Possibilities and consequences of deregulation of the European electricity market for connection of heat sparse areas to district heating systems

The objective of the study is to analyse the conditions for connection of residential buildings in heat sparse areas to district heating systems in order to increase electricity production in municipal combined heat and power plants. The European electricity market has been assumed to be fully deregulated. The relation between connection of heat sparse areas, increased electricity and heat production as well as electricity prices, fuel prices and emissions rights is investigated. The results of the study show that there is potential to expand the district heating market to areas with lower heat concentrations in the cities of Gävle, Sandviken and Borlänge in Sweden, with both economic and environmental benefits. The expansion provides a substantial heat demand of approximately 181 GWh/year, which results in an electricity power production of approximately 43 GWh/year. Since the detached and stand-alone houses in the studied heat sparse areas have been heated either by oil boiler or by direct electricity, connection to district heating also provides a substantial reduction in emissions of CO₂. The largest reductions in CO₂ emissions are found to be 211 ktonnes/year assuming coal-fired condensing power as marginal electricity production. Connection of heat sparse areas to district heating decrease the system costs and provide a profitability by approximately 22 million EURO/year for the studied municipalities if the price of electricity is at a European level, i.e. 110 EURO/MWh. Sensitivity analysis shows, among other things, that a strong relation exists between the price of electricity and the profitability of connecting heat sparse areas to district heating systems.     

Electricity dependency and CO2 emissions from heating in the Swedish building sector—Current trends in conflict with governmental policy?

Coal-condensing power is marginal production in the deregulated Nordic power market and an increase in electricity consumption will therefore result in increased CO₂ emissions. One goal of the Swedish energy policy is to reduce the amount of electricity used for heating in the building sector. This paper investigates the potential for reduction in electricity dependency and CO₂ emissions from heating, taking the energy infrastructure into account, here defined as the capital stock of the buildings and heating systems together with geographical variations in heat intensity. In order to include the energy infrastructure in the analysis the study is made on a regional level (Southern Sweden) applying a comprehensive database describing the energy infrastructure of the region. The paper compares two scenarios for converting the heating systems of the region: one employing energy savings and with the aim to phase out the oil and most of the electricity used for heating purposes and a second which illustrates the effect if the current trend in the heating market continues. Both scenarios apply commercially available technologies only.From the second scenario it is seen that the current trend—contrary to the aim of the Swedish Governmental policy—shows an increase in electricity dependency for heating, mainly due to a large diffusion of heat pumps, but also due to installations of electrical floor heating and electricity heating systems installed in newly constructed one- and two-dwelling buildings. However, the options proposed in first scenario show that it is possible to reach significant reductions in the electricity dependency due to heating and in corresponding CO₂ emissions. An analysis of the age structure of the heating systems shows that the transformation of the heating system is not completed until the year 2025, if new investments for replacement of heating systems are made only provided they have reached their economical life time, and only applying heating technologies which at present are known to be economically competitive. It can be concluded that future policies on transforming the energy system should be based on an analysis that takes the entire energy infrastructure (in this case of heating system) into account (e.g. not directed towards single technologies). More specifically for the region studied, which is considered representative for Sweden as a whole, policies should aim at installing heat pumps to replace electricity heating only in regions with low heat density where district heating is not competitive, in contrary to the present situation where heat pumps replace all types of heating systems.     

Coproduction of district heat and electricity or biomotor fuels

The operation of a district heating system depends on the heat load demand, which varies throughout the year. In this paper, we analyze the coproduction of district heat and electricity or biomotor fuels. We demonstrate how three different taxation scenarios and two crude oil price levels influence the selection of production units to minimize the district heat production cost and calculate the resulting primary energy use. Our analysis is based on the annual measured heat load of a district heating system. The minimum-cost district heat production system comprises different production units that meet the district heat demand and simultaneously minimize the district heat production cost. First, we optimize the cost of a district heat production system based on the cogeneration of electricity and heat with and without biomass integrated gasification combined-cycle technology. We considered cogenerated electricity as a byproduct with the value of that produced by a condensing power plant. Next, we integrate and optimize different biomotor fuel production units into the district heat production system by considering biomotor fuels as byproducts that can substitute for fossil motor fuels. We demonstrate that in district heating systems, the strengthening of environmental taxation reduces the dependence on fossil fuels. However, increases in environmental taxation and the crude oil price do not necessarily influence the production cost of district heat as long as biomass price is not driven by policy measures. Biomotor fuel production in a district heating system is typically not cost-efficient. The biomotor fuels produced from the district heating system have to compete with those from standalone biomotor fuel plants and also with its fossil-based counterparts. This is also true for high oil prices. A carbon tax on fossil CO₂ emissions based on social cost damage will increase the competitiveness of biomass-based combined heat and power plants, especially for BIGCC technology with its high electricity-to-heat ratio.     

