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

Kristo Helin, Behnam Zakeri and Sanna Syri
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Kristo Helin: Department of Mechanical Engineering, School of Engineering, Aalto University, Otakaari 4, 02150 Espoo, Finland
Behnam Zakeri: Department of Mechanical Engineering, School of Engineering, Aalto University, Otakaari 4, 02150 Espoo, Finland
Sanna Syri: Department of Mechanical Engineering, School of Engineering, Aalto University, Otakaari 4, 02150 Espoo, Finland

Energies, 2018, vol. 11, issue 5, 1-19

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 CO 2 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.

Keywords: electricity market; CHP; district heating; energy market modelling; variable renewable energy; energy policy (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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