The role of district heating in future renewable energy systems

Energy 35 (2010) 1381–1390

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Energy journal homepage: www.elsevier.com/locate/energy

The role of district heating in future renewable energy systems H. Lund a, *, B. Mo¨ller a, B.V. Mathiesen a, A. Dyrelund b a b

Department of Development and Planning, Aalborg University, Fibigerstraede 13, DK 9220 Aalborg, Denmark Ramboll Denmark Ltd., Teknikerbyen 31, DK 2830 Virum, Denmark

a r t i c l e i n f o

a b s t r a c t

Article history: Received 21 August 2009 Received in revised form 12 November 2009 Accepted 23 November 2009 Available online 19 January 2010

Based on the case of Denmark, this paper analyses the role of district heating in future Renewable Energy Systems. At present, the share of renewable energy is coming close to 20 per cent. From such point of departure, the paper defines a scenario framework in which the Danish system is converted to 100 per cent Renewable Energy Sources (RES) in the year 2060 including reductions in space heating demands by 75 per cent. By use of a detailed energy system analysis of the complete national energy system, the consequences in relation to fuel demand, CO2 emissions and cost are calculated for various heating options, including district heating as well as individual heat pumps and micro CHPs (Combined Heat and Power). The study includes almost 25 per cent of the Danish building stock, namely those buildings which have individual gas or oil boilers today and could be substituted by district heating or a more efficient individual heat source. In such overall perspective, the best solution will be to combine a gradual expansion of district heating with individual heat pumps in the remaining houses. Such conclusion is valid in the present systems, which are mainly based on fossil fuels, as well as in a potential future system based 100 per cent on renewable energy. Ó 2009 Elsevier Ltd. All rights reserved.

Keywords: District heating Community heating Energy system analysis Renewable energy systems

1. Introduction In many countries around the world, the ability to heat and supply hot water to buildings is essential. Today, it is intensively being discussed how to do so in the best way in future energy systems in which the combustion of fossil fuel should be reduced or completely avoided. In the present discussion, one can identify at least two different views, which will be explained further in the following. One view states that future low-energy buildings could completely remove the need for heating or even, by the use of e.g. solar thermal energy, be plus energy houses producing more heat than they demand. The other view states that excess heat production from industries, waste incineration and power stations may also be used together with geothermal energy, large-scale solar thermal energy and large-scale heat pumps to utilise excess wind energy for house heating. In the first case, a district heating network may not be needed, while, in the latter case, a district heating network becomes essential. The design and perspective of low-energy buildings have been analysed and described in many recent papers [1–5] as well as concepts like zero emission buildings [6–8] and plus energy houses. However, such papers mostly deal with future buildings and do not

* Corresponding author. Tel.: þ45 9940 8309; fax: þ45 9815 3788. E-mail address: [email protected] (H. Lund). 0360-5442/$ – see front matter Ó 2009 Elsevier Ltd. All rights reserved. doi:10.1016/j.energy.2009.11.023

include all the existing buildings which, due to the long lifetime of buildings, are expected to remain for many decades to come. Some papers have addressed how to reduce heat demands in existing buildings and have come to the conclusion that such effort involves a significant investment cost but results in operational savings [9–12]. However, the share of buildings already existing today is expected to remain high for many years. e.g., in Denmark, the share of such buildings is expected to be as high as 85–90 per cent in the year 2030. And no study has been found which identifies how to completely avoid heat demands in existing buildings at a reasonable cost and within a relevant time frame. On the other hand, some of the measures to reduce the combustion of fossil fuels are to introduce or expand the use of CHP by which the fuel efficiency in the system is improved [13–22]; to include heat pumps [23,24]; to utilise industrial waste heat [25] and/or to replace fossil fuels with residual resources such as waste or various biomass fuels [26–28]. Such policies often involve the need for a district heating system. District heating versus individual supply of heat demand for residential buildings has been analysed, e.g., in Norway where district heating compared to individual electric heating was found to have a lower CO2 emission [2]. However, such analyses have typically not been applied to future energy systems with very little or no share of fossil fuel. For various reasons including energy security and climate change, many countries around the world pursue an energy policy focussing on energy efficiency and an increase in the share of

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H. Lund et al. / Energy 35 (2010) 1381–1390

energy system analysis tools, to make models of the present as well as potential future Danish energy systems, and, finally, to identify various options and the cost of heating the houses in question. The methodology and data are described further in the following.

Net heat demand 70 60

TWh/ year

50

2.1. Potential district heating scenarios

40 30 20 10 Year 2006

Reference

100% + Ngas + Ngas up to 1 connection adjoining areas km from exist. DH existing areas Scenario1

Scenario2

Scenario3

Indiv. Oil and biomass Indiv. Ngas boilers DH (large CHP) DH (small CHP) DH (boilers) Fig. 1. Net heat demand divided into district heating and individual heating in the three scenarios.

