Combined Assessment of Future Heat Supply and Demand - A Dynamic Systems Approach

Licentiate thesis, 2022

In order to meet climate change mitigation targets, the use of fossil fuels has to be reduced and, eventually, be phased out in all sectors. As the heating sector occupies a central place in energy systems, especially in Nordic countries, it is affected by and affects other energy sectors. The demand for space heating and hot water has traditionally been covered by: district heating (DH) systems, whereby buildings are connected through a grid to power plants; and the installation of individual heating technologies within each building. As there are several heating solutions available, the ways in which heating systems will develop in the future when fossil fuels are phased out depend on several factors, which are currently uncertain.

As many components of heating systems have long lifetimes, the investments made in the near future will have long-term impacts on the development of heating systems. It will be important to understand how investments and the dispatch of different components depend on the phasing out of fossil fuels and other factors. Therefore, this thesis aims to investigate how the different parts of heating systems develop under different climate policies, electricity prices and heat load profiles.

To investigate heating system development when both the supply and demand sides evolve simultaneously, a dynamic systems approach is used in which an expanding heating system is investigated for several decades in the future and new housing is treated heterogeneously.

In this thesis, the TIMES modeling framework is used, and the heating system of Gothenburg is applied as modeling case. The demand side is treated heterogeneously by investigating several types of new housing, which means that the resulting cost-efficient solution may be different for different types of housing. The investment cost for new DH grid connections is therefore assessed for each housing type.

The modeling results show that the main effect of a climate policy is decreased investments in new natural gas heat-only boilers (HOBs) in the DH supply side. New natural gas HOBs compete with new large-scale heat pumps (HPs) but does not affect new combined heat and power (CHP) plants. Investments are made in large-scale HPs in the cases of increasing and decreasing electricity prices, whereas no investments are made in biomass CHP plants if the future electricity price decreases.

The results further shows that apartment buildings use DH exclusively, while single-family housing with low heat demands and small single-family housing with high heat demand are not connected to the DH system at all. The heating solution for large single-family housing with high heat demands is dictated by both future electricity prices and whether a climate policy is introduced. A heat demand load with a higher relative use during wintertime generally discourages the use of individual HPs.

The findings of this thesis may be of interest to city planners and DH utilities, as the findings shows that both the DH supply side and the heating solution for new large single-family housing with high heat demand are affected by climate policy, future electricity prices, and the heat load profile.