Regional energy system optimization – Potential for a regional heat market

Energy supply companies and industrial plants are likely to face new situations due to, for example, the introduction of new energy legislation, increased fuel prices and increased environmental awareness. These new prerequisites provide companies with new challenges but also new possibilities from which to benefit. Increased energy efficiency within companies and increased cooperation between different operators are two alternatives to meet the new conditions. A region characterized by a high density of energy-intensive processes is used in this study to find the economic potential of connecting three industrial plants and four energy companies, within three local district heating systems, to a regional heat market, in which different operators provide heat to a joint district heating grid. Also, different investment alternatives are studied. The results show that the economical potential for a heat market amounts to between 5 and 26 million EUR/year with payback times ranging from two to eleven years. However, the investment costs and the net benefit for the total system need to be allotted to the different operators, as they benefit economically to different extents from the introduction of a heat market. It is also shown that the emissions of CO₂ from the joint system would decrease compared to separate operation of the systems. However, the valuation of CO₂ emissions from electricity production is important as the difference of emitted CO₂ between the accounting methods exceeds 650 kton/year for some scenarios.     

Optimisation of a Swedish district heating system with reduced heat demand due to energy efficiency measures in residential buildings

The development towards more energy efficient buildings, as well as the expansion of district heating (DH) networks, is generally considered to reduce environmental impact. But the combined effect of these two progressions is more controversial. A reduced heat demand (HD) due to higher energy efficiency in buildings might hamper co-production of electricity and DH. In Sweden, co-produced electricity is normally considered to displace electricity from less efficient European condensing power plants. In this study, a potential HD reduction due to energy efficiency measures in the existing building stock in the Swedish city Linköping is calculated. The impact of HD reduction on heat and electricity production in the Linköping DH system is investigated by using the energy system optimisation model MODEST. Energy efficiency measures in buildings reduce seasonal HD variations. Model results show that HD reductions primarily decrease heat-only production. The electricity-to-heat output ratio for the system is increased for HD reductions up to 30%. Local and global CO₂ emissions are reduced. If co-produced electricity replaces electricity from coal-fired condensing power plants, a 20% HD reduction is optimal for decreasing global CO₂ emissions in the analysed DH system.     

Operational optimisation of a complex trigeneration system connected to a district heating and cooling network

The combined production of electricity, heat and cold by polygeneration systems ensures maximum utilization of resources by reducing emissions and energy losses during distribution. Polygeneration systems are highly integrated systems characterized by the simultaneously production of different services (electricity, heating, cooling) by means of several technologies using fossil and renewable fuels that operates together to obtain a higher efficiency than that of an equivalent conventional system. The high number of distribution technologies available to produce electricity, heating and cooling and the different levels of integration make it difficult to select of the optimal configuration. Moreover, the high variability in the energy demand renders difficult the selection of the optimal operational strategy. Optimization methodologies are usually applied for the selection of the optimal configuration and operation of energy supply systems. This paper presents a scenario analysis using optimization models to perform an economic, energetic and environmental assessment of a new polygeneration system in Cerdanyola del Vallès (Spain) in the framework of the Polycity project of the European Concerto Program. This polygeneration system comprise high-efficiency natural gas cogeneration engines with thermal cooling facilities and it will provide electricity, heating and cooling for a new area in growth known as Alba park including a Synchrotron Light Facility and a Science and Technological park through a district heating and cooling network of four tubes. The results of the scenario analysis show that the polygeneration plant is an efficient way to reduce the primary energy consumption and CO₂ emissions (up to 24%).     

