Energy 35 (2010) 1381–1390

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Energy
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The role of district heating in future renewable energy systems

H. Lund a, *, B. Möller a, B.V. Mathiesen a, A. Dyrelund b
a
Department of Development and Planning, Aalborg University, Fibigerstraede 13, DK 9220 Aalborg, Denmark
b
Ramboll Denmark Ltd., Teknikerbyen 31, DK 2830 Virum, Denmark

a r t i c l e i n f o a b s t r a c t

Article history: Based on the case of Denmark, this paper analyses the role of district heating in future Renewable Energy
Received 21 August 2009 Systems. At present, the share of renewable energy is coming close to 20 per cent. From such point of
Received in revised form departure, the paper defines a scenario framework in which the Danish system is converted to 100 per
12 November 2009
cent Renewable Energy Sources (RES) in the year 2060 including reductions in space heating demands by
Accepted 23 November 2009
Available online 19 January 2010
75 per cent. By use of a detailed energy system analysis of the complete national energy system, the
consequences in relation to fuel demand, CO2 emissions and cost are calculated for various heating
options, including district heating as well as individual heat pumps and micro CHPs (Combined Heat and
Keywords:
District heating Power). The study includes almost 25 per cent of the Danish building stock, namely those buildings
Community heating which have individual gas or oil boilers today and could be substituted by district heating or a more
Energy system analysis efficient individual heat source. In such overall perspective, the best solution will be to combine a gradual
Renewable energy systems expansion of district heating with individual heat pumps in the remaining houses. Such conclusion is
valid in the present systems, which are mainly based on fossil fuels, as well as in a potential future
system based 100 per cent on renewable energy.
Ó 2009 Elsevier Ltd. All rights reserved.

1. Introduction
In many countries around the world, the ability to heat and
supply hot water to buildings is essential. Today, it is intensively
being discussed how to do so in the best way in future energy
systems in which the combustion of fossil fuel should be reduced or
completely avoided. In the present discussion, one can identify at
least two different views, which will be explained further in the
following. One view states that future low-energy buildings could
completely remove the need for heating or even, by the use of e.g.
solar thermal energy, be plus energy houses producing more heat
than they demand. The other view states that excess heat
production from industries, waste incineration and power stations
may also be used together with geothermal energy, large-scale
solar thermal energy and large-scale heat pumps to utilise excess
wind energy for house heating. In the first case, a district heating
network may not be needed, while, in the latter case, a district
heating network becomes essential.
The design and perspective of low-energy buildings have been
analysed and described in many recent papers [1–5] as well as
concepts like zero emission buildings [6–8] and plus energy houses.
However, such papers mostly deal with future buildings and do not
* Corresponding author. Tel.: þ45 9940 8309; fax: þ45 9815 3788.
E-mail address: Lund@plan.aau.dk (H. Lund).
include all the existing buildings which, due to the long lifetime
of buildings, are expected to remain for many decades to come.
Some papers have addressed how to reduce heat demands in
existing buildings and have come to the conclusion that such effort
involves a significant investment cost but results in operational
savings [9–12]. However, the share of buildings already existing
today is expected to remain high for many years. e.g., in Denmark,
the share of such buildings is expected to be as high as 85–90 per
cent in the year 2030. And no study has been found which identifies
how to completely avoid heat demands in existing buildings at
a reasonable cost and within a relevant time frame.
On the other hand, some of the measures to reduce the
combustion of fossil fuels are to introduce or expand the use of CHP
by which the fuel efficiency in the system is improved [13–22]; to
include heat pumps [23,24]; to utilise industrial waste heat [25]
and/or to replace fossil fuels with residual resources such as waste
or various biomass fuels [26–28]. Such policies often involve the
need for a district heating system. District heating versus individual
supply of heat demand for residential buildings has been analysed,
e.g., in Norway where district heating compared to individual
electric heating was found to have a lower CO2 emission [2].
However, such analyses have typically not been applied to future
energy systems with very little or no share of fossil fuel.
For various reasons including energy security and climate
change, many countries around the world pursue an energy policy
focussing on energy efficiency and an increase in the share of

