Calculating the marginal costs of a district-heating utility

Jörgen Sjödin and Dag Henning

Applied Energy, 2004, vol. 78, issue 1, 18 pages

Abstract: District heating plays an important role in the Swedish heat-market. At the same time, the price of district heating varies considerably among different district-heating utilities. A case study is performed here in which a Swedish utility is analysed using three different methods for calculating the marginal costs of heat supply: a manual spreadsheet method, an optimising linear-programming model, and a least-cost dispatch simulation model. Calculated marginal-costs, obtained with the three methods, turn out to be similar. The calculated marginal-costs are also compared to the actual heat tariff in use by the utility. Using prices based on marginal costs should be able to bring about an efficient resource-allocation. It is found that the fixed rate the utility uses today should be replaced by a time-of-use rate, which would give a more accurate signal for customers to change their heat consumptions.

Keywords: District; heating; Marginal; costs; Modelling; Combined; heat; and; power (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (38)

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