Renewable Energy Sources [29,30]. In Denmark, the official longterm governmental objective is to convert to 100 per cent renewable energy, and the implementation of such goal will imply coordinated actions involving the entire energy supply system [31,32]. Such energy policies lead to the challenge of balancing electricity supply and demand. With a wind power production and a CHP share meeting 20 and 50 per cent of the electricity demand, respectively, Denmark is one of the forerunners in facing such problems. So far, Denmark has already faced excess electricity production problems. Various technological options have been analysed and several measures have been implemented including changes in the regulation of distributed CHP plants [33–35]. The different technological options in question include electric boilers and heat pumps for district heating with thermal storages [36,37], flexible demands, electricity for transportation [38,39], reorganisation of energy conversion in relation to waste treatment [40], and various energy storage options [41,42]. It cannot be concluded from a purely house heating perspective, whether one strategy with regard to district heating fits better than the other into the implementation of future sustainable and renewable energy systems. One has to include the rest of the energy system in order to evaluate how to use the available resources in the overall system in the best way and how to combine energy savings and efficiency measures with renewable energy in order to meet the target to put an end to fossil fuels at the lowest possible cost for society. This paper seeks to perform an advanced energy system analysis of the whole national energy system in order to evaluate the impact of different heating options on the total fuel demand and CO2 emissions by comparing different options of house heating in the present as well as in potential future energy systems. 2. Methodology By use of GIS (Geographical Information System) tools, the methodology applied has been, first, to identify potential scenarios and the cost of expanding district heating; secondly, by use of

Today, 46 per cent of the Danish net heat demand (equal to 60 per cent of the households) is met by district heating mainly based on Combined Heat and Power production (CHP). The remaining part is mostly heated by individual boilers based on oil, natural gas or biomass. By use of advanced GIS models, the cost of connecting different parts of the remaining buildings has been identified. The identification has been made by combining a geographical model based on the Danish building register with a heat district model maintained by the Danish energy authorities. The specific models and applications are described further in [43,44]. For 2006, the total house heating consumption has been identified as 60.1 TWh/year, of which 27.9 TWh are supplied from district heating and 32.2 are supplied from individual boilers and heaters. According to the GIS model, the net end-use heating demand has been defined as 94–95 per cent of the energy delivered per house, since a small loss in heat exchangers was included in the estimate. Calculated in such a way, the heat demand equals more or less exactly the net heat demand of 28.4 TWh/year of the Danish energy statistics. In the analysis described in the following, the data have been adjusted to match the energy statistics. Compared to the situation in 2006 as described above (and in the following referred to as the reference situation), the following scenarios of potential expansion of district heating were defined and identified: - Scenario 1: All buildings within areas defined as existing or planned district heating areas are connected to the system, which increases the district heating demand from 27.9 to 31.6 TWh/year. - Scenario 2: All areas supplied by natural gas for individual boilers in direct vicinity of existing DH areas are converted to DH, which increases the share further from 31.6 to 37.6 TWh/year. - Scenario 3: Further natural gas areas up to a distance of 1 km from existing areas are converted to DH, which increases the share from 37.6 to 42.3 TWh/year. The three scenarios are compared to the reference in Fig. 1. The net heat demands of Fig. 1 have been converted into district heating including grid losses and fuel demands and, at the same time, adjusted to the data of Danish energy statistics as shown in Fig. 2. 2.2. Modelling of present and potential future Danish energy systems The analysis of district heating versus various kinds of individual heating has been carried out with regard to the present energy system from 2006 as well as potential future energy systems leading to a vision of an energy supply based on 100 per cent renewable energy. The energy system analysis of the complete Danish energy system has been carried out by means of the EnergyPLAN model [45,46]. This model, which has been developed at Aalborg University, can be freely accessed from the website www. energyplan.eu. On the same website, one can find links to documentation, journal papers and a training programme. Fig. 3 shows an overview of the model. EnergyPLAN is described and compared to other models in [47]. The main purpose of the model is to assist the design of national or regional energy planning strategies and encompass the whole


Fuel and district heating demand 100

TWh/year

80 60 40 20 Year 2006

Reference

100% connection existing areas

+ Ngas adjoining areas

+ Ngas up to 1 km from exist. DH

Scenario1

Scenario2

Scenario3

Indiv. Biomass Indiv. Oil boiler Indiv. Ngas boilers DH (large CHP) DH (small CHP) DH (boilers) Fig. 2. Fuel and district heating demands (including grid losses, heat transfer loss and degree of efficiency) in the three scenarios when adjusted to Danish energy statistics.

