District Heating Sensitivity to Heat Demand Reductions and Electricity Market Dynamics

Abstract: Sweden and the rest of the EU member states have to reduce primary energy use andemissions of CO2, and increase the use of renewable energy sources according to the EUclimate change package “20-20-20”. To do this, the energy systems need to use less fossilfuel and to utilise energy resources more efficiently. Reduction of energy use in buildings isan important part of this transformation. In Sweden, district heating is the most commontechnique to supply heat for space heating and domestic hot water to multi-family residentialbuildings in urban areas. Efficiency improvements in buildings connected to district heatingsystems should not be counterproductive from a systems perspective, e.g. causing lessefficient total use of resources and increased global CO2 emissions. A reduced electricityproduction in combined heat and power plants, which may be a result of reduced districtheating demand, is sometimes seen as problematic with regards to emissions of CO2, sincethis electricity is normally considered to replace electricity produced in less efficient fossilfuelledcondensing power plants.This licentiate thesis summarises the first part of a PhD project that studies thepossibilities for Swedish district heating systems to adapt to a reduced demand for heating inbuildings, as well as to changes in energy markets. In this thesis the impact of buildingenergy-efficiency improvements and electricity market dynamics on the operation of districtheating systems and CO2 emissions is investigated.The energy system cost-optimisation software MODEST has been used to study theimpact of heat demand changes on the heat and electricity production in the Swedish districtheating systems in Linköping and Uppsala. MODEST optimisations were also used toinvestigate the impact of electricity price fluctuations on the operation of the Uppsaladistrict heating system, and the interaction between the national power system and allSwedish district heating systems collectively.The results show that energy efficiency improvements in buildings that reduce heatdemand by up to 40 % do not increase global CO2 emissions due to production of districtheating. This is because heat-only production is reduced to a larger extent than combinedheat and power production. The results also show that low electricity prices during winterand a large introduction of intermittent wind and solar power generation in the Swedishpower system can be expected to induce use of electricity for district heat production and tohamper co-generation of electricity in combined heat and power plants.