District heating and energy efficiency in detached houses of differing size and construction

House envelope measures and conversion of heating systems can reduce primary energy use and CO₂ emission in the existing Swedish building stock. We analysed how the size and construction of electrically heated detached houses affect the potential for such measures and the potential for cogenerated district heating. Our starting point was two typical houses built in the 1970s. We altered the floor plans to obtain 6 houses, with heated floor space ranging between 100 and 306 m². One of the houses was also analysed for three energy standards with differing heat loss rates. CO₂ emission, primary energy use and heating cost were estimated after implementing house envelope measures, conversions to other heating systems and changes in the generation of district heat and electricity. The study accounted for primary energy, including energy chains from natural resources to useful heat in the houses. We showed that conversion to district heating based on biomass, together with house envelope measures, reduced the primary energy use by 88% and the CO₂ emission by 96%, while reducing the annual societal cost by 7%. The choice of end-use heating system was decisive for the primary energy use, with district heating being the most efficient. Neither house size nor energy standard did significantly change the ranking of the heating systems, either from a primary energy or an economic viewpoint, but did affect the extent of the annual cost reduction after implementing the measures.     

Decarbonization synergies from joint planning of electricity and hydrogen production: A Texas case study

Hydrogen (H₂) shows promise as an energy carrier in contributing to emissions reductions from sectors which have been difficult to decarbonize, like industry and transportation. At the same time, flexible H₂ production via electrolysis can also support cost-effective integration of high shares of variable renewable energy (VRE) in the power system. In this work, we develop a least-cost investment planning model to co-optimize investments in electricity and H₂ infrastructure to serve electricity and H₂ demands under various low-carbon scenarios. Applying the model to a case study of Texas in 2050, we find that H₂ is produced in approximately equal amounts from electricity and natural gas under the least-cost expansion plan with a CO₂ price of $30–60/tonne. An increasing CO₂ price favors electrolysis, while increasing H₂ demand favors H₂ production from Steam Methane Reforming (SMR) of natural gas. H₂ production is found to be a cost effective solution to reduce emissions in the electric power system as it provides flexibility otherwise provided by natural gas power plants and enables high shares of VRE with less battery storage. Additionally, the availability of flexible electricity demand via electrolysis makes carbon capture and storage (CCS) deployment for SMR cost-effective at lower CO₂ prices ($90/tonne CO₂) than for power generation ($180/tonne CO₂). The total emissions attributable to H₂ production is found to be dependent on the H₂ demand. The marginal emissions from H₂ production increase with the H₂ demand for CO₂ prices less than $90/tonne CO₂, due to shift in supply from electrolysis to SMR. For a CO₂ price of $60/tonne we estimate the production weighted-average H₂ price to be between $1.30–1.66/kg across three H₂ demand scenarios. These findings indicate the importance of joint planning of electricity and H₂ infrastructure for cost-effective energy system decarbonization.     

Analysis of CO2 emissions reduction potential in secondary production and semi-fabrication of non-ferrous metals

Industrial sector growth in developing countries requires the provision of alternatives to guarantee sustainable development. Improving energy efficiency and fuel switching are two measures to reduce CO₂ emissions in the industrial sector, with natural gas and low-carbon electricity as the most feasible options in the short term. In this work, a linear programming optimization model has been developed to study the potential of energy efficiency improvement and fuel substitution for CO₂ emissions reduction, at national level in the non-ferrous metals industry. The energy resource/end-use device allocation problem in secondary metal production and semi-fabrication has been modeled. Using this model, the particular case of Colombia, where low-carbon electricity is available, has been studied. By improving energy efficiency, energy use and CO₂ emissions can be reduced significantly, 73% and 72%, respectively, at negative costs. Further CO₂ emissions reductions, up to 88%, are possible with fuel switching to low-carbon electricity, increasing the costs for the energy system; however, cost reductions caused by energy efficiency improvement outweigh cost increments of fuel switching. Benefits achieved with fuel substitution using low-carbon electricity can be lost if hydropower is not available; in such a case, efficient natural gas-fired end-use devices are preferable.     