0360-5442/$ – see front matter Ó 2009 Elsevier Ltd. All rights reserved.
doi:10.1016/j.energy.2009.11.023
1382 H. Lund et al. / Energy 35 (2010) 1381–1390
Net heat demand
70
60
50
TWh/ year
40
30
20
10
- identification has been made by combining a geographical model
Year 2006 100% + Ngas + Ngas up to 1
connection adjoining areas km from exist.
existing areas DH
Reference Scenario1 Scenario2 Scenario3
Indiv. Oil and biomass
Indiv. Ngas boilers
DH (large CHP)
DH (small CHP)
DH (boilers)
Fig. 1. Net heat demand divided into district heating and individual heating in the
three scenarios.
Renewable Energy Sources [29,30]. In Denmark, the official long-
term governmental objective is to convert to 100 per cent renew-
able energy, and the implementation of such goal will imply
coordinated actions involving the entire energy supply system
[31,32]. Such energy policies lead to the challenge of balancing
electricity supply and demand. With a wind power production and
a CHP share meeting 20 and 50 per cent of the electricity demand,
respectively, Denmark is one of the forerunners in facing such
problems. So far, Denmark has already faced excess electricity
production problems. Various technological options have been
analysed and several measures have been implemented including
changes in the regulation of distributed CHP plants [33–35]. The
different technological options in question include electric boilers
and heat pumps for district heating with thermal storages [36,37],
flexible demands, electricity for transportation [38,39], reorgan-
isation of energy conversion in relation to waste treatment [40],
and various energy storage options [41,42].
It cannot be concluded from a purely house heating perspective,
whether one strategy with regard to district heating fits better than
the other into the implementation of future sustainable and
renewable energy systems. One has to include the rest of the energy
system in order to evaluate how to use the available resources in the
overall system in the best way and how to combine energy savings
and efficiency measures with renewable energy in order to meet the
target to put an end to fossil fuels at the lowest possible cost for
society. This paper seeks to perform an advanced energy system
analysis of the whole national energy system in order to evaluate the
impact of different heating options on the total fuel demand and CO2
emissions by comparing different options of house heating in the
present as well as in potential future energy systems.
2. Methodology
By use of GIS (Geographical Information System) tools, the
methodology applied has been, first, to identify potential scenarios
and the cost of expanding district heating; secondly, by use of
energy system analysis tools, to make models of the present as well
as potential future Danish energy systems, and, finally, to identify
various options and the cost of heating the houses in question. The
methodology and data are described further in the following.
2.1. Potential district heating scenarios
Today, 46 per cent of the Danish net heat demand (equal to 60
per cent of the households) is met by district heating mainly based
on Combined Heat and Power production (CHP). The remaining
part is mostly heated by individual boilers based on oil, natural gas
or biomass. By use of advanced GIS models, the cost of connecting
different parts of the remaining buildings has been identified. The
based on the Danish building register with a heat district model
maintained by the Danish energy authorities. The specific models
and applications are described further in [43,44].
For 2006, the total house heating consumption has been iden-
tified as 60.1 TWh/year, of which 27.9 TWh are supplied from
district heating and 32.2 are supplied from individual boilers and
heaters. According to the GIS model, the net end-use heating
demand has been defined as 94–95 per cent of the energy delivered
per house, since a small loss in heat exchangers was included in the
estimate. Calculated in such a way, the heat demand equals more or
less exactly the net heat demand of 28.4 TWh/year of the Danish
energy statistics. In the analysis described in the following, the data
have been adjusted to match the energy statistics.
Compared to the situation in 2006 as described above (and in
the following referred to as the reference situation), the following
scenarios of potential expansion of district heating were defined
and identified:
- Scenario 1: All buildings within areas defined as existing or
planned district heating areas are connected to the system,
which increases the district heating demand from 27.9 to
31.6 TWh/year.
- Scenario 2: All areas supplied by natural gas for individual boilers
in direct vicinity of existing DH areas are converted to DH, which
increases the share further from 31.6 to 37.6 TWh/year.
- Scenario 3: Further natural gas areas up to a distance of 1 km
from existing areas are converted to DH, which increases the
share from 37.6 to 42.3 TWh/year.
The three scenarios are compared to the reference in Fig. 1.
The net heat demands of Fig. 1 have been converted into district
heating including grid losses and fuel demands and, at the same time,
adjusted to the data of Danish energy statistics as shown in Fig. 2.
2.2. Modelling of present and potential future Danish energy
systems
The analysis of district heating versus various kinds of individual
heating has been carried out with regard to the present energy
system from 2006 as well as potential future energy systems
leading to a vision of an energy supply based on 100 per cent
renewable energy. The energy system analysis of the complete
Danish energy system has been carried out by means of the Ener-
gyPLAN model [45,46]. This model, which has been developed at
Aalborg University, can be freely accessed from the website www.
energyplan.eu. On the same website, one can find links to docu-
mentation, journal papers and a training programme. Fig. 3 shows
an overview of the model.
EnergyPLAN is described and compared to other models in [47].
The main purpose of the model is to assist the design of national or
regional energy planning strategies and encompass the whole
 H. Lund et al. / Energy 35 (2010) 1381–1390 1383

