Hot water reticulation (district heating) is an established method of energy supply within cities in many countries. It is based on the fact that heat can often be obtained cheaply in bulk, and that the resultant savings can, in suitable circumstances, justify the investment in a reticulation network of insulated pipes to distribute the heat to many consumers in the form of hot water or occasionally steam. The heat can be used by domestic, commercial, and industrial consumers for space heating and water heating, and by industries for process heat. The costs of supplying domestic consumers can be determined by considering an average residential area, but industrial and commercial consumers are so varied in their requirements that every proposal must be treated independently. Fixed costs, variable costs, total costs, and demand and resource constraints are discussed.