Individual heating stations: benefits of installation and the role of IHSs in reforming the district heating system

November 8, 2023

What is an Individual Heating Station?

An individual heating station (IHS) is comprised of equipment and automatic devices that is connected to a district heating network and a customer’s facility. An IHS helps to manage the heat consumption of a single building by adjusting the parameters of heat supply transfer in line with weather changes. If necessary and needed, the station can also distribute heat energy by type of consumption (for heating and hot water supply).

IHS enable building owners (co-owners) to regulate heat consumption, thus saving money on their heating bills. In addition, an IHS ensures hot water supply throughout the year.

Experience and practice demonstrate that the installation of an IHS improves the quality of services, comfort for residents, and encourages building co-owners to implement energy efficiency (EE) measures, with associated cost savings. Without an IHS, other EE measures can help to increase indoor temperatures, but will not reduce the building owners’ heating bills.

Read also  Individual heating stations in Ukraine: benefits and measures for their extensive use

In addition, the installation of IHSs enhance the effectiveness of district heating companies (DHCs). The comprehensive installation of IHSs help to reduce the production costs of utilities through the more efficient consumption of fuel, water, and electricity while also decreasing the risk of accidents. Since IHSs can reduce the overall demand for heat, DHCs need to reconsider their priorities when investing in production, transportation, and distribution capacities. In addition, the overall improvement in the quality of services, and thus greater customer satisfaction with service, has positive impacts on customer payment discipline. The resulting compliance of customers with payment discipline helps to improve the financial stability of DHCs.

Approximate Simplified Calculation of Costs and Benefits of Installing IHSs


The calculation of a multi-story building is based on data of a building with 150 apartments and an average heat tariff of UAH 1,535. Source: ESP’s calculations are based on data from Naftogaz, NEURC, and other open sources. IHS installation cost is indicated in prices as of the date of the study, 2021-2022.

The table above shows the potential costs and savings for a typical 150-apartment building with 20 percent energy savings and an average heat tariff of UAH 1,535. However, since IHSs typically save 15 to 30 percent of the energy transferred to a building and costs depend on the size of the building, the savings and payback period may vary due to the following:

  • Most apartment buildings have less than 150 apartments, so the overall investment will be smaller;
  • Larger and more expensive IHSs can serve more apartments and therefore save more energy;
  • The costs of an IHS or heat tariffs may vary depending on the market situation and country as a whole;
  • The resolution of bureaucratic issues related to the installation of IHSs can significantly reduce design costs;
  • Possible need to replace networks outside a building should be taken into account; this may lead to additional investments;
  • The above chart assumes 20 percent savings from the installation of IHSs but savings can be as high as 30 percent in Ukraine. Therefore, overall savings may be higher.

In addition to the savings that households receive due to the reduced energy consumption, the installation of IHSs can have the following macroeconomic effects:

  • Reduced heat consumption will reduce the demand for natural gas, and any reduction in energy imports increases the country’s energy security;
  • Investments in IHSs will create new jobs.

It is worth noting that the comprehensive installation of IHSs throughout the entire heating system, in the way organized as district by district (by thermo-hydraulic clusters), has the greatest impact on the efficiency of the district heating (DH) system and potential for consumer savings. Modernizing heating networks in parallel would double the effect.

Ownership of the IHSs and its Maintenance

In Ukraine, the ownership of installed IHSs belongs either to a heat supply company or to the co-owners of an apartment building (depending on which entity finances the installation of the IHS). In case the heat supply company is responsible for the installation of the IHSs (e.g., through funding by international financial institutions (IFIs)), it is usually the owner of the installed equipment. In some cities though, the IHS is also owned by building co-owners. At the same time, when an IHS is installed at the expense of a building co-owners, in particular where condominiums have been created, it’s owned by the co-owners. They are responsible for the maintenance of the stations.

In Ukrainian practice, there is no consolidated opinion on which entity the best candidate to become the owner of the installed IHSs. If we analyze the opinions of each type of stakeholder, they mostly depend on past experiences installing IHSs in a particular city. In cities where DHCs have installed IHSs and became their owners under the terms and conditions of the project, representatives of relevant companies and local governments are convinced that DHCs should own and maintain the stations. On the other side, in cities that do not have experiences with DHCs installing IHSs, most representatives of local governments and DHCs believe that co-owners of apartment buildings should initiate the installation of IHSs and take ownership of them. At the same time, in all the cities where the study was conducted, representatives of condominiums are convinced that the ownership of IHSs belongs to the co-owners.

Both types of IHS ownership- when the IHS is owned by co-owners or by the DHC – can be considered acceptable and realistic in the Ukrainian context. However, when installing IHSs becomes part of the comprehensive modernization and development of the DH system, DHCs should install IHSs and take the ownership of them. The availability of qualified employees will enable companies to ensure the  professional maintenance of IHSs. Of course, the issue of access to a building’s premises must be settled with the co-owners. On the contrary, when IHSs are installed at the initiative and expense of a building’s co-owners, it’s logical that they retain ownership of these IHSs.

Our recommendation is to choose the IHSs installation implementation planned by districts (by thermo-hydraulic clusters), i.e. to install the IHSs as one project to all the heat consuming facilities in the entire sub-system (thermo-hydraulic cluster).

