Structural Network Optimization for the Liberalization of District Heating

Abstract

This paper examines structural approaches to the liberalization of district heating through the interconnection of isolated monopolistic networks. Motivated by Germany's climate targets and the planned expansion of district heating, the study addresses economic and regulatory challenges associated with limited competition. The central hypothesis is that network interconnection enables a transition toward oligopolistic market conditions, reducing prices while potentially increasing producer profits at the cost of additional infrastructure expenditure. A simplified interdisciplinary framework combining graph-theoretic network modeling, clustering methods, Cournot-based quantity competition, and multiobjective optimization is applied. Despite limited real-world data, the results demonstrate that stylized network representations capture key trade-offs between price, profit, and network expenditure, providing a basis for the comparative assessment of extended network configurations.