Policy implications of challenges and opportunities for district heating – The case for a Nordic heating system

Journal article, 2024

District heating (DH) is an efficient urban heating solution. Numerous external factors (energy efficiency, fuel-price increases, heat -pump competition and policy changes) are challenging. It is relevant to explore long-term cost-competitiveness of DH. A model has been developed testing three, future DH pathways: (i) phase out of biomass (aligned to the cascading principle of the EU Taxonomy), (ii) including waste heat in the fuel supply mix (aligned to the updated Energy Efficiency Directive) and (iii) lower system temperatures (aligned to the idea of more renewables and waste heat). The model considers the long-term development of the supply and demand sides together and simultaneously. This allows the model to determine the most cost-efficient heating solution for different building types in different points in time. The results confirm that a phaseout of biomass would erode -but that developments rendering lower system temperatures and increased waste heat utilization would strengthen-the DH business case. Additionally, it is confirmed that heat pumps constitute the main competition to DH. Hence, to remain a cost-efficient heating alternative in the future, DH systems need to revisit the tradition of centralized heat supply resorting to combustion for decentralized heat supply resorting to heat supply on demand.