energy system including heat and electricity supplies as well as the transport and industrial sectors. The model is a deterministic input/output model. General inputs are demands, renewable energy sources, energy station capacities,

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cost and a number of optional different regulation strategies emphasising import/export and excess electricity production. Outputs are energy balances and resulting annual productions, fuel consumption, import/export of electricity, and total cost including income from the exchange of electricity. First, the energy system model was calibrated in order to adjust it to the output of Danish energy statistics from 2006 as well as a Business As Usual (BAU) projection made by the Danish Energy Agency (17 January 2008). Compared to the present situation, the future energy systems include more wind power, heat savings and better CHP and power plants, etc., as illustrated in Table 1, in which the Danish governmental vision of 100 per cent RES is reached by the year 2060 by implementing the following changes: Energy consumption from oil and natural gas production in the Danish North Sea is terminated. Fuel demands on CHP and power plants are converted to biogas and/or hydrogen. Fuel demands for boilers are converted to biomass such as straw and/or wood. The fuel demands of the industry are cut by 50 per cent and converted to biogas and/or biomass. Individual heating is converted to biomass boilers (in the reference scenario). Diesel for transport is replaced by bio petrol in the ratio 1:1. Petrol for transport is replaced by electricity in the ratio 3:1. In such a 100 per cent RES vision, 66 TWh of biomass divided into 31 TWh biogas/syngas, 24 TWh bio petrol and 11 TWh solid biomass is needed in addition to wind power (27 TWh) and waste (15 TWh). However, in return, an excess electricity production of 5.6 TWh/year is created. Such excess production can be exported or it may be converted into hydrogen and thus reduce the

Fig. 3. Illustrations from the user interface of the EnergyPLAN model and a flow chart of the connections between the technologies in the model.

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Table 1 Overview of 100% Renewable Energy Scenario.

Tentative RES share (per cent) Reductions in space heating Power plan efficiencies - and CHP efficiencies (el/th) Wind power in % of 2006 electricity demand Electricity savings in % Share of electricity in transport

Present Year 2006

2020

2040

2060

– 39% 35%/48% 16% – –

25% 42% 38%/50% 33% 10% 10%

50% 45% 40%/50% 50% 20% 30%

100% 75% 50% 45%/45% 75% 30% 50%

demand for biogas by approx. 4 TWh. In the scenario, it has been chosen to add the capacity of electrolysers of 1000 MW resulting in a hydrogen production of 3.2 TWh/year and reducing the biomass demand to approx. 64 TWh. Including waste, the total demand for biomass resources adds up to 80 TWh/year, similar to 290 PJ/year. Such demand for biomass resources is within the magnitude of domestic Danish resources, which has been estimated at between 165 and 400 PJ/year, depending on the inclusion of energy crops [31]. It must be emphasised that the scenario described above by no means represents a comprehensive identification of the optimal solution of a Danish 100 per cent renewable energy system. Here, the scenario solely serves as a proper framework for analysing whether conclusions with regard to district heating in the present system will also be valid in a probable future 100 per cent renewable energy system. The focus is on the framework conditions related to heat supply, and the scenario is not comprehensive with regard to the transport and industrial sectors. In the analysis, special attention has been paid to the hourly modelling of district heating demands in relation to reductions in the demand for space heating. The starting point is the annual district heating demand in 2006 of 35.77 TWh, divided into a net heat demand of 28.35 TWh and grid losses of 7.42 TWh. Such a demand has been subject to a typical hourly distribution, as shown in Fig. 4. In the scenarios of reduced space heating demands, the shape of the duration curve as well as the hourly distribution have been adjusted, as shown in Fig. 5 in the case of a 75 per cent reduction in the space heating demand. In such a case, the grid loss and demand for hot water have not been adjusted in the same way as the space heating demand. 2.3. Alternative options of heating houses The analysis defines and compares the 10 following heating technologies: Ref.: Existing individual oil, natural gas and biomass boilers. HP-gr: Individual heat pumps using ground heat including electric heating for peak load assuming an average co-efficiency of

Hourly distribution of district heating demand after 75% reductions in space heating Relative compared to average