Fuel and district heating demand cost and a number of optional different regulation strategies
100 emphasising import/export and excess electricity production.
Outputs are energy balances and resulting annual productions, fuel
80 consumption, import/export of electricity, and total cost including
income from the exchange of electricity.
60 First, the energy system model was calibrated in order to adjust
TWh/year

it to the output of Danish energy statistics from 2006 as well as

a Business As Usual (BAU) projection made by the Danish Energy
40
Agency (17 January 2008). Compared to the present situation, the
future energy systems include more wind power, heat savings and
20 better CHP and power plants, etc., as illustrated in Table 1, in which
the Danish governmental vision of 100 per cent RES is reached by
- the year 2060 by implementing the following changes:
Year 2006 100% + Ngas + Ngas up to 1
connection adjoining areas km from exist.  Energy consumption from oil and natural gas production in the
existing areas DH
Danish North Sea is terminated.
Reference Scenario1 Scenario2 Scenario3  Fuel demands on CHP and power plants are converted to biogas
and/or hydrogen.
 Fuel demands for boilers are converted to biomass such as
Indiv. Biomass
straw and/or wood.
Indiv. Oil boiler
 The fuel demands of the industry are cut by 50 per cent and
Indiv. Ngas boilers
converted to biogas and/or biomass.
DH (large CHP)
 Individual heating is converted to biomass boilers (in the
DH (small CHP)
reference scenario).
DH (boilers)  Diesel for transport is replaced by bio petrol in the ratio 1:1.
 Petrol for transport is replaced by electricity in the ratio 3:1.
Fig. 2. Fuel and district heating demands (including grid losses, heat transfer loss and
degree of efficiency) in the three scenarios when adjusted to Danish energy statistics.
In such a 100 per cent RES vision, 66 TWh of biomass divided
into 31 TWh biogas/syngas, 24 TWh bio petrol and 11 TWh solid
energy system including heat and electricity supplies as well as the biomass is needed in addition to wind power (27 TWh) and waste
transport and industrial sectors. (15 TWh). However, in return, an excess electricity production of
The model is a deterministic input/output model. General inputs 5.6 TWh/year is created. Such excess production can be exported
are demands, renewable energy sources, energy station capacities, or it may be converted into hydrogen and thus reduce the

Fig. 3. Illustrations from the user interface of the EnergyPLAN model and a flow chart of the connections between the technologies in the model.
1384 H. Lund et al. / Energy 35 (2010) 1381–1390

Table 1
Overview of 100% Renewable Energy Scenario.

Present Year 2006 2020 2040 2060

Tentative RES share (per cent) 100%

Reductions in space heating – 25% 50% 75%
Power plan efficiencies 39% 42% 45% 50%
- and CHP efficiencies (el/th) 35%/48% 38%/50% 40%/50% 45%/45%
Wind power in % of 2006 electricity demand 16% 33% 50% 75%
Electricity savings in % – 10% 20% 30%
Share of electricity in transport – 10% 30% 50%

demand for biogas by approx. 4 TWh. In the scenario, it has been
chosen to add the capacity of electrolysers of 1000 MW resulting
in a hydrogen production of 3.2 TWh/year and reducing the
biomass demand to approx. 64 TWh. Including waste, the total
demand for biomass resources adds up to 80 TWh/year, similar to
290 PJ/year. Such demand for biomass resources is within the
magnitude of domestic Danish resources, which has been esti-
mated at between 165 and 400 PJ/year, depending on the inclu-
sion of energy crops [31].
It must be emphasised that the scenario described above by no
means represents a comprehensive identification of the optimal
solution of a Danish 100 per cent renewable energy system. Here,
the scenario solely serves as a proper framework for analysing
whether conclusions with regard to district heating in the present
system will also be valid in a probable future 100 per cent renew-
able energy system. The focus is on the framework conditions
related to heat supply, and the scenario is not comprehensive with
regard to the transport and industrial sectors.
In the analysis, special attention has been paid to the hourly
modelling of district heating demands in relation to reductions in
the demand for space heating. The starting point is the annual
district heating demand in 2006 of 35.77 TWh, divided into a net
heat demand of 28.35 TWh and grid losses of 7.42 TWh. Such
a demand has been subject to a typical hourly distribution, as
shown in Fig. 4. In the scenarios of reduced space heating demands,
the shape of the duration curve as well as the hourly distribution
have been adjusted, as shown in Fig. 5 in the case of a 75 per cent
reduction in the space heating demand. In such a case, the grid loss
and demand for hot water have not been adjusted in the same way
as the space heating demand.
2.3. Alternative options of heating houses
The analysis defines and compares the 10 following heating
technologies:
Ref.: Existing individual oil, natural gas and biomass boilers.
HP-gr: Individual heat pumps using ground heat including
electric heating for peak load assuming an average co-efficiency of
performance (COP) of 3.2. (In the case of space heat reductions, the
COP decreases due to an increasing share of hot water demands to
3.1 at 25 per cent savings, 3.0 at 50 per cent savings and 2.8 at 75
per cent savings, respectively.)
HP-air: Individual heat pumps using air including electric
heating for peak load assuming an average COP of 2.6. (In the case
of savings reduced to 2.5, 2.4 and 2.3).
EH: Individual electric heating with an efficiency (COP) of 1.
MiCHP: Individual fuel cell natural gas micro CHP units with an
electric output of 30 per cent and a heat production of 60 per cent.
The CHP unit supplies 60 per cent of the peak demand. The rest is
covered by a natural gas boiler.
H2-CHP: Individual micro CHP based on hydrogen assuming 45
per cent electric and 45 per cent heating output. The CHP unit
supplies 60 per cent of the peak demand. The rest is covered by
a boiler. Hydrogen is supplied via a gas pipeline system and
produced on electrolysis assuming an efficiency of 80 per cent. The
system makes use of hydrogen storage equal to one week’s average
production.
DH-Ex: District heating without investing in new production
units apart from increasing the capacity of peak load boilers.
DH-chp: District heating in combination with expanding the
CHP capacity on existing CHP plants.
DH-HP: District heating in combination with adding large-scale
heat pumps to the CHP plants assuming a COP of 3.5.
DH-EH: District heating in combination with adding electric
boilers to the CHP plants.
The reason for including the different district heating alterna-
tives is that the present situation, with increasing unbalances in
the electricity supply caused by wind power and CHP, calls for
solutions like heat pumps and electric boilers in order to increase
the flexibility of the system. These different district heating
alternatives are only used for the present system of 2006. In the
future scenarios of 2020, 2040 and 2060, it is assumed that a good
balance between CHP units, heat pumps and peak load boilers has
been implemented and that, consequently, an increase in district
heating has been followed by a marginal increase in all three types
of units.

