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Rehabilitation and Modernization of the district heating (DH) system in the City of Banja Luka

banja Luka_d.bailey
This technical assistance advances the following Sustainable Development Goals:

Affordable and clean energy

Affordable and clean energy

Industry, innovation and infrastructure

Industry, innovation and infrastructure

Sustainable cities and communities

Sustainable cities and communities

Climate action

Climate action

This technical assistance advances Bosnia-Herzegovina's Determined Contribution to:

  • Introduce renewable energy sources in the existing district heating systems and to construct new district heating systems fuelled by renewable energy sources.

For more detailed information on this techology transfer, please refer to original project documents under the documents section below.


Banja Luka’s district heating network (DH), the second largest in Bosnia and Herzegovina, relies on high cost crude oil and experiences significant energy losses during transmission and end-use. This causes major costs to the city and district heating company, and unnecessary GHG emissions. Boilers used in the heating system are on average 35 years old and lose up to 60% of generated heat, while poor insulation means up to 40% of supplied heat is lost in the district’s buildings.

CTCN Support

The CTCN, together with partner United Nations Environment Programme, conducted a city-wide analysis to assess the status of the district heating network and energy efficiency, building efficiency, appropriateness of current heat productions sources, and the financial situation including current tariff levels and customer connections rates. The assessment recommended measures to establish an environmentally, technically and financially sustainable district heating system, with a focus on: 

  • Construction of new biomass boilers to reduce heavy fuel oil consumption and generate heat with sustainable biomass (cheaper, renewable and locally available)
  • Rehabilitation and replacement of key components in the distribution network to cut heat and water losses and reduce electricity consumption; and
  • Switching to consumption based metering and billing for improved quality of services and customer confidence.

Relevant Technologies and Approaches

Expected Impact

Immediate impact

  • By leveraging a relatively small technical assistance investment, the CTCN was able to provide the city of Banja Luka with a strategy for significantly upgrading its district heating as well as for financing the implementation of the proposed changes.
  • The proposed CTCN strategy has attracted funding interest from different stakeholders. 
  • Investments in the modernisation of the heating infrastructure and the partial write-off of existing debts. 
  • This technology solution generated interest from Serbia in requesting similar technical assistance for the city of Belgrade.

Medium term impact

  • Improved sustainability of Banja Luka's district heating (DH) system.
  • Reduction in procurement cost of crude oil and fuel consumption by up to 27% for Banja Luka's DH system, saving €4.5 million a year in crude oil expenditure and 20,000 tC02 annually, while retaining wealth in the local economy encouraging local job development.
  • Economic and employment benefits for the local community through the use of domestic energy resources such as biomass.
  • Benefits for women and children, who spend more time at home in general, in terms of: 1) access to cleaner, safer and reliable heating system, 2) reduced domestic chores related to space heating, and 3) reduced incidence of carbon monoxide poisoning and accidental fire.
  • Development of a new energy tariff system at municipal level to improve efficiency, protect fuel poor and ensure business model is sustainable and attractive to the private sector. Subject to feasibility results (i.e. business plan) and thus availability of funds, heat meters will be installed in residential and commercial buildings.

Long term impact

  • Diversification of energy sources (from crude oil to biomass and/or geothermal) and the development of co-generation DH plants, leading to emission reductions of up to 80,000 tC02 per year and improved air quality in city.
  • A reduction in overall energy requirements and associated GHG emissions stemming from the city's space and water heating operations.
  • Improved operational efficiency of the district heating company, through the process of knowledge transfer and capacity building.
  • The establishment of Banja Luka as a forerunner for further DH energy efficiency initiatives across Bosnia & Herzegovina.
  • Decoupling of local heat market from international fossil fuel markets increasing local wealth retention, jobs and the financial stability of the DH system.