Hourly distribution of district heating demand in the present year 2006 situation Relative compared to average

performance (COP) of 3.2. (In the case of space heat reductions, the COP decreases due to an increasing share of hot water demands to 3.1 at 25 per cent savings, 3.0 at 50 per cent savings and 2.8 at 75 per cent savings, respectively.) HP-air: Individual heat pumps using air including electric heating for peak load assuming an average COP of 2.6. (In the case of savings reduced to 2.5, 2.4 and 2.3). EH: Individual electric heating with an efficiency (COP) of 1. MiCHP: Individual fuel cell natural gas micro CHP units with an electric output of 30 per cent and a heat production of 60 per cent. The CHP unit supplies 60 per cent of the peak demand. The rest is covered by a natural gas boiler. H2-CHP: Individual micro CHP based on hydrogen assuming 45 per cent electric and 45 per cent heating output. The CHP unit supplies 60 per cent of the peak demand. The rest is covered by a boiler. Hydrogen is supplied via a gas pipeline system and produced on electrolysis assuming an efficiency of 80 per cent. The system makes use of hydrogen storage equal to one week’s average production. DH-Ex: District heating without investing in new production units apart from increasing the capacity of peak load boilers. DH-chp: District heating in combination with expanding the CHP capacity on existing CHP plants. DH-HP: District heating in combination with adding large-scale heat pumps to the CHP plants assuming a COP of 3.5. DH-EH: District heating in combination with adding electric boilers to the CHP plants. The reason for including the different district heating alternatives is that the present situation, with increasing unbalances in the electricity supply caused by wind power and CHP, calls for solutions like heat pumps and electric boilers in order to increase the flexibility of the system. These different district heating alternatives are only used for the present system of 2006. In the future scenarios of 2020, 2040 and 2060, it is assumed that a good balance between CHP units, heat pumps and peak load boilers has been implemented and that, consequently, an increase in district heating has been followed by a marginal increase in all three types of units.

3,00 2,50 2,00 1,50 1,00 0,50 0,00

2,50 2,00 1,50 1,00 0,50 0,00 1

1

1001

2001

3001

4001

5001

6001

7001

8001

Timer hour distribution

1001

2001

3001

4001

5001

6001

7001

8001

Timer hour distribution

duration curve

duration curve

Fig. 4. Hourly distribution of district heating demand in the present 2006 situation.

Fig. 5. Hourly distribution of district heating demand in a situation in which space heating demands have been reduced by 75 per cent.


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Table 2 Cost of individual heat technologies for a typical house with a 15 MWh/year heat demand. For scenarios with reduced space heating demand the cost has been reduced. Heat prod. Technology Oil boiler Biomass boiler Natural gas boiler Micro FC CHP on natural gas Micro FC CHP on Hydrogen District heating excl. pipes Electric heating incl. hot water Heat pump Ground heat Heat pump Air

EUR/unit Lifetime (year) EUR/unit Lifetime (year) EUR/unit Lifetime (year) EUR/unit Lifetime (year) EUR/unit Lifetime (year) EUR/unit Lifetime (year) EUR/unit Lifetime (year) EUR/unit Lifetime (year) EUR/unit Lifetime (year)

Unit

Central heating

Storage/Electrolyser

O&M (fixed) EUR/year

O&M (fixed) % of invest

6000 15 6700 15 4000 15 6700 10 6000 10 2000 20 1100 20 13400 15/40 6700 15

5400 40 5400 40 5400 40 5400 40 5400 40 5400 40 2700 40 5400 40 5400 40

1300 40 1300 40

320

2.5%

380

2.8%

200

2.1%

330

2.8%

270

2.4%

70

0.9%

30

0.9%

110

0.6%

110

0.6%

2700 15

2.4. Investment, operational and fuel costs The cost estimate is based on a simple calculation of saved fuel and maintenance cost compared to additional investment cost by use of a real interest of 3 per cent. The cost of individual solutions is based on an estimate of actual prices in Denmark as shown in Table 2. The prices apply to a typical average house with a heat demand of 15 MWh/year. The prices shown in the table relate to the present level of heat demand and have been reduced in scenarios of reduced heat demands. Electrolysers for hydrogen production are assumed to be community installations equal to an investment cost of 20,000 DKK per household. For heat pumps based on ground heat, the heat pumps have an expected lifetime of 15 years while the ground heat source pipes have a lifetime of 40 years. For electric heating and heat pumps, an increased cost of expanding the electric grid has been included based on the following estimate: Investments in low-voltage grids account for 0.1 DKK/kWh and the increase in peak load production is included as an additional demand for transmission and production, corresponding to 8000 DKK/kW for a lifetime of 30 years. The cost of increasing district heating from the calculation of the scenarios done by the GIS model is shown in Table 3 together with the cost assumption of additional production units that have to be added if district heating demands are increased. Fuel cost is analysed on the basis of world market prices added the cost of transporting the fuels to the relevant end users. Three world price levels were identified equivalent to oil prices of 55, 85 and 115 USD/barrel as shown in Table 4. With reference to the Danish energy authorities, the Danish price of natural gas has been set to 62 per cent of the crude oil price. With regard to biomass, the prices have been assumed to follow variations in coal prices.