Excess heat from kraft pulp mills: Trade-offs between internal and external use in the case of Sweden—Part 2: Results for future energy market scenarios

In this paper the trade-off between internal and external use of excess heat from a kraft pulp mill is investigated for four different future energy market scenarios. The work follows the methodology described in Svensson et al. [2008. Excess heat from kraft pulp mills: trade-offs between internal and external use in the case of Sweden—Part 1: methodology. Energy Policy, submitted for publication], where a systematic approach is proposed for investigating the potential for profitable excess heat cooperation. The trade-off is analyzed by economic optimization of an energy system model consisting of a pulp mill and an energy company (ECO). In the model, investments can be made, which increase the system's energy efficiency by utilization of the mill's excess heat, as well as investments that increase the electricity production. The results show that the trade-off depends on energy market prices, the district heating demand and the type of existing heat production. From an economic point of view, external use of the excess heat is preferred for all investigated energy market scenarios if the mill is studied together with an ECO with a small heat load. For the cases with medium or large district heating loads, the optimal use of excess heat varies with the energy market price scenarios. However, from a CO₂ emissions perspective, external use is preferred, giving the largest reduction of global emissions in most cases.     

Conventional and advanced CO2 based district energy systems

District energy systems can potentially decrease the CO₂ emissions linked to energy services, thanks to the implementation of large polygeneration energy conversion technologies connected to buildings over a network. To transfer the energy from these large technologies to the users, conventional district energy systems use water with often two independent supply and return piping systems for heat and cold. However, sharing energy or interacting with decentralised heat pump units often results in relatively large heat transfer exergy losses due to the large temperature differences that are economically required from the water network. Besides, the implementation of two independent supply and return piping systems for heat and cold, results in large space requirements in underground technical galleries. Using refrigerants as a district heating or cooling fluid at an intermediate temperature could alleviate some of these drawbacks. A new system has been developed, that requires only two pipes, filled with refrigerant, to meet heating, hot water and cooling requirements. Because of the environmental concerns about conventional refrigerants, CO₂, a natural refrigerant, used under its critical point, is considered an interesting candidate. A comparative analysis shows that both in terms of exergy efficiency and costs the proposed CO₂ network is favourable.     

Primary energy use for heating in the Swedish building sector—Current trends and proposed target

One goal of the Swedish energy policy is to reduce the amount of electricity used for heating in the building sector. This means to reduce the primary energy used for heating which in this paper is analyzed in the context of various heating technologies and CO₂ emissions. The analysis is applied to a region in Sweden (southern Sweden) for which detailed information on the energy infrastructure (the capital stock of the buildings and heating systems together with geographical variations in heat intensity) is available from a previous work [Johansson, P., Nylander, A., Johnsson, F., 2005. Electricity dependency and CO₂ emissions from heating in the Swedish building sector—current trends in conflict with governmental policy? Energy policy] and which is large enough to be assumed representative for Sweden as a whole. The detailed mapping of the energy infrastructure allows a good estimate on the rate at which the energy system can be expected to be replaced with respect to economical lifetime of the capital stock (the year 2025 in this case). Two scenarios are investigated; a target scenario for which energy savings are employed (e.g. improving climate shell in buildings) and oil and most of the electricity used for heating purposes are phased out and a second for which the current trend in the heating market continues.     

Cost-effective CO2 emission reduction through heat,power and biofuel production from woody biomass: A spatially explicit comparison of conversion technologies

Bioenergy is regarded as cost-effective option to reduce CO₂ emissions from fossil fuel combustion. Among newly developed biomass conversion technologies are biomass integrated gas combined cycle plants (BIGCC) as well as ethanol and methanol production based on woody biomass feedstock. Furthermore, bioenergy systems with carbon capture and storage (BECS) may allow negative CO₂ emissions in the future. It is still not clear which woody biomass conversion technology reduces fossil CO₂ emissions at least costs. This article presents a spatial explicit optimization model that assesses new biomass conversion technologies for fuel, heat and power production and compares them with woody pellets for heat production in Austria. The spatial distributions of biomass supply and energy demand have significant impact on the total supply costs of alternative bioenergy systems and are therefore included in the modeling process. Many model parameters that describe new bioenergy technologies are uncertain, because some of the technologies are not commercially developed yet. Monte-Carlo simulations are used to analyze model parameter uncertainty. Model results show that heat production with pellets is to be preferred over BIGCC at low carbon prices while BECS is cost-effective to reduce CO₂ emissions at higher carbon prices. Fuel production – methanol as well as ethanol – reduces less CO₂ emissions and is therefore less cost-effective in reducing CO₂ emissions.     

