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Restructured district heating price models and their impact on district heating users
Mälardalen University, School of Business, Society and Engineering, Future Energy Center. (Research school REESBE)ORCID iD: 0000-0002-4720-548X
2017 (English)Licentiate thesis, comprehensive summary (Other academic)
Abstract [en]

District heating (DH) is considered to be an efficient, environmentally friendly and cost-effective method for providing heat to buildings, since electricity is usually co-generated in biomass fuelled combined heat and power (CHP) plants. This gives it an important role in the mitigation of climate change. Swedish district heating companies are currently facing multiple challenges, and are in urgent need of new price models to increase transparency and maintain their competitiveness.

This thesis describes a survey carried out to understand the structure of the present price models and subsequently proposes and compares two restructured price models with the most commonly used price model. This work also investigates the impact of restructured price models on users who would encounter a significant cost increase if the restructured price models were to be introduced. The district heating costs of different price models are compared with three alternative technical solutions.

The results show that price models based on the consumption pattern of users can reflect district heating companies’ cost structure. Meanwhile, adopting a pricing strategy based on users’ consumption patterns increased the incentives to reduce the peak load.

Consequently, users with high load factor (flat consecutive load curve) were able to reduce costs whereas users with low load factor (steep consecutive load curve) faced possible cost increases, when the load demand cost was changed to daily or hourly peak demand based methods. Further, the most economically preferable option for the invested district heating user was to combine district heating with direct electrical heating or with a ground source heat pump.

Abstract [sv]

Fjärrvärme anses som ett effektivt, miljövänligt och kostnadseffektivt sätt för att leverera värme eftersom kraftvärme blir vanligare i fjärrvärmesystem, där elektricitet produceras tillsammans med värme. Den spelar en viktig roll i att begränsa klimatförändringen. Svenska fjärrvärme företag står inför flera utmaningar nu för tiden, och är i akut behov av nya prismodeller för att öka öppenheten och behålla konkurrenskraften.

I denna avhandling, genomfördes en undersökning för att ta reda på strukturen av de nuvarande prismodellerna. Därefter föreslogs två omstrukturerade prismodeller, vars påverkan på kostnaden av fjärrvärme konsument analyserades jämför med den nuvarande modellen.

Detta arbete undersökte också effekten av omstrukturerade prismodeller på konsument som skulle drabbas på signifikant kostnadsökning i samband med införande prismodeller. Kostnaden av fjärrvärme under olika prismodeller har också jämförts med tre olika tekniska lösningar.

Resultatet visade att prismodeller som baserar sig på konsuments förbrukningsprofil kunde återspegla fjärrvärme företagens kostnadsstruktur; Samtidigt medförde prissättningsstrategi baserad på användarens förbrukningsprofil högre incitament för att minska spetseffekt.

Följaktligen kommer att konsumenter med stabila konsumtionsprofiler att spara kostnader, medan konsumenter med spetsiga konsumtionsprofiler kommer att drabbas av kostnadsökning. Och för den investerade fjärrvärme konsument, den ekonomiska bättre val var att kombinera fjärrvärme med elpanna eller bergvärmepump.

Place, publisher, year, edition, pages
Västerås: Malardalen University , 2017.
Series
Mälardalen University Press Licentiate Theses, ISSN 1651-9256 ; 251
Keyword [en]
district heating, restructured price model, price model survey, pricing strategy, consumption profile, consumption pattern, alternative cost
National Category
Energy Systems
Research subject
Energy- and Environmental Engineering
Identifiers
URN: urn:nbn:se:mdh:diva-34779ISBN: 978-91-7485-311-7 (print)OAI: oai:DiVA.org:mdh-34779DiVA: diva2:1072105
Presentation
2017-03-16, Case, Mälardalens högskola, Västerås, 13:00 (English)
Opponent
Supervisors
Funder
Knowledge Foundation
Available from: 2017-02-07 Created: 2017-02-03 Last updated: 2017-03-08Bibliographically approved
List of papers
1. Price models of district heating in Sweden
Open this publication in new window or tab >>Price models of district heating in Sweden
2015 (English)In: Energy Procedia, ISSN 1876-6102, E-ISSN 1876-6102, Vol. 88, 100-105 p.Article in journal (Refereed) Published
Abstract [en]

Traditional pricing scheme of district heating is based on previous experience of system operation. This strategy does not work well under the circumstances of decreasing demand and shifting consumption pattern. Therefore new pricing strategies are needed. To have a comprehensive view on existing price models in Sweden, a price model survey was carried out among all members of the district heating quality system REKO. Four basic price components and multiple variants of them are detected in the survey. The result also shows that most of the district heating companies still use traditional methods and do not consider their customers’ consumption pattern while charging them.

Keyword
District heating, price model, model survey, price component
National Category
Energy Systems
Research subject
Energy- and Environmental Engineering
Identifiers
urn:nbn:se:mdh:diva-29824 (URN)10.1016/j.egypro.2016.06.031 (DOI)000387975200016 ()2-s2.0-85007574096 (Scopus ID)
Conference
Applied Energy Symposium and Summit on Low-Carbon Cities and Urban Energy Systems, CUE 2015; Fuzhou; China; 15 November 2015 through 17 November 2015
Available from: 2015-11-30 Created: 2015-11-30 Last updated: 2017-02-07Bibliographically approved
2. Cost comparison between district heating and alternatives during the price model restructuring process
Open this publication in new window or tab >>Cost comparison between district heating and alternatives during the price model restructuring process
2017 (English)In: Energy Procedia, ISSN 1876-6102, E-ISSN 1876-6102, Vol. 105, 3922-3927 p.Article in journal (Refereed) Published
Abstract [en]

District heating (DH) has been considered as a resource- and cost-efficient way of supplying heat and a promising method to mitigate climate change, yet it also facing growing competition from alternative technical solutions, such as heat pumps. Many DH companies are under price model restructuring process to enhance their competitiveness. This study investigated the competitiveness of DH among users which would encounter significant cost increase during the price model restructuring process through comparing the cost of different DH price models with three alternative technical solutions. The result shows that for the invested DH user, instead of DH, the most economic preferable choice is to install ground source heat pump combining with direct electrical heating.

Keyword
alternative cost, District heating, heat pump, price model
National Category
Energy Systems
Identifiers
urn:nbn:se:mdh:diva-33950 (URN)10.1016/j.egypro.2017.03.813 (DOI)2-s2.0-85020703991 (Scopus ID)
Conference
The 8th International Conference on Applied Energy, Beijing, October 8-11 2016
Funder
Knowledge Foundation
Available from: 2016-11-24 Created: 2016-11-24 Last updated: 2017-07-06Bibliographically approved
3. District heating cost fluctuation caused by price model shift
Open this publication in new window or tab >>District heating cost fluctuation caused by price model shift
2017 (English)In: Applied Energy, ISSN 0306-2619, E-ISSN 1872-9118, Vol. 194, 715-724 p.Article in journal (Refereed) Published
Abstract [en]

District heating companies are facing multiple challenges nowadays, including increased investment and maintenance cost and critique from customers regarding opaque price model. Hence there is an urgent need to develop new price models. In this paper, a survey was carried out and identified four basic components in the price model. Three price models that represent the current situation and future trend have been extracted from the survey as well. Based on those price models, investigation was performed to study the impacts of different components in price models on customers’ cost. The result shows that customers with flatter consumption profiles can benefit from the price model that has a higher share of load demand component and use consumers’ real-time consumption data for charging. On the contrary, when a price model that has a higher share of energy component is adopted, customers with flatter consumption profiles may experience an increase in the cost.  

Keyword
District heating, Price model, Cost flucturation, Restructured model
National Category
Energy Systems
Research subject
Energy- and Environmental Engineering
Identifiers
urn:nbn:se:mdh:diva-33958 (URN)10.1016/j.apenergy.2016.09.073 (DOI)000399623600066 ()
Funder
Knowledge Foundation
Available from: 2016-11-24 Created: 2016-11-24 Last updated: 2017-05-19Bibliographically approved
4. SEASONAL DEPENDENT ASSESSMENT OF ENERGY CONSERVATION WITHIN DISTRICT HEATING AREAS
Open this publication in new window or tab >>SEASONAL DEPENDENT ASSESSMENT OF ENERGY CONSERVATION WITHIN DISTRICT HEATING AREAS
2014 (English)In: Proceedings from the 14th International Symposium on District Heating and Cooling, September 7th to September 9th, 2014, Stockholm, Sweden / [ed] Anna Land, Stockholm: Swedish District Heating Association , 2014Conference paper, (Refereed)
Abstract [en]

When housing companies plan for energy conserving renovations, costs and amount of saved energy are usually estimated with yearly mean values. Yet the fuel mix varies widely depending on heat demand of district heating system, often with higher cost and CO2 emission rates during winter than summer.

Instead of comparing different energy conserving measures’ potentials with yearly mean values, it would be beneficial to examine them in a higher resolution, e.g. on daily or monthly basis, to identify real effectiveness of different measures in reducing CO2-emissions and primary energy consumption.

In this study, three energy conserving measures are put into a building simulation model to obtain results of hourly energy consumption reduction, which is then fitted into a district heating optimization model to analyze the impact on district heating system.

This study also discuss the correlation between energy cost for the customer and different measures’ environmental impact under new circumstances: seasonal energy price models of district heating, a price model which introduce price fluctuation throughout a year. This new factor provides a more comprehensive incitement to the property owners to encourage them to make environmental friendly decisions when planning for energy conserving renovations.

Place, publisher, year, edition, pages
Stockholm: Swedish District Heating Association, 2014
Keyword
District heating energy conserving price model co2 evironmental optimazation
National Category
Energy Systems
Research subject
Energy- and Environmental Engineering
Identifiers
urn:nbn:se:mdh:diva-27507 (URN)ISBN 978-91-85775-24-8 (ISBN)
Conference
The 14th International Symposium on District Heating and Cooling, September 7th to September 9th, 2014, Stockholm, Sweden
Projects
Reese
Funder
Knowledge Foundation
Available from: 2015-02-12 Created: 2015-02-12 Last updated: 2017-02-07Bibliographically approved

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