Techno-Economic Analysis of a Highly Renewable and Electrified District Heating Network Operating in the Balancing Markets

Nima Javanshir () and Sanna Syri
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Nima Javanshir: Department of Mechanical Engineering, School of Engineering, Aalto University, FI-00076 Aalto, Finland
Sanna Syri: Department of Mechanical Engineering, School of Engineering, Aalto University, FI-00076 Aalto, Finland

Energies, 2023, vol. 16, issue 24, 1-21

Abstract: In pursuit of Finland’s carbon neutrality objective by 2035, integrating renewable energy sources into the power grid is essential. To address the stochastic nature of these resources, additional sources of flexibility are required to maintain grid stability. Meanwhile, district heating network (DHN) operators in Finland are decommissioning fossil fuel-based combined heat and power plants (CHPs) and electrifying heating systems with heat pumps (HPs) and electric boilers. A techno-economic assessment and the optimized operation of DHN-connected HPs and electric boilers in providing ancillary balancing services were explored in this study. The primary goal was to maximize the potential revenue for DHN operators through participation in the day-ahead electricity market and frequency containment reserve (FCR) balancing markets. Three interconnected DHNs in the Helsinki metropolitan area were optimized based on 2019 data and each operator’s decarbonization strategies for 2025. HPs are expected to achieve the highest profit margins in the FCR-D up-regulation market, while electric boilers could generate substantial profits from the FCR-D down-regulation market. In contrast to other balancing markets studied, the FCR-N market exhibited limited profit potential. Sensitivity analysis indicated that spot electricity prices and CO 2 emission allowance prices significantly influence the profitability derived from balancing markets.

Keywords: district heating; electrification; power-to-heat technologies; balancing markets; techno-economic analysis; Helsinki metropolitan area; heat pump (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: 2023
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