Hourly distribution of district heating demand

Hourly distribution of district heating demand after 75% reductions in space heating
in the present year 2006 situation 2,50
Relative compared to

3,00
2,00
Relative compared to

2,50
average

1,50
2,00
average

1,50 1,00
1,00 0,50
0,50 0,00
0,00 1 1001 2001 3001 4001 5001 6001 7001 8001
1 1001 2001 3001 4001 5001 6001 7001 8001 Timer
Timer hour distribution duration curve
hour distribution duration curve
Fig. 5. Hourly distribution of district heating demand in a situation in which space
Fig. 4. Hourly distribution of district heating demand in the present 2006 situation. heating demands have been reduced by 75 per cent.
 H. Lund et al. / Energy 35 (2010) 1381–1390 1385

Table 2
Cost of individual heat technologies for a typical house with a 15 MWh/year heat demand. For scenarios with reduced space heating demand the cost has been reduced.

Heat prod. Technology Unit Central heating Storage/Electrolyser O&M (fixed) EUR/year O&M (fixed) % of invest
Oil boiler EUR/unit 6000 5400 1300 320 2.5%
Lifetime (year) 15 40 40
Biomass boiler EUR/unit 6700 5400 1300 380 2.8%
Lifetime (year) 15 40 40
Natural gas boiler EUR/unit 4000 5400 200 2.1%
Lifetime (year) 15 40
Micro FC CHP on natural gas EUR/unit 6700 5400 330 2.8%
Lifetime (year) 10 40
Micro FC CHP on Hydrogen EUR/unit 6000 5400 2700 270 2.4%
Lifetime (year) 10 40 15
District heating excl. pipes EUR/unit 2000 5400 70 0.9%
Lifetime (year) 20 40
Electric heating incl. hot water EUR/unit 1100 2700 30 0.9%
Lifetime (year) 20 40
Heat pump Ground heat EUR/unit 13400 5400 110 0.6%
Lifetime (year) 15/40 40
Heat pump Air EUR/unit 6700 5400 110 0.6%
Lifetime (year) 15 40

2.4. Investment, operational and fuel costs
The cost estimate is based on a simple calculation of saved fuel
and maintenance cost compared to additional investment cost by
use of a real interest of 3 per cent. The cost of individual solutions is
based on an estimate of actual prices in Denmark as shown in
Table 2. The prices apply to a typical average house with a heat
demand of 15 MWh/year. The prices shown in the table relate to the
present level of heat demand and have been reduced in scenarios of
reduced heat demands. Electrolysers for hydrogen production are
assumed to be community installations equal to an investment cost
of 20,000 DKK per household. For heat pumps based on ground
heat, the heat pumps have an expected lifetime of 15 years while
the ground heat source pipes have a lifetime of 40 years.
For electric heating and heat pumps, an increased cost of
expanding the electric grid has been included based on the
following estimate: Investments in low-voltage grids account for
0.1 DKK/kWh and the increase in peak load production is included
as an additional demand for transmission and production, corre-
sponding to 8000 DKK/kW for a lifetime of 30 years.
The cost of increasing district heating from the calculation of the
scenarios done by the GIS model is shown in Table 3 together with
the cost assumption of additional production units that have to be
added if district heating demands are increased.
Fuel cost is analysed on the basis of world market prices added
the cost of transporting the fuels to the relevant end users. Three
world price levels were identified equivalent to oil prices of 55, 85
and 115 USD/barrel as shown in Table 4. With reference to the
Danish energy authorities, the Danish price of natural gas has
been set to 62 per cent of the crude oil price. With regard to
biomass, the prices have been assumed to follow variations in
coal prices.
The analysis has used the price level of 85 USD/barrel as a base
level with the other two levels added as sensitivity factors.
However, in the future 100 per cent renewable energy scenario in
which no fossil fuels are left, the analysis was based on the high
price level assuming biomass prices equivalent to similar types of
fossil fuels. Consequently, biomass for individual houses is assumed
to have the price of wood chips, while biogas/syngas is assumed to
have a price equivalent to light oil.
The cost calculation does not include external cost related to,
e.g., pollution and health, apart from a CO2 emission trade cost of
23 EUR/ton. With regard to the exchange of electricity on the
Nordic Nord Pool, the analysis is, as a starting point, based on the
expectations of the Danish energy authorities, which state that in
the future the average price level will be 47 EUR/MWh in combi-
nation with CO2 trading prices of 23 EUR/ton. In the energy system
analysis conducted in the EnergyPLAN model, such an average price
has been distributed on an hourly basis using the hourly distribu-
tion of the year 2005, as shown in Fig. 6. The year 2005 represents
a typical average year.
3. Results
The analysis has been carried out for the present system as well
as for the potential future energy systems of 2020 and 2060.
3.1. Results in the present 2006 energy systems
As a first result, a comparison of the consequences of applying
the 10 different heating options to scenario 1 is shown. This
scenario involves the houses within district heating areas that at
present are not connected to the network. The resulting fuel
demand of each option is illustrated in Fig. 7.

