other the cost of everything else (civil works, excavation, soil disposal, backfilling, reinstatement, traffic management, welding, jointing, testing). If the utility sizes tightly now and later has to upgrade – with probability p , after t years, at discount rate r – the expected cost of sizing the backbone tightly and upgrading later if needed C tight can be expressed as: C tight = C other(D 0 ) + C pipe(D 0 ) + p · —--————————— other(D 1 ) pipe(D 1 ) C + C - S(t) (1 + r) t Where D 0 is today’s (“tight”) dimension and D 1 is the larger and upgraded dimension. S(t) = (C other(D 1 ) + C pipe(D 1 ) )· —t - L , with L being the service life of the pipe. Put simply, the entire formula tells you that you pay for the tight-dimensioned pipe now, plus a bit extra to cover the risk that you’ll have to upgrade it to a larger pipe later.
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