The analysis has used the price level of 85 USD/barrel as a base level with the other two levels added as sensitivity factors. However, in the future 100 per cent renewable energy scenario in which no fossil fuels are left, the analysis was based on the high price level assuming biomass prices equivalent to similar types of fossil fuels. Consequently, biomass for individual houses is assumed to have the price of wood chips, while biogas/syngas is assumed to have a price equivalent to light oil. The cost calculation does not include external cost related to, e.g., pollution and health, apart from a CO2 emission trade cost of 23 EUR/ton. With regard to the exchange of electricity on the Nordic Nord Pool, the analysis is, as a starting point, based on the expectations of the Danish energy authorities, which state that in the future the average price level will be 47 EUR/MWh in combination with CO2 trading prices of 23 EUR/ton. In the energy system analysis conducted in the EnergyPLAN model, such an average price has been distributed on an hourly basis using the hourly distribution of the year 2005, as shown in Fig. 6. The year 2005 represents a typical average year. 3. Results The analysis has been carried out for the present system as well as for the potential future energy systems of 2020 and 2060. 3.1. Results in the present 2006 energy systems As a first result, a comparison of the consequences of applying the 10 different heating options to scenario 1 is shown. This scenario involves the houses within district heating areas that at present are not connected to the network. The resulting fuel demand of each option is illustrated in Fig. 7.

Table 3 Cost of expanding district heating networks and of adding production units. Unit

Investment MEUR

Lifetime Year

O&M (fixed) Percent of investment

O&M (variable) EUR/unit

Peak load boilers Small CHP plants Large CHP plants Heat pumps Electric boilers District heatingScenario 1 District heatingScenario 1 District heatingScenario 1

0.15 pr. MW-th 0.95 pr. MW-e 1.35 pr. MW-e 2.70 pr. MW-e 0.15 pr. MW-e 1070 in total 4430 in total 10,470 in total

20 20 30 20 20 40 40 40

3% 1.5% 2% 0.2% 1% 1% 1% 1%

0.15 2.70 2.70 0.27 1.35 0 0 0

EUR/MWh-th EUR/MWh-e EUR/MWh-e EUR/MWh-e EUR/MWh-e


Table 4 Fuel price assumptions (EUR/GJ).

Fig. 7 is to be read in the following way: In the reference (pillar 1, Ref), the houses of scenario 1 are supplied by heat from individual boilers based on oil, natural gas or biomass. The resulting fuel demand is 5.25 TWh/year. If the supply of all houses was converted to heat pumps (pillar 2 and 3, HP), the resulting fuel demand of the system would be reduced to 2.55 or 2.23 TWh/ year, respectively. Such conversion would replace the fuel demand in individual boilers by a demand for electricity which would mostly be produced by coal-fired power plants because of the price relation between coal and natural gas. However, such an electricity demand would also increase the possibility of utilising existing CHP plants (coal as well as natural gas) in a better way. In principle, the same would be the case if electric heating supplied all buildings (pillar 4, EH). However, the fuel demand would increase to 8.44 TWh/year due to the inefficiency of electric heating compared to heat pumps. A very small amount of biomass is saved for the reason that CHP plants can be operated more and can save fuel on peak load boilers of which some are fuelled by biomass. If the supply of all buildings is converted to micro CHP on natural gas (pillar 5, MiCHP), the demand for natural gas increases and the demand for coal decreases, since the electricity produced by the micro CHP units saves production at the coal-fired power stations. Altogether, the net fuel demand is reduced to only 2.95 TWh/year. If, instead, the micro CHP units utilise hydrogen (pillar 6, H2-CHP), the resulting fuel demand increases to as much as 12.87 TWh/year because of the demand for electricity for the electrolysers. Furthermore, the CHP units produce electricity which saves coal, but the demand for electricity of this alternative by far exceeds the production. It should be noted that both micro CHP options assume the existence of a gas distribution network which has not been included in the cost estimation and which is not present in most of the areas of scenario 1. If all buildings are connected to the district heating network in which they are located (some to small CHP plants fuelled by natural gas and others to large CHP plants fuelled by coal), the general picture is that the fuel demand will decrease. This is a consequence

Coal

5

0

-5

Fig. 7. Fuel demands of 10 options of supplying scenario 1 houses with heat.