Towards a low-carbon future in China's building sector—A review of energy and climate models forecast

This article investigates the potentials of energy saving and greenhouse gases emission mitigation offered by implementation of building energy efficiency policies in China. An overview of existing literature regarding long-term energy-demand and carbon dioxide (CO₂) emission forecast scenarios is presented. Energy consumption in buildings could be reduced by 100–300 million tons of oil equivalent (mtoe) in 2030 compared with the business-as-usual (BAU) scenario, which means that 600–700 million metric tons of CO₂ emissions could be saved by implementing appropriate energy policies within an adapted institutional framework. The main energy-saving potentials in buildings can be achieved by improving a building's thermal performance and district heating system efficiency. The analyses also reveal that the energy interchange systems are effective especially in the early stage of penetration. Our analysis on the reviewed models suggests that more ambitious efficiency improvement policies in both supply- and demand-side as well as the carbon price should be taken into account in the policy scenarios to address drastic reduction of CO₂ emission in the building sector to ensure climate security over the next decades.     

Performance assessment of a Stirling engine plant for local micro‐cogeneration

In this paper, we evaluate the viability of a 9.5‐kW_e wooden pellet‐fueled Stirling engine‐based micro‐cogeneration plant as a substitute for small‐scale district heating. The district heating systems against which the micro‐cogeneration plant is compared are based either on a pellet‐fueled boiler or a ground‐source heat pump. The micro‐cogeneration and district heating plants are compared in terms of primary energy consumption, CO₂ emissions, and feasibility of the investment. The comparison also considers an optimally operated individual 0.7‐kW_e pellet‐fueled Stirling engine micro‐cogeneration system with exhaust gas heat recovery. The study is conducted in two different climates and contributes to the knowledge base by addressing: (i) hourly changes in the Finnish electricity generation mix; and (ii) uncertainty related to what systems are used as reference and the treatment of displaced grid electricity. Our computational results suggest that when operated at constant power, the 9.5‐kW_e Stirling engine plant results in reduced annual primary energy use compared with any of the alternative systems. The results are not sensitive to climate or the energy efficiency or number of buildings. In comparison with the pellet‐fueled district heating plant, the annual use of primary energy and CO₂ emissions are reduced by a minimum of 25 and 19%, respectively. Owing to a significant displacement of grid electricity, the system's net primary energy consumption appears negative when the total built area served by the plant is less than 1200 m². On the economic side, the maximum investment cost threshold of a CHP‐based district heating system serving 10 houses or more can typically be positive when compared with oil and pellet systems, but negative when compared with a corresponding heat pump system. Copyright © 2010 John Wiley & Sons, Ltd.     

Assessment of integration of different biomass gasification alternatives in a district-heating system

With increasingly stringent CO₂ emission reduction targets, incentives for efficient use of limited biomass resources increase. Technologies for gasification of biomass may then play a key role given their potential for high electrical efficiency and multiple outputs; not only electricity but also bio transport fuels and district heat. The aim of this study is to assess the economic consequences and the potential for CO₂ reduction of integration of a biomass gasification plant into a district-heating (DH) system. The study focuses on co-location with an existing natural gas combined cycle heat and power plant in the municipal DH system of Göteborg, Sweden. The analysis is carried out using a systems modelling approach. The so-called MARTES model is used. MARTES is a simulating, DH systems supply model with a detailed time slice division. The economic robustness of different solutions is investigated by using different sets of parameters for electricity price, fuel prices and policy tools. In this study, it is assumed that not only tradable green certificates for electricity but also tradable green certificates for transport fuels exist. The economic results show strong dependence on the technical solutions and scenario assumptions but in most cases a stand-alone SNG-polygeneration plant with district-heat delivery is the cost-optimal solution. Its profitability is strongly dependent on policy tools and the price relation between biomass and fossil fuels. Finally, the results show that operation of the biomass gasification plants reduces the (DH) system's net emissions of CO₂.     

The future developments of the electricity prices in view of the implementation of the Paris Agreements: Will the current trends prevail,or a reversal is ahead?

