District Heating and CHP Local Possibilities for Global Climate Change Mitigation

Abstract: Global warming, in combination with increasing energy demand and higher energy prices, makes it necessary to change the energy use. To secure the energy supply and to develop sustainable societies, construction of energy-efficient systems is at the same time most vital. The aim of this thesis is therefore to identify how a local energy company, producing district heating (DH), district cooling (DC) and electricity in combined heat and power (CHP) plants, can contribute to resource-efficient energy systems and cost-effective reductions of global carbon dioxide (CO2) emissions, along with its customers. Analyses have been performed on how a local energy company can optimise their DH and DC production and what supply-side and demand-side measures can lead to energy-efficient systems in combination with economic and climate change benefits. The energy company in focus is located in Linköping, Sweden. Optimisation models, such as MODEST and reMIND, have been used for analysing the energy systems. Scenario and sensitivity analyses have also been performed for evaluation of the robustness of the energy systems studied. For all analyses a European energy system perspective was applied, where a fully deregulated European electricity market with no bottlenecks or other system failures was assumed.In this thesis it is concluded that of the DH-supply technologies studied, the biomass gasification applications and the natural gas combined cycle (NGCC) CHP are the technologies with the largest global CO2 reduction potential, while the biomass-fuelled plant that only produces heat is the investment with the smallest global CO2 reduction and savings potential. However, the global CO2 reduction potential for the biomass integrated gasification combined cycle (BIGCC) CHP and NGCC CHP, the two technologies with highest electricity efficiencies, is highly dependent on the assumptions made about marginal European electricity production. Regarding the effect on the DH system cost the gasification application integrated with production of renewable biofuels (SNG) for the transport sector is the investment option with the largest savings potential for lower electricity prices, while with increasing electricity prices the BIGCC and NGCC CHP plants are the most cost-effective investment options. The economic outcome for biomass gasification applications is, however, dependent on the level of policy instruments for biofuels and renewable electricity. Moreover, it was shown that the tradable green certificates for renewable electricity can, when applied to DH systems, contribute to investments that will not fully utilise the DH systems’ potential for global CO2 emissions reductions.Also illustrated is that conversion of industrial processes, utilising electricity and fossil fuels, to DH and DC can contribute to energy savings. Since DH is mainly used for space heating, the heat demand for DH systems is strongly outdoor temperature-dependent. By converting industrial processes, where the heat demand is often dependent on process hours instead of outdoor temperature, the heat loads in DH systems can become more evenly distributed over the year, with increased base-load heat demand and increased electricity generation in CHP plants as an outcome. This extra electricity production, in combination with the freed electricity when converting electricity-using processes to DH, can replace marginal electricity production in the European electricity market, resulting in reduced global CO2 emissions.Demonstrated in this thesis is that the local energy company, along with its customers, can contribute to reaching the European Union’s targets of reducing energy use and decreasing CO2 emissions. This can be achieved in a manner that is cost-effective to both the local energy company and the customers.