Table 3
Cost of expanding district heating networks and of adding production units.

Unit Investment MEUR Lifetime O&M (fixed) Percent O&M (variable) EUR/unit
Year of investment
Peak load boilers 0.15 pr. MW-th 20 3% 0.15 EUR/MWh-th
Small CHP plants 0.95 pr. MW-e 20 1.5% 2.70 EUR/MWh-e
Large CHP plants 1.35 pr. MW-e 30 2% 2.70 EUR/MWh-e
Heat pumps 2.70 pr. MW-e 20 0.2% 0.27 EUR/MWh-e
Electric boilers 0.15 pr. MW-e 20 1% 1.35 EUR/MWh-e
District heatingScenario 1 1070 in total 40 1% 0
District heatingScenario 1 4430 in total 40 1% 0
District heatingScenario 1 10,470 in total 40 1% 0
1386 H. Lund et al. / Energy 35 (2010) 1381–1390

Table 4 Fuel consumption

Fuel price assumptions (EUR/GJ).
(Scenario1 in DK-2006 closed system)
EUR/GJ Crude Coal Natural Fuel Light oil Petrol Biomassb 15
oila gas oil diesel JP Biomass Oil
55 $/barrel 6.6 1.6 4.0 4.6 8.2 8.7 2.4/6.0 Ngas Coal
85 $/barrel 10.5 2.4 6.4 7.4 13.2 14.0 3.2/8.1 10
115 $/barrel 14.4 3.2 8.9 10.1 18.0 19.1 4.0/10.1

TWh/ year
a
Exchange rate 0.72 EUR/USD.
b 5
Esqual to prices of straws on power plants and wood chips at individual houses.

0
Fig. 7 is to be read in the following way: In the reference (pillar

h
r

hp
x
EH

HP
1, Ref), the houses of scenario 1 are supplied by heat from indi-

Re

i
-g

-h
-e

-e
-a

-c
HP

-C

DH
DH

DH
iC
HP

DH
vidual boilers based on oil, natural gas or biomass. The resulting -5

H2
fuel demand is 5.25 TWh/year. If the supply of all houses was
converted to heat pumps (pillar 2 and 3, HP), the resulting fuel Fig. 7. Fuel demands of 10 options of supplying scenario 1 houses with heat.

