Is District Heating Combined Heat and Power at Risk in the Nordic Area?—An Electricity Market Perspective

Kristo Helin,Sanna Syri,Behnam Zakeri

doi:10.3390/en11051256

Abstract

The Nordic power market has exceptionally low carbon emissions. Energy efficient combined heat and power (CHP) plays an important role in the market, and also produces a large share of Nordic district heating (DH) energy. In future Nordic energy systems, DH CHP is often seen as vital for flexibility in electricity production. However, CHP electricity production may not be profitable in the future Nordic market. Even currently, the prevailing trend is for CHP plants to be replaced with heat-only boilers in DH production. In this work, we aim to describe the future utilisation of CHP in the Nordic area. We use an electricity market simulation model to examine the development of the Nordic electricity market until 2030. We examine one main projection of electricity production capacity changes, and based on it we assess scenarios with different electricity demands and CO2 emission prices. Differences between scenarios are notable: For example, the stalling or increasing of electricity demand from the 2014 level can mean a difference of 15 €/MWh in the average market price of electricity in 2020. The results of this paper underline the importance of considering several alternative future paths of electricity production and consumption when designing new energy policies.

Highlights

Increasing shares of variable renewable energy (VRE) together with an economic recession have pushed the market price of electricity down in the Nordic countries
We investigate the role of combined heat and power (CHP) on the Nordic electricity market in 2030, assuming market-based operation and forecasts of future power production capacities with other technologies
The Nordic electricity market was analysed in this paper in the years 2014, 2020 and 2030 to assess the expected role of district heating (DH) CHP in different scenarios

Summary

Introduction

Increasing shares of variable renewable energy (VRE) together with an economic recession have pushed the market price of electricity down in the Nordic countries. In the Nordic countries (Finland, Sweden, Norway, and Denmark), many long-term visions for the future rely on CHP (and hydro power) to supply controllable electricity production when VRE availability is low [1,2,3,4]. Should CHP lose its profitability even with more recent VRE capacities, the premise of the described future visions would need to be revised for them to be viable as market-based action. With this in mind, we investigate the role of CHP on the Nordic electricity market in 2030, assuming market-based operation and forecasts of future power production capacities with other technologies

Objectives

Results

Discussion

Conclusion