Sector-Coupling and Renewable Energy Integration in Low-Carbon District Heating: Perspectives of Economics, Environment and Supply Security

In the face of a global climate crisis, the imperative to reduce carbon emissions throughtransforming our energy infrastructure is paramount. This dissertation focuses on decarbonizing District Heating (DH) systems in Finland by integrating power-to-heat (P2H) technologies, including heat pumps and electric boilers, and renewable energy sources such as wind power, considering diverse energy market scenarios. Given the substantial role of heating in Finland's energy demand and the prevalence of DH systems, this topic is pivotal in meeