Tariff Setting in the District Heating Sector: Recommendations Based on International Experience
Ukraine’s district heating (DH) system is an essential resource for the country and has the potential to provide efficient, local, and renewable energy to a large share of the population. However, inefficient regulation and management have caused the sector to experience a vicious cycle of financial, operational, and technological problems. Overcoming these challenges and building a sustainable DH system requires comprehensive reforms, which could attract significant investment, improve the quality of services, and increase the efficiency of DH. One of the key elements of a comprehensive reform program should be a comprehensive reform of the tariff system. The purpose of this report is to provide analysis of European models for tariff regulation and recommendations for reforms to Ukraine’s DH tariff system. The report presents several case studies from European countries, followed by analysis of the current tariff system in Ukraine and barriers to effective regulation. Based on these findings, the report proposes actions Ukraine could take to improve the tariff regulatory system and promote a sustainable DH sector.