of expanding the use of CHP. If no additional investments are made in production units, except increasing the peak load boiler capacity, the fuel demand is 3.20 TWh/year (pillar 7, DH-ex). It can be further reduced to 2.86 TWh/year if a total CHP capacity of 400 MW-e is added (pillar 8, DH-chp). If, instead, heat pump capacity is added (pillar 9, DH-hp), the fuel consumption will be 2.93 TWh/year. However, in such a situation, due to the price relation between coal and natural gas, the system will save natural gas at the small CHP units and increase the electricity production at the large coal-fired plants. In this case, investing in electric boilers (pillar 10, DH-eh) will result in the same fuel demand as investing in peak load boilers. This is caused by the design of the present system which will result in almost no cheap excess electricity production. In Fig. 8, the CO2 emissions are shown for the same analysis. As can be seen, the overall picture is the same as for the fuel demand. The exception is micro CHP based on natural gas that shows a remarkable reduction in CO2 emissions. This is caused by the combined effect of increasing CHP while, at the same time, replacing coal by natural gas. In Fig. 9, the cost is shown for the same analysis. Again the overall picture is very much the same. The district heating solutions are among the cheapest options and the high cost of district heating networks is not dominating when compared to the total costs of all options. The same calculations have been made for all three district heating scenarios, and the results show the same overall picture in all cases. However, the cost effectiveness of district heating decreases along with increased cost in the district heating network in scenarios 2 and 3 compared to scenario 1. Gradually, the heat pump option becomes competitive with the district heating solutions.

Hourly distribution of the Nord Pool electricity prices year 2005

Net CO2 emission (Scenario1 in DK-2006 closed system)

1000 800

5

600 400 200 0 5001

6001

7001

8001

Hours

Fig. 6. Hourly distribution and duration curve of Nord Pool spot market prices in year 2005.

-e h DH

-h p DH

-e x

-c hp DH

DH

H2 -C H

duration curve

P

0 iC HP

hour distribution

1

M

4001

EH

3001

2

r

2001

3

HP -g r

1001

CO2

4

Re f

1

Mio.ton/year

DKK/MWh

-e h

Exchange rate 0.72 EUR/USD. Esqual to prices of straws on power plants and wood chips at individual houses.

Oil

Ngas

HP -a i

a b

10

Biomass

-h p

2.4/6.0 3.2/8.1 4.0/10.1

DH

8.7 14.0 19.1

DH

8.2 13.2 18.0

-c hp

4.6 7.4 10.1

-e x

4.0 6.4 8.9

DH

1.6 2.4 3.2

P

6.6 10.5 14.4

DH

55 $/barrel 85 $/barrel 115 $/barrel

15

H2 -C H

Biomassb

iC HP

Petrol JP

EH

Light oil diesel

M

Fuel oil

r

Natural gas

HP -g r

Coal

Re f

Crude oila

TWh/ year

EUR/GJ

Fuel consumption (Scenario1 in DK-2006 closed system)

HP -a i

1386

Fig. 8. CO2 emission of the 10 heating options applied to scenario 1.


12

4000

10

3000

8 TWh/ year

Mio.DKK/year

Fuel consumption (Scenario1 in DK-2020 closed system)

Costs (Scenario1 in DK-2006 closed system)

5000

1387

2000 1000

Excess

Ngas

Biomass

Oil

Coal

6 4 2

0

Fuel

Inv-grid

CO2

Inv-radiator

O&M

Inv-prod

-e h

EH

MiCHP H2-CHP

DH

Net CO2 emission (Scenario1 in DK-2020 closed system)

Mi o.ton/year

3 2 1

Ref

HP-gr

HP-air

EH

MiCHP H2-CHP

DH

Costs (Scenario1 in DK-2020 closed system) 4000 3000 2000 1000 0

Fuel consumption

Ref

(Scenario3 in DK-2060 100% RES system)

HP-gr

HP-air

EH

MiCHP H2-CHP

DH

-1000

15 Biogas

12 TWh/ year

HP-air

0

Mi o. DKK/ year

Next step has been to make the same calculations for the 100 per cent renewable energy system in the year 2060. The results are shown in Fig. 10. Here, the district heating option has been calculated for only one solution, since it is expected that a suitable combination of heat pumps, CHP units and peak load boilers has already been established in the future. Consequently, the district heating option involves a coordinated investment in an expansion of all three types of production units. In the 100 per cent renewable energy system, the expansion of wind power leads to an excess electricity production of 3.2 TWh. The energy system analysis includes the factor that such excess

Fuel

O&M

Inv-radiator

CO2

Inv-grid

Inv-prod

Fig. 11. Fuel, CO2 and cost in a future 2020 system without exchange of electricity.

9 6 3 0 Ref

-3

HP-gr

HP-air

EH

MiCHP H2-CHP

DH

Cost (Scenario3 in DK-2060 100% RES system) 15000 Mi l li on DKK/ year

HP-gr

CO2

3.2. Results in the future 2060 renewable energy systems

Biomass

Ref

4

Fig. 9. Total annual cost of the 10 heating options applied to scenario 1.