demand of the system would be reduced to 2.55 or 2.23 TWh/

year, respectively. Such conversion would replace the fuel demand
in individual boilers by a demand for electricity which would
mostly be produced by coal-fired power plants because of the
price relation between coal and natural gas. However, such an
electricity demand would also increase the possibility of utilising
existing CHP plants (coal as well as natural gas) in a better way. In
principle, the same would be the case if electric heating supplied
all buildings (pillar 4, EH). However, the fuel demand would
increase to 8.44 TWh/year due to the inefficiency of electric
heating compared to heat pumps. A very small amount of biomass
is saved for the reason that CHP plants can be operated more and
can save fuel on peak load boilers of which some are fuelled by
biomass.
If the supply of all buildings is converted to micro CHP on
natural gas (pillar 5, MiCHP), the demand for natural gas increases
and the demand for coal decreases, since the electricity produced
by the micro CHP units saves production at the coal-fired power
stations. Altogether, the net fuel demand is reduced to only
2.95 TWh/year. If, instead, the micro CHP units utilise hydrogen
(pillar 6, H2-CHP), the resulting fuel demand increases to as much
as 12.87 TWh/year because of the demand for electricity for the
electrolysers. Furthermore, the CHP units produce electricity which
saves coal, but the demand for electricity of this alternative by far
exceeds the production. It should be noted that both micro CHP
options assume the existence of a gas distribution network which
has not been included in the cost estimation and which is not
present in most of the areas of scenario 1.
If all buildings are connected to the district heating network in
which they are located (some to small CHP plants fuelled by natural
gas and others to large CHP plants fuelled by coal), the general
picture is that the fuel demand will decrease. This is a consequence
of expanding the use of CHP. If no additional investments are made
in production units, except increasing the peak load boiler capacity,
the fuel demand is 3.20 TWh/year (pillar 7, DH-ex). It can be further
reduced to 2.86 TWh/year if a total CHP capacity of 400 MW-e is
added (pillar 8, DH-chp). If, instead, heat pump capacity is added
(pillar 9, DH-hp), the fuel consumption will be 2.93 TWh/year.
However, in such a situation, due to the price relation between coal
and natural gas, the system will save natural gas at the small CHP
units and increase the electricity production at the large coal-fired
plants. In this case, investing in electric boilers (pillar 10, DH-eh)
will result in the same fuel demand as investing in peak load
boilers. This is caused by the design of the present system which
will result in almost no cheap excess electricity production.
In Fig. 8, the CO2 emissions are shown for the same analysis. As
can be seen, the overall picture is the same as for the fuel demand.
The exception is micro CHP based on natural gas that shows
a remarkable reduction in CO2 emissions. This is caused by the
combined effect of increasing CHP while, at the same time,
replacing coal by natural gas.
In Fig. 9, the cost is shown for the same analysis. Again the
overall picture is very much the same. The district heating solutions
are among the cheapest options and the high cost of district heating
networks is not dominating when compared to the total costs of all
options.
The same calculations have been made for all three district
heating scenarios, and the results show the same overall picture in
all cases. However, the cost effectiveness of district heating
decreases along with increased cost in the district heating network
in scenarios 2 and 3 compared to scenario 1. Gradually, the heat
pump option becomes competitive with the district heating
solutions.

Hourly distribution of the

Nord Pool electricity prices year 2005
1000 Net CO2 emission
(Scenario1 in DK-2006 closed system)
800
5
DKK/MWh

600 CO2
4
Mio.ton/year

400
3
200
2
0
1 1001 2001 3001 4001 5001 6001 7001 8001 1
Hours 0
f

h
r

hp
x
EH

HP
Re

i
-g

-e

-h

-e

hour distribution duration curve

-a

-c
HP

-C

DH

DH

DH
iC
HP

DH
M

H2

Fig. 6. Hourly distribution and duration curve of Nord Pool spot market prices in year
2005. Fig. 8. CO2 emission of the 10 heating options applied to scenario 1.
 H. Lund et al. / Energy 35 (2010) 1381–1390 1387

Costs Fuel consumption

(Scenario1 in DK-2006 closed system) (Scenario1 in DK-2020 closed system)
5000 12
Excess Ngas
4000 10
Biomass Oil Coal
Mio.DKK/year

3000 8

TWh/ year
6
2000
4
1000
2
0
0
f

ir

P
r

h
hp
x
EH

HP

-1000
Re

-g

-e

-h

-e
Ref HP-gr HP-air EH MiCHP H2-CHP DH
-a

-c
HP

-2
-C

DH

DH

DH
iC
HP

DH
M

H2

Fuel Inv-grid Net CO2 emission

Inv-radiator
(Scenario1 in DK-2020 closed system)
CO2 4
O&M Inv-prod CO2
3

Mi o.ton/year
Fig. 9. Total annual cost of the 10 heating options applied to scenario 1.
2

3.2. Results in the future 2060 renewable energy systems 1

Next step has been to make the same calculations for the 100 0
per cent renewable energy system in the year 2060. The results are Ref HP-gr HP-air EH MiCHP H2-CHP DH
shown in Fig. 10. Here, the district heating option has been calcu-
lated for only one solution, since it is expected that a suitable Costs
combination of heat pumps, CHP units and peak load boilers has (Scenario1 in DK-2020 closed system)
4000
already been established in the future. Consequently, the district
heating option involves a coordinated investment in an expansion
3000
of all three types of production units.
Mi o. DKK/ year

In the 100 per cent renewable energy system, the expansion of

2000
wind power leads to an excess electricity production of 3.2 TWh.
The energy system analysis includes the factor that such excess 1000

0
Fuel consumption Ref HP-gr HP-air EH MiCHP H2-CHP DH
(Scenario3 in DK-2060 100% RES system) -1000
15 Fuel O&M Inv-radiator
Excess Biomass Biogas
12 CO2 Inv-grid Inv-prod

