water company in the UK, Thames Water, has suffered from decades of underinvestment under private control. Rather than investing in the maintenance of its water treatment infrastructure, it has prioritized paying out dividends to its private owners. This chronic neglect is now posing a threat to the public in the form of an increased risk of flooding and a higher frequency of waterborne parasites 12 . Different models of democratic ownership offer a distinct advantage here. They are not subject to the same short-term pressures to deliver quarterly returns to investors. This gives them the space to plan ahead. There is, of course, no guarantee that they will always use this freedom wisely. But the ability to think long-term will be essential as countries move to expand district heating.
requires making investments with a very long economic life. That, in turn, requires owners with a long-term horizon.
This is where commercial ownership runs into problems. The median holding period of a private infrastructure investor is around six years. In practice, this means they typically own an asset for only six years before selling it on. There are, of course, significant deviations, with some investors holding assets for significantly longer periods. Still, the mismatch between the time horizon of a typical private investor and the lifespan of the assets they own is hard to ignore. This short time horizon of private infrastructure investors is a result of how the infrastructure investment funds are set up. They are often “closed-end”, meaning that they are typically designed to operate for a period of 10-12 years before selling their assets again and repaying the money to investors 11 . This creates a serious mismatch, because district heating assets often operate on a timescale of around 25 years in the heat production area, and new transmission pipes are estimated to last more than 80 years. Why is this mismatch in time horizons a problem? One of the clearest examples of the conflict between the long-term public purpose of a utility and the short-termism of private ownership comes from another related utility sector, namely the experience of British water privatization. Here, the biggest
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11 https://www.ft.com/content/0cbd8878-1de1-4f73-8e87-73e1dafad1f2 12 https://www.energi.se/artiklar/2024/september-2024/miljardinvesteringar-nar-fjarrvarmeroren-ska-bytas-ut/
42 HOTCOOL SPECIAL COLLECTION edition 2, 2025
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