Excess

-2

DH

iC HP H2 -C H P DH -e x DH -c hp DH -h p

EH

M

HP -g r HP -a ir

Re f

0

-1000

12000

Fuel O&M

DH/grid Production central heating

9000 6000 3000 0 Ref

HPHP-air ground

EH

MiCHP

H2CHP

DH

Fig. 10. Fuel demands and total cost of different heating options of scenario 3 seen in a future 100 per cent RES system year 2060.

production is utilised better by some of the heating options than others. Moreover, it should be highlighted that the space heating demand has decreased by as much as 75 per cent. Compared to the present 2006 system, the overall picture changes in the direction that electricity consuming options (electric heating and heat pumps) improve, while electricity producing options (CHP) deteriorate. In general, this is caused by the excess electricity production from wind turbines. It should be emphasised that the ability of the hydrogen FC option depends on the hydrogen storage, which has been defined here as an electrolyser capacity of 3200 MW-e in combination with a hydrogen storage of 200 GWh, corresponding to the production of approximately 14 days. Electric heating seems to have a low cost. However, the fuel demand is high and, consequently, such an option is extremely sensitive to shifting fuel prices. Moreover, such a solution puts pressure on the need for biomass and other renewable energy sources. Consequently, the best solutions again seem to be individual heat pumps and district heating, while individual CHP options do not seem to be desirable neither in terms of fuel efficiency nor from an economic point of view.

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Fuel consumption (Scenario1 in DK-2020 open system) 12 10

Exchange Ngas Oil

Biomass Coal

TWh/year

8 6 4 2 0 -2

Ref

HP-gr

HP-air

EH

MiCHP H2-CHP

DH

Net CO2 emission (Scenario1 in DK-2020 open system) 4 Foreign Mio.ton/year

3

Domestic

2 1 0 Ref

HP-gr

HP-air

EH

MiCHP

H2-CHP

DH

-1

Costs (Scenario1 in DK-2020 open system) 4000

Mio.DKK/year

3000 2000 1000 0 Ref

HP-gr

HP-air

EH

MiCHP H2-CHP

DH

-1000 Exchange CO2 Inv-grid Fuel O&M Inv-radiator Inv-prod Fig. 12. Analysis in a year 2020 energy system with electricity overflow and without electricity trade.

3.3. Results in the future 2020 energy system As a final step, the heating option was also analysed in a future 2020 system with a 25 per cent reduction in the space heating demand; 33 per cent wind power; 10 per cent savings in electricity demands, and 10 per cent of the transport sector converted to electric vehicles. Moreover, the incineration of waste has been increased from 10 TWh in 2006–12 TWh in 2020. Like in the 100 per cent renewable energy system, only one district heating option has been analysed. However, for 2020, the option has been analysed in a system both with and without exchange on the Nord Pool electricity market in order to identify its influence on the conclusions. In the closed system, an excess electricity production of 0.48 TWh arises in the reference system. In the open system, such excess production is exchanged leading to market prices varying between 0 and 54 EUR/MWh with an average of 39 EUR/MWh. In the open system, the energy system modelling estimates an exchange of 6.2 TWh of export and 3.2 TWh of import based on the 85 USD/barrel price level. Compared to the closed system, Danish society will make a profit of 36 MEUR/year. It must be emphasised that such estimation of exchange by nature depends on fuel prices