9 Fig. 11. Fuel, CO2 and cost in a future 2020 system without exchange of electricity.
TWh/ year

3 production is utilised better by some of the heating options than

others. Moreover, it should be highlighted that the space heating
0 demand has decreased by as much as 75 per cent.
Ref HP-gr HP-air EH MiCHP H2-CHP DH Compared to the present 2006 system, the overall picture
-3
changes in the direction that electricity consuming options (electric
heating and heat pumps) improve, while electricity producing
Cost
options (CHP) deteriorate. In general, this is caused by the excess
(Scenario3 in DK-2060 100% RES system)
15000 electricity production from wind turbines. It should be emphasised
Fuel DH/grid Production that the ability of the hydrogen FC option depends on the hydrogen
Mi l li on DKK/ year

12000 O&M central heating storage, which has been defined here as an electrolyser capacity of
3200 MW-e in combination with a hydrogen storage of 200 GWh,
9000
corresponding to the production of approximately 14 days.
6000 Electric heating seems to have a low cost. However, the fuel
demand is high and, consequently, such an option is extremely
3000 sensitive to shifting fuel prices. Moreover, such a solution puts
pressure on the need for biomass and other renewable energy
0
sources.
Ref HP- HP-air EH MiCHP H2- DH
Consequently, the best solutions again seem to be individual
ground CHP
heat pumps and district heating, while individual CHP options do
Fig. 10. Fuel demands and total cost of different heating options of scenario 3 seen in not seem to be desirable neither in terms of fuel efficiency nor from
a future 100 per cent RES system year 2060. an economic point of view.
1388 H. Lund et al. / Energy 35 (2010) 1381–1390

Fuel consumption as well as electricity prices on the international market. Conse-

(Scenario1 in DK-2020 open system) quently, a sensitivity analysis has been conducted using low
12 (55 USD/barrel) and high (115 USD/barrel) oil price levels. With low
Exchange Biomass electricity prices, the import decreases to 1.0 TWh and the export
10
Ngas Oil Coal increases to 10.5 TWh; while in the case of high fuel prices, the
8
import increases to 5.2 TWh and the export decreases to 3.6 TWh.
TWh/year

6 However, in both cases, Danish society makes a profit of 40 or 60

4
MEUR, respectively.
In [31], a comprehensive study was conducted including typical
2 variations in dry, wet and normal years with regard to the water
0 levels of the Nordic hydro power plants in Norway and Sweden.
Ref HP-gr HP-air EH MiCHP H2-CHP DH Moreover, the study included changes in fuel prices as well as in the
-2
CO2 emission trading cost. The study showed that Danish society
Net CO2 emission will make a profit in all cases if an exchange was made, compared to
(Scenario1 in DK-2020 open system) a closed system without trade of electricity, which thus confirms
4
the analysis of this study.
Foreign
3
In the present study, the impacts of district heating have been
Domestic
calculated in a closed system as well as in an open system for the
Mio.ton/year

2 year 2020. However, this study is not as comprehensive as the

former one [31], as it includes only one fuel price level. The results
1 of the closed system (without exchange) are shown in Fig. 11.
In Fig. 12, the same results are shown in the case of including
0
exchange of electricity on the international Nord Pool market.
Ref HP-gr HP-air EH MiCHP H2-CHP DH
-1
Basically, the overall picture is the same. However, in the case of an
open system, changes in electricity demand primarily influence
Costs import/export; while in the case of the closed system, the same
(Scenario1 in DK-2020 open system) changes primarily influence the production on the coal-fired power
4000 plants. In the case of electricity consuming heating options (heat
pumps, electric heating and hydrogen CHP), the net import
3000 increases; while in the case of electricity producing options (Micro-
Mio.DKK/year

CHP), the net export increases. The model is not able to identify the
2000
consequences in terms of CO2 emissions outside Denmark. Such
CO2 emissions are shown in Fig. 12, assuming an equivalent
1000
production on the marginal unit in Denmark, i.e. a coal-fired power
plant.
0
The total cost does not change much. Still, the cost increases for
Ref HP-gr HP-air EH MiCHP H2-CHP DH
-1000 electric heating and hydrogen. This is due to the fact that the
Exchange CO2 Inv-grid Fuel increases in electricity demand for those options hinder better
O&M Inv-radiator Inv-prod alternatives of exchange. For district heating and micro CHP, the
cost is slightly lowered for the same reason.
Fig. 12. Analysis in a year 2020 energy system with electricity overflow and without
electricity trade. 4. Conclusion

