Effects of Environmental Taxation on District Heat Production Structures

Abstract

In this study, we explore how different environmental taxation regimes influence the design of costoptimal district heat production systems and the primary energy use for district heat production. Our calculations are based on the heat load duration curve of a district heat production system in Ostersund, Sweden. Using the system’s measured daily district heat load curve from 1 May 2008 to 30 April 2009, we model four costoptimal district heat production systems based on four environmental taxation scenarios. The design of the district heat production under the different taxation scenarios is based on expected utilization time and on the production units which give the lowest heat production cost. We find that primary energy use varies strongly when different technologies and fuels are used under the different environmental taxation scenarios. However environmental taxation has a minimal effect on district heat production cost for optimally designed district heat production systems. Fossil fuels become less competitive as the environmental taxation increases. However, light fuel oil boiler for the peak load production remains viable due to low utilization time and investment cost.