as well as electricity prices on the international market. Consequently, a sensitivity analysis has been conducted using low (55 USD/barrel) and high (115 USD/barrel) oil price levels. With low electricity prices, the import decreases to 1.0 TWh and the export increases to 10.5 TWh; while in the case of high fuel prices, the import increases to 5.2 TWh and the export decreases to 3.6 TWh. However, in both cases, Danish society makes a profit of 40 or 60 MEUR, respectively. In [31], a comprehensive study was conducted including typical variations in dry, wet and normal years with regard to the water levels of the Nordic hydro power plants in Norway and Sweden. Moreover, the study included changes in fuel prices as well as in the CO2 emission trading cost. The study showed that Danish society will make a profit in all cases if an exchange was made, compared to a closed system without trade of electricity, which thus confirms the analysis of this study. In the present study, the impacts of district heating have been calculated in a closed system as well as in an open system for the year 2020. However, this study is not as comprehensive as the former one [31], as it includes only one fuel price level. The results of the closed system (without exchange) are shown in Fig. 11. In Fig. 12, the same results are shown in the case of including exchange of electricity on the international Nord Pool market. Basically, the overall picture is the same. However, in the case of an open system, changes in electricity demand primarily influence import/export; while in the case of the closed system, the same changes primarily influence the production on the coal-fired power plants. In the case of electricity consuming heating options (heat pumps, electric heating and hydrogen CHP), the net import increases; while in the case of electricity producing options (MicroCHP), the net export increases. The model is not able to identify the consequences in terms of CO2 emissions outside Denmark. Such CO2 emissions are shown in Fig. 12, assuming an equivalent production on the marginal unit in Denmark, i.e. a coal-fired power plant. The total cost does not change much. Still, the cost increases for electric heating and hydrogen. This is due to the fact that the increases in electricity demand for those options hinder better alternatives of exchange. For district heating and micro CHP, the cost is slightly lowered for the same reason. 4. Conclusion Today, 46 per cent of the Danish net heat demand is met by district heating. It has been analysed whether to expand to (1) 53 per cent by connecting buildings within existing areas of district heating; (2) 63 per cent by adding buildings in neighbouring areas which today are mostly supplied by natural gas, or (3) 70 per cent by additionally adding buildings within a distance of up to 1 km from existing district heating areas. Today, the buildings in these areas are supplied by heat from individual boilers based on oil, natural gas or biomass. Compared to such a reference, the analysis shows that a substantial reduction in fuel demands and CO2 emissions as well as cost can be achieved by converting to district heating. Such a conclusion seems to be valid in the present energy systems as well as in a future scenario aiming at a 100 per cent renewable energy supply in 2060, even if the space heating demand is reduced to as much as 25 per cent of the present demands. However, other options than boilers exist, which have also been analysed, i.e.: - Micro-CHP based on fuel cells on hydrogen. Such a solution does not seem to be able to reduce fuel demands, CO2 emissions or cost, neither in the present system nor in a future 100


per cent renewable energy system. The efficiency is simply too low and the cost too high. Moreover, better and more costeffective solutions can be found to deal with the problem of excess electricity productions from wind power and CHP. - Micro-CHP based on natural gas seems to be an efficient way to reduce fuel demands and especially CO2 emissions in the short term. CO2 emissions are reduced both by expanding CHP and by converting from coal to natural gas in the overall system. The solution is, however, very expensive compared to district heating because of the substantial investments in micro CHP units in various buildings. In the long-term perspective, in a 100 per cent renewable energy system, the solution is not competitive with regard to fuel, CO2 emission and cost reduction compared to district heating and not even compared to individual boilers based on biomass. - With the high oil and gas prices of 2008 and, at the same time, low coal and Nord pool electricity prices, electric heating is a socio-economically reasonable alternative mainly because of the saved central heating system cost. In the short term, this is not valid for houses which already have central heating. And in the long-term perspective, electric heating is bad for fuel demands and CO2 emissions. Moreover, this alternative becomes very sensitive to potential increases in future fuel demands. - Individual heat pumps seem to be the best alternative to district heating. In the short term, heat pumps are to be found at the same level as district heating in terms of fuel efficiency, CO2 emissions and cost. The cost is a little higher close to the district heating system but a little lower in houses further away. In the long-term perspective, in a 100 per cent renewable energy system, the fuel efficiency is high and, with regard to cost, the solution is more or less equal to district heating. However, it is highly dependent on the distance to existing district heating grids. To all the alternative options it is relevant to add solar thermal energy. However, this option has not been included in the analysis presented here. However, in an additional scenario, a potential of up to 4 million m2 of large-scale solar heating panels for district heating was identified, which will be competitive and can produce heat at around 20 per cent of the cost of individual solar heating panels [48]. In an overall perspective, the conclusion seems to be that the best solution will be to combine a gradual expansion of district heating with individual heat pumps in the rest of the areas. The analysis indicates that the optimal solution will be to expand district heating from the present 46 per cent to somewhere between 63 and 70 per cent. It must, however, be emphasised that the analysis is based on a gradual improvement of district heating technologies, implementing among other initiatives a decrease in temperature in combination with a reduction in space heating demands including a reduction in the consumers’ return temperature. Therefore, it is crucial to continue the present development in such a direction. Moreover, the expansion of district heating will help utilise heat production from waste incineration and industrial excess heat production which has been included in the analysis. On the other hand, district heating also helps the integration of the following technologies, which were not included in the study: - geothermal heating - biogas production (supply of heat) - solid biomass such as straw. Subsequently, the strategy of this paper has been analysed in an overall energy plan for the whole of Denmark including the abovementioned technologies [49].

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Acknowledgements The work presented in this paper is an essential part of a recent R&D study, Heat Plan Denmark, elaborated by Aalborg University and Ramboll and financed by the district heating consumers’ R&D fund. Moreover, it is a result of the research project Coherent Energy and Environmental System Analysis (CEESA), partly financed by The Danish Council for Strategic Research.

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