Today, 46 per cent of the Danish net heat demand is met by

3.3. Results in the future 2020 energy system
As a final step, the heating option was also analysed in a future
2020 system with a 25 per cent reduction in the space heating
demand; 33 per cent wind power; 10 per cent savings in electricity
demands, and 10 per cent of the transport sector converted to
electric vehicles. Moreover, the incineration of waste has been
increased from 10 TWh in 2006–12 TWh in 2020. Like in the 100
per cent renewable energy system, only one district heating option
has been analysed. However, for 2020, the option has been analysed
in a system both with and without exchange on the Nord Pool
electricity market in order to identify its influence on the conclu-
sions. In the closed system, an excess electricity production of
0.48 TWh arises in the reference system. In the open system, such
excess production is exchanged leading to market prices varying
between 0 and 54 EUR/MWh with an average of 39 EUR/MWh.
In the open system, the energy system modelling estimates an
exchange of 6.2 TWh of export and 3.2 TWh of import based on the
85 USD/barrel price level. Compared to the closed system, Danish
society will make a profit of 36 MEUR/year. It must be emphasised
that such estimation of exchange by nature depends on fuel prices
district heating. It has been analysed whether to expand to (1) 53
per cent by connecting buildings within existing areas of district
heating; (2) 63 per cent by adding buildings in neighbouring areas
which today are mostly supplied by natural gas, or (3) 70 per cent
by additionally adding buildings within a distance of up to 1 km
from existing district heating areas.
Today, the buildings in these areas are supplied by heat from
individual boilers based on oil, natural gas or biomass. Compared to
such a reference, the analysis shows that a substantial reduction in
fuel demands and CO2 emissions as well as cost can be achieved by
converting to district heating. Such a conclusion seems to be valid
in the present energy systems as well as in a future scenario aiming
at a 100 per cent renewable energy supply in 2060, even if the space
heating demand is reduced to as much as 25 per cent of the present
demands.
However, other options than boilers exist, which have also been
analysed, i.e.:
- Micro-CHP based on fuel cells on hydrogen. Such a solution
does not seem to be able to reduce fuel demands, CO2 emis-
sions or cost, neither in the present system nor in a future 100
 H. Lund et al. / Energy 35 (2010) 1381–1390
per cent renewable energy system. The efficiency is simply too
low and the cost too high. Moreover, better and more cost-
effective solutions can be found to deal with the problem of
excess electricity productions from wind power and CHP.
- Micro-CHP based on natural gas seems to be an efficient way to
reduce fuel demands and especially CO2 emissions in the short
term. CO2 emissions are reduced both by expanding CHP and
by converting from coal to natural gas in the overall system.
The solution is, however, very expensive compared to district
heating because of the substantial investments in micro CHP
units in various buildings. In the long-term perspective, in
a 100 per cent renewable energy system, the solution is not
competitive with regard to fuel, CO2 emission and cost reduc-
tion compared to district heating and not even compared to
individual boilers based on biomass.
- With the high oil and gas prices of 2008 and, at the same time,
low coal and Nord pool electricity prices, electric heating is
a socio-economically reasonable alternative mainly because of
the saved central heating system cost. In the short term, this is
not valid for houses which already have central heating. And in
the long-term perspective, electric heating is bad for fuel
demands and CO2 emissions. Moreover, this alternative becomes
very sensitive to potential increases in future fuel demands.
- Individual heat pumps seem to be the best alternative to
district heating. In the short term, heat pumps are to be found
at the same level as district heating in terms of fuel efficiency,
CO2 emissions and cost. The cost is a little higher close to the
district heating system but a little lower in houses further
away. In the long-term perspective, in a 100 per cent renewable
energy system, the fuel efficiency is high and, with regard to
cost, the solution is more or less equal to district heating.
However, it is highly dependent on the distance to existing
district heating grids.
To all the alternative options it is relevant to add solar thermal
energy. However, this option has not been included in the analysis
presented here. However, in an additional scenario, a potential of up
to 4 million m2 of large-scale solar heating panels for district heating
was identified, which will be competitive and can produce heat at
around 20 per cent of the cost of individual solar heating panels [48].
In an overall perspective, the conclusion seems to be that the
best solution will be to combine a gradual expansion of district
heating with individual heat pumps in the rest of the areas. The
analysis indicates that the optimal solution will be to expand
district heating from the present 46 per cent to somewhere
between 63 and 70 per cent.
It must, however, be emphasised that the analysis is based on
a gradual improvement of district heating technologies, imple-
menting among other initiatives a decrease in temperature in
combination with a reduction in space heating demands including
a reduction in the consumers’ return temperature. Therefore, it is
crucial to continue the present development in such a direction.
Moreover, the expansion of district heating will help utilise heat
production from waste incineration and industrial excess heat
production which has been included in the analysis. On the other
hand, district heating also helps the integration of the following
technologies, which were not included in the study:
- geothermal heating
- biogas production (supply of heat)
- solid biomass such as straw.
Subsequently, the strategy of this paper has been analysed in an
overall energy plan for the whole of Denmark including the above-
mentioned technologies [49].
1389
Acknowledgements
The work presented in this paper is an essential part of a recent
R&D study, Heat Plan Denmark, elaborated by Aalborg University
and Ramboll and financed by the district heating consumers’ R&D
fund. Moreover, it is a result of the research project Coherent
Energy and Environmental System Analysis (CEESA), partly
financed by The Danish Council for Strategic Research.
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