Economic incentives for flexible district heating in the Nordic countries

Abstract

By analysing four types of district heating plants, ranging from fully integrated with an electricity system (combined heat and power and electric boiler) to no integration with an electricity system (wood chip boiler), operation and investment incentives for flexible district heating plants under current Danish, Finnish, Norwegian and Swedish framework conditions have been investigated. Hourly-based operation optimisation over 20 years using the modelling software energyPRO showed that the largest investment incentive in Finland, Norway and Sweden was for combined heat and power with an electric boiler. This is largely driven by subsidies. Conversely, the less-subsidised Danish case incentivised investment in wood chip boilers. Untaxed biomass is the major energy source in all scenarios, while electricity use is limited. Capacity component-based tariffs can eliminate operation of electric boilers, while less costly energy component-based tariffs can increase the operation of electric boilers. Heat storage was found to be a no-regrets solution for optimising operation and lowering costs in all cases.