Economic modelling of the competitiveness of small urban renewable district heating
Abstract
A key area of decarbonisation is the transition of the heating sector, including district heating, to renewable sources. In this research, we aim to determine the cost level at which a renewable district heating system can become competitive in a small urban environment in Hungary. For this purpose, we use an economic model that we developed and applied to three municipalities. Our analysis is unique in that it integrates district heating network expansion with various district heating technologies. Our findings indicate that renewable technologies are close to being competitive even at higher gas prices. Biomass can be competitive with natural gas heating for low consumption levels, while geothermal heating is competitive for higher consumption levels. Heat pumps appear only marginally in the reference case; however, at lower electricity prices, significant penetration of this technology can be observed, particularly in areas with lower district heating consumption. Solar thermal heat production does not emerge as a dominant technology in any of the scenarios but could serve as a complementary solution at a small scale.
References
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DANISH ENERGY AGENCY [2021]: Technology Data for Heating installations. https://ens.dk/media/3332/download.
DANISH ENERGY AGENCY [2023]: Technology Data for Individual Heating Plants. https://ens.dk/en/our-services/projections-and-models/technology-data/technology-data-individual-heating-plants.
DECC [2009]: Heat and Energy Saving Strategy. Department for Energy and Climate Change, London, https://assets.publishing.service.gov.uk/media/5a7b8ccbe5274a7318b8f630/9780108508158.pdf.
DOCHEV, I.–PETERS, I.–SELLER, H.–SCHUCHARDT, G. K. [2018]: Analysing district heating potential with linear heat density. A case study from Hamburg. Energy Procedia, Vol. 149. 410–419. o. https://doi.org/10.1016/j.egypro.2018.08.205.
FINNEY, K. N.–SHARIFI, V. N.–SWITHENBANK, J.–NOLAN, A.–WHITE, S.–OGDEN, S. [2012]: Developments to an existing city-wide district energy network – Part I: Identification of potential expansions using heat mapping. Energy Conversion and Management, Vol. 62. 165–175. o. https://doi.org/10.1016/j.enconman.2012.03.006.
GROSSE, R.–CHRISTOPHER, B.–STEFAN, W.–GEYER, R.– ROBBI, S. [2017]: Long term (2050) projections of techno-economic performance of large-scale heating and cooling in the EU. Publications Office of the European Union, Luxembourg, https://doi.org/10.2760/24422.
JALIL-VEGA, F.–HAWKES, A. D. [2018]: The effect of spatial resolution on outcomes from energy systems modelling of heat decarbonisation. Energy, Vol. 155. 339–350. o. https://doi.org/10.1016/j.energy.2018.04.160.
LUND, R.–PERSSON, U. [2016]: Mapping of potential heat sources for heat pumps for district heating in Denmark. Energy, Vol. 110. 129–138. o. https://doi.org/10.1016/J. https://doi.org/10.1016/j.energy.2015.12.127.
MEZŐSI ANDRÁS–KÁCSOR ENIKŐ–DIALLO, A. [2023]: Projects of common interest? Evaluation of European electricity interconnectors. Utilities Policy, Vol. 84. https://doi.org/10.1016/j.jup.2023.101642.
NIELSEN, S.–MOLLER, B. [2013]: GIS based analysis of future district heating potential in Denmark. Energy, Vol. 57. 458–468. o. https://doi.org/10.1016/j.energy.2013.05.041.
NOVOSEL, T.–PUKŠEC, T.–DUIĆ, N.–DOMAC, J. [2020]: Heat demand mapping and district heating assessment in data-pour areas. Renewable and Sustainable Energy Reviews, Vol. 131. 109987. https://doi.org/10.1016/j.rser.2020.109987.
NUSSBAUMER, T.–THALLMAN, S. [2014]: Status Report on District Heating Systems in IEA Countries. IEA Bioenergy Task 32, Swiss Federal Office of Energy, and Verenum, Zürich, https://nachhaltigwirtschaften.at/resources/iea_pdf/reports/iea_bioenergy_task32_status_report_on_district_heating_systems.pdf.
PETROVIĆ, S.–KARLSSON, K. [2016]: Ringkøbing-Skjern energy atlas for analysis of heat saving potentials in building stock. Energy, Vol. 110. 166–177. o. https://doi.org/10.1016/j.energy.2016.04.046.
REIDHAV, C.–WERNER, S. [2008]: Profitability of sparse district heating. Applied Energy, Vol. 85. 867–877. o. https://doi.org/10.1016/j.apenergy.2008.01.006.
REKK [2020]: Megújuló és kapcsolt távhőtermelés potenciálbecslése. REKK Alapítvány, Budapest, https://rekk.hu/downloads/projects/REKK%20Tavho%20Potenci%C3%
A1lbecsl%C3%A9s%202020.pdf.
REKK [2022]: Megújuló város- és távfűtési rendszerek létesítésének lehetőségei Magyarországon. REKK Alapítvány, Budapest, https://rekk.hu/downloads/projects/REKK_V-02%20Potencialbecsles%20reszanyag_final.pdf.
SÁNCHEZ-GARCÍA, L.–AVERFALK, H.– PERSSON, U. [2022]: sEEnergies special report: Construction costs of new district heating networks in Germany. http://urn.kb.se/resolve?urn=urn:nbn:se:hh:diva-48303.
SCOTTISH GOVERNMENT [2022]: First national assessment of potential heat network zones. Zero Waste Scotland. The Scottish Government, https://www.gov.scot/publications/first-national-assessment-potential-heat-network-zones/.
TORABI, S.–TONIOLO, J.–MUTANI, G.–LOMBARDI, P. [2018]: A GIS-statistical approach for assessing built environment energy use at urban scale. Sustainable Cities and Society, Vol. 37. 70–84. o. https://doi.org/10.1016/j.scs.2017.10.002.
Published
2025-02-10
How to Cite
KerekesL., & MezősiA. (2025). Economic modelling of the competitiveness of small urban renewable district heating. Hungarian Economic Review, 72(2), 178-202. Retrieved from https://ojs.mtak.hu/index.php/kszemle/article/view/18308
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