We assess the impact on the European electricity market of the European Union “Clean energy for all Europeans” package, which implements the EU Nationally Determined Contribution in Paris COP 21. We focus on the year 2030, which is the year with defined climate targets. For the assessment, we employ a game-theoretic framework of the wholesale electricity market, with high technical detail. The model is applied to two core scenarios, a Base scenario and a Low Carbon scenario to provide insights regarding the future electricity capacity, generation mix, cross-border trade and electricity prices. We also assess three additional variants of the core scenarios concerning different levels of: a) fossil and CO₂ prices; b) additional flexibility provided by batteries; c) market integration. We find that the electricity prices in 2030 substantially increase from today's level, driven by the increase in fuel and CO₂ prices. The flexibility from batteries helps in mitigating the price peaks and the price volatility. The increased low marginal cost electricity generation, the expansion of non-dispatchable and distributed capacities, and the higher market integration further reduce the market power from producers in the electricity markets from today's level.     

Energy efficiency measures and conversion of fossil fuel boiler systems in a detached house

There is a large potential to reduce primary energy use and CO₂ emissions from the Swedish building stock. Here detached houses heated by oil, natural gas or electric boilers were assessed. CO₂ emissions, primary energy use and heating costs were evaluated before and after implementing house envelope measures, conversions to more efficient heating systems and changes to biomass fuel use. The study included full energy chains, from natural resources to usable heat in the houses. The aim was to evaluate the societal economic cost effectiveness of reducing CO₂ emission and primary energy use by different combinations of changes. The results demonstrated that for a house using an electric boiler, a conversion to a heat pump combined with house envelope measures could be cost efficient from a societal economic perspective. If the electricity was based on biomass, the primary energy use was at the same time reduced by 70% and the CO₂ emission by 97%. Large emission reductions were also seen for conversions from oil and gas boilers to a biomass-based system. However, for these conversions the heating cost increased, leading to a mitigation cost of around €50/tonne C avoided. The price of oil and natural gas greatly influenced the competitiveness of the alternatives. House envelope measures were more cost-effective for houses with electric boilers as the cost of energy for this system is high. The results are specific to a Swedish context, but also give an indication of the potential in other regions, such as northern European and large parts of North America, which have both a cold climate and a widespread use of domestic boilers.     

Electricity generation from low-temperature industrial excess heat—an opportunity for the steel industry

Awareness of climate change and the threat of rising energy prices have resulted in increased attention being paid to energy issues and industry seeing a cost benefit in using more energy-efficient production processes. One energy-efficient measure is the recovery of industrial excess heat. However, this option has not been fully investigated and some of the technologies for recovery of excess heat are not yet commercially available. This paper proposes three technologies for the generation of electricity from low-temperature industrial excess heat. The technologies are thermoelectric generation, organic Rankine cycle and phase change material engine system. The technologies are evaluated in relation to each other, with regard to temperature range of the heat source, conversion efficiency, capacity and economy. Because the technologies use heat of different temperature ranges, there is potential for concurrent implementation of two or more of these technologies. Even if the conversion efficiency of a technology is low, it could be worthwhile to utilise if there is no other use for the excess heat. The iron and steel industry is energy intensive and its production processes are often conducted at high temperatures. As a consequence, large amounts of excess heat are generated. The potential electricity production from low-temperature excess heat at a steel plant was calculated together with the corresponding reduction in global CO₂ emissions.     

Efficient power generating portfolio in Brazil: Conciliating cost,emissions and risk

The main purpose of this paper is to assess efficiency of the Brazilian electricity generation mix proposed in the 2020 Decennial Plan for Energy Expansion (DPEE 2020). It evaluates estimated costs, risks and CO₂ emissions following the mean–variance portfolio theory. The efficiency frontier is estimated for three CO₂ prices scenarios: no CO₂ prices, low CO₂ price and high CO₂ price. The planned portfolio in Brazil presented in the DPEE 2020 is relatively close to the efficient frontier, however there is still room for risk mitigation by diversifying the energy portfolio. As there is currently no CO₂ price in Brazil, the tendency is that diversification increases fossil fuel share in the energy mix, but the introduction of a CO₂ price can be an option to promote renewables. This type of large general market framework can contribute to reduce market uncertainties by reducing the level of government′s discretionary activism.