quite a bit of heat is lost in transit
Without this setup,
all the heat is lost.
a single failure can leave a very large number of people without heat.
Statistically, the number of homes without heat is lower. A failure of a domestic oil furnace will only leave one home without heat, but it is much more likely to happen and does not get any priority for fixing.
Short plant downtime can be offset by using a district heating accumulator, for example for maintenance shutdowns. Combine that with better maintenance capabilities and you'll get a lower number of average homes without heat compared to distributed, potentially unattended furnaces.
I understand a certain appeal of doing it this way but from experience it doesn't really work all that well.
Works very well from my experience. Some facts about our setup, compared to running an oil furnace in your house:
CO2? To get one gross MWh of heat you need to burn about 102l of oil, emitting about 270kg of CO2 (actually you'll get less than one MWh because some heat is lost through the chimney). According to the T?V, one net MWh of heat through our coal-powered district heating emitted only 218kg of CO2. Much less CO2 for a bit more net heat.
Money? Those 102l of oil would cost you about 90? and get a bit less than one MWh of heat, one MWh of heat from the district heating system currently is about 37?. Less than half the moniez.
Space? With an oil furnace you lose a large room in the basement for the tank and furnace, with district heating you only need a small room for the heat exchanger.
Maintenance? No need for an operating chimney and no need to have it cleaned. Maintaining the heat exchanger is simple compared to the whole system of tank, pipes, furnace, chimney.
Convenience? No noise, during my last stay in a house with an oil furnace I could hear it firing up because the chimney shared a wall with my room.
Reliability? If something breaks with your own furnace (unlikely) you need to get it fixed, probably at a low-ish priority. If something breaks with the district heating (highly unlikely if maintained properly) the utilities company quickly sends out their people to fix it. Also saves you from paying the man to fix your furnace.
All in all, tons of advantages