Another important issue is setting up the operation mode (temperature control, etc) of an IHS and which entity is responsible – the DHC or co-owners? As with ownership, in practice, the temperature control of the IHS can be done in different ways. In buildings or condominiums where IHSs are installed at the initiative of co-owners, the responsibility for temperature control lies with the person appointed by the HOA. When a DHC installs IHSs buildings, temperatures are controlled by the employees of the DHC and can be changed at the request of the co-owners. In any case, the possibility and mechanisms of co-owners to influence the process to set the temperature settings must be clearly defined by agreements between co-owners and the DHC.

Practical Technical Recommendations to Install IHSs

To create a high-quality design and balanced approach when selecting equipment for the IHS, it is important to consider multiple factors. These included the initial data such as the calculated over-pressure in the supply and return pipelines of the primary circuit; the calculated over-pressure in the supply and return pipelines; and the resistance and static pressure of the in-house heating systems.

The lack of trained specialists and appropriate control and measuring devices of in-building heating systems does not enable condominium representatives to collect and provide design companies with the actual performance indicators of these systems. Therefore, quite often the choice of equipment results in complaints from HOAs about the improper operation of IHSs and the lack of desired and expected effects.

In most cases, representatives of condominiums choose a contractor on the recommendation of friends, residents of neighboring residential buildings, or via the Internet. This choice is not always successful. Involving contractors who do not have sufficient experience installing IHS projects and their choices of low-efficiency and low-quality equipment to reduce the cost can create more costs for building residents. These include having to invest additional funds to replace the installed equipment. As a result, the contractor’s intent to reduce cost actually results in more costs.

Its critical to ensure the sustainable, reliable, correct, and uninterrupted operation of the IHS equipment, compliance with a residential building’s regulatory parameters for the heat and hot water supplies, and to obtain real savings. Therefore, we recommend that representatives of condominiums contact trusted specialized organizations before starting the design work. The best option is to choose a contractor capable of performing the entire range of the turnkey operation, including the design, delivery, installation, and maintenance of the IHS during its operation. In other words, a contractor capable of taking responsibility for achieving the expected effect.

Its important to confirm the compliance of the proposed equipment with the existing hydraulic conditions, heat and hot water needs, and EE requirements; the compliance of the adopted technical solutions with applicable norms and rules; and ensure the cost of installation are Ukrainian market prices. Therefore, the contractor should be required to submit a complete set of design and estimate documents for an expert review.

Since the IHS is designed to transmit and distribute heat energy within a single building or its part, it’s installed between the heat supplier’s heat supply network to the building and the intra-building (internal) heating system. The station has automated temperature regulation of the heat and hot water, which depends on the ambient temperature. Automation both optimizes the heating and hot water supplies to residences and saves heat and electricity when pumping and/or transferring heat and hot water. Automated IHS makes it possible to save heat and electricity when pumping heat transfer medium and hot water. Heating stations can be automated under so called “dependent scheme by installing water jet pumps with an adjustable nozzle cross-section or mixing pumps with an electric drive. Another method of automation is through an independent scheme by installing heat exchangers that separate the external circuit of the heating network and the internal heating circuit of a building. Our recommendation to always choose the independent IHS connection scheme.

For more details on the main advantages of the schemes and practical recommendations on technical solutions, see our Final Report “Assessment of the Practical Installation and Performance of Individual Heating Stations (IHSs) in Ukraine”.

Mass Installation of IHSs and Their Importance to Reform DH in Ukraine

Ukraine can reduce energy consumption, strengthen energy security, and revitalize its DH sector by launching a large-scale installation of IHSs. The costs are relatively moderate, and the benefits are clear. The massive installation of IHSs can lead to tangible heat savings for end-users while replacing worn-out heating pipes will eliminate accidents and minimize heat loss. Increasing efficiency and switching to environmentally friendly (renewable) fuels, including waste fuels and waste (industrial) heat into the system, will help to stabilize heat costs, increase independence from international trends in the fossil fuel markets, and significantly improve the availability of services for local consumers.

To ease the process of large-scale installation of IHSs, all stakeholders should define the following common goals and outcomes:

  • Ensure 100 percent mandatory commercial metering of energy consumption in the residential sector;
  • Reduce heat consumption in residential buildings;
  • Increase the efficiency of fuel use for heat production by improving production efficiency and reducing losses in the networks.

Read more about the legislative aspects of installing IHSs, ownership, necessary approvals, financing options, responsibility for maintenance, and much more in “Options for large-scale installation of individual heating stations based on international best practices”.

The experience of many western and northern European countries shows:

  • DH is economically justified, as the energy costs for centralized heat supply to apartment buildings are lower than in the case of individual heating systems in apartments.
  • DH causes the least environmental impact.

The installation of IHSs increases energy efficiency at the consumer’s and supplier’s sides, and reduces overall system costs. Installing efficient IHSs by independent connection scheme with automated weather-based control and balancing of in-building heating networks will significantly improve DH efficiency and reduce heat bills.

At the same time, the large-scale installation of IHSs should be integrated into broader reforms and legislative changes in the district heating sector. Priority reform areas include the introduction of a cost and investment remunerating tariff system, improving overall system efficiency, facilitating EE in buildings, ensuring the quality of district heating services, and replacing distortive gas-PSO and electricity-PSO practices with address subsidies for consumers in need.