Assessment of existing and potential developments of district-heating systems

Licentiate thesis, 2008

District heating (DH) may play an important role for achieving the EU goal of a secure, competitive and sustainable energy supply. DH benefits from the possibilities of utilising local resources such as municipal solid waste and other low-quality fuels, as well as low-cost waste heat from industries and from combined heat and power plants (CHP). This may contribute not only to a more competitive energy supply but also to lower environmental impacts due to the avoidance of emissions from other fuels. There is a large diversity of production-mix solutions, especially among, and within the Swedish district-heating systems (DHS). This helps to spread the risks of future availability and price trends of limited energy sources as well as the risks of changes in policy instruments. With increasingly stringent targets for reduction of CO2 emissions and for the share of the energy and transport fuel supply based on renewable energy sources, the pressure on limited biomass resources is expected to increase. This will certainly favour efficiency measures and efficient resource utilisation. Technologies for gasification of biomass may then play a key role given their potential for high electrical efficiency and polygeneration, i.e. combined production of e.g. not only electricity but also bio-derived transport fuels (BTF) and district heat. The air pollution associated with energy use causes different kinds of damage to e.g. human health, ecosystems and buildings. If the damage costs are not included in the market prices and not accounted for in the polluter’s economy, these costs are so-called external costs. To achieve both a competitive and a sustainable energy supply it is necessary to integrate the environmental considerations into energy policy and internalise external costs in energy systems studies. The aim of this thesis is to develop, apply and evaluate methodologies for assessment of existing and potential developments of DHS, considering more efficient resource utilisation with respect to economic, environmental and social aspects. The first appended paper evaluates the economic consequences, and the CO2 reduction potential, of integration of different biomass gasification alternatives in a Swedish DHS. The second appended paper assesses the socio-economic cost-effectiveness of a DHS’s operation which takes external costs into account. A systems modelling approach is applied in the studies and the MARTES model is used, which is a simulating DH supply model, here applied to the DHS of Göteborg. The first paper’s main findings show that the generation of electricity and transport fuel based on renewable energy sources can be significantly increased by integration of biomass gasification technology in the DHS of Göteborg, and that it can lead to cost-effective reduction of global CO2 emissions, given the assumptions of marginal power generation technologies and alternative use of transport fuels. The economic results show that gasified biomass, upgraded to synthetic natural gas, is better used as BTF than for substitution of natural gas in an existing combined cycle CHP plant. The study also stresses the importance of assumptions for the base load options when analysing a system with high availability of waste heat. In the second paper, the socio-economic cost-effectiveness of a DHS’s operation has been assessed by studying the DHS’s total costs which include external costs, referred to as the social system cost. The results show that the studied DHS’s marginal heat production differs due to optimisations regarding external costs or current Swedish policy instruments, and that these differences result in various social system costs and external costs. The results also show that the contribution of CO2 emissions dominates the external costs associated with the DHS’s operation, whereas the local and regional pollutants, in this case SO2 and NOx emissions, have a small impact on the results.