Improving the Competitiveness of District Energy

A tailored model for Greater Copenhagen's district heating

Varmelast handles load dispatching of heat production for the greater Copenhagen area, organised as a cooperation between CTR, VEKS and HOFOR, the three largest municipally owned heating companies in the region. Energy Modelling Lab carried out a quantitative impact assessment for Varmelast as part of the Load Distribution based on Contract Prices project, aimed at improving the competitiveness of district heating. The assessment compared the pricing of different load distribution systems to identify the lowest possible heating prices, and the resulting report has been published on Varmelast.dk.

Energy Modelling Lab built TIMES-Varmelast, an optimisation model based on the TIMES framework, to compare a load distribution system based on contract prices against the existing system, which minimises the total costs of running the plants. The model runs at hourly resolution across 8760 hours a year and represents the greater Copenhagen district heating area in detail, across 98 regions covering supply, transmission and demand. The analysis examines the total variable heat payment in 2030 under the two systems, and tests how electricity and fuel price assumptions affect future heat prices and production.

Price based contracts lower costs and prices

Price based contracts for load distribution were found to substantially reduce costs and lower district heating prices compared to the existing cost based system, mainly by ensuring the cheapest production plant is used at any given time. The shift brings a considerable change in production, with decreased output from thermal plants and increased output from heat pumps and electric boilers, and the price based format proved more robust to changes in electricity prices.

A tailored model for Greater Copenhagen's district heating

TIMES-Varmelast was built from scratch within a few weeks, using the TIMES modelling framework to represent load distribution under different pricing systems at hourly resolution, with a detailed representation of the greater Copenhagen district heating area.

Scenarios compare price based contracts for load distribution against the existing total cost based system, with sensitivity analyses testing how electricity and fuel price assumptions affect the results.

The findings are set out in the report ‘Contract Price based Load Distribution: Analysis of the economic implication of load distribution based on contract prices,’ published by Varmelast.

Client: Varmelast

Reference: Peter Folke

Collaborators: Not stated

EML team: Ida Græsted Jensen, Kristoffer Steen Andersen, Julius Lindberg Steensberg

Budget: Not stated

Duration: June to September 2024

Model: TIMES-Varmelast