Business and socioeconomic assessment of introducing heat pumps with heat storage in small-scale district heating systems

Fossil fuel-based cogeneration of heat and power plants have a long history of supplying district heating in Denmark, however small-scale systems are progressively switching to biomass boilers for economic reasons. Biomass, however, should be reserved for other purposes where a storable fuel is pertinent. This paper investigates the transition of a biomass-based district heating system which is neither socioeconomically optimal nor optimal in terms of integrating fluctuating renewable energy sources or using biomass resources appropriately. First, EnergyPLAN is used to investigate the introduction of heat pumps in terms of the ability to integrate fluctuating renewables and overall system costs. Secondly, optimal business economic design and operation of the district heating plant are analysed using the energyPRO model where plant operation is optimised against an external electricity market. While heat pumps have a positive impact when factoring in the ability to exploit locally available fluctuating renewable energy sources and observing local biomass availability constraints, business economic analyses demonstrate a more uncertain feasibility of the potential switch and also demonstrate that significant flexibility through heat storage and overcapacity on heat pumps does not pay.