Estimating the value of novel heat sources in district heating systems from the perspective of energy utilities using a merit order approach

Thommessen, Christian and Verheyen, Joana and Roes, Jürgen and Hoster, Harry (2025) Estimating the value of novel heat sources in district heating systems from the perspective of energy utilities using a merit order approach. Applied Energy, 401: 126594. ISSN 0306-2619

Abstract

Integrating waste heat as well as renewable energy sources into district heating systems increases the overall energy efficiency. Despite being aware of this, energy utilities are hesitant due to uncertainties and costs associated with such novel heat sources. To overcome this, the economic benefits are evaluated in this contribution by applying a merit order approach to two real German district heating systems with different, but both conventional as well as novel heat sources. Therefore, the short-term marginal generation costs of the individual technologies are estimated for typical supply scenarios based on both technical and economic parameters. Results show that renewable heat and waste heat often have the lowest generation costs. Furthermore, cost-efficient and low-emission operation options of the district heating systems are identified, in times when the novel heat sources are not available or are temporarily somewhat more expensive than fossil-fired heat generators. By using the merit order approach it is shown that large-scale thermal storages are a key element in the integration of waste heat and renewable heat. Moreover, the importance of renewable electricity to power large-scale heat pumps is discussed. Finally, the results demonstrated by the two case studies in this contribution serve as a motivation to establish the merit order approach for other district heating systems and thus reduce the barriers to the integration of novel heat sources.