Energy system analysis of the inclusion of monetary values of environmental damage

This is an analysis of the effect on the technical solution when monetary values of externalities are included in a model for optimising energy systems. The focus of the study is on heating in domestic houses, non-residential premises, multi-dwelling buildings and district heating systems. The included monetary values of damage to the environment and health are those resulting from atmospheric emissions of CO₂, NO_x, SO₂ and particulates. The estimates are taken from the literature. An optimising method based on linear programming is used and the result is an optimal mix of energy carriers as well as new and existing heating plants that minimise the costs of satisfying a demand for heat. Furthermore, a calculation is made of the externality cost resulting from the energy system. The analysis makes it possible to compare the technical and economic differences of an energy system based on business economics to a system with greater emphasis on socio-economics. Generally speaking, it is cost-effective to take externality costs into consideration at the planning stage instead of correcting the damage later. The results show that by considering externality costs the total discounted cost of the energy system would be approximately 30% lower than today. Furthermore, the use of pellets and wood chips should be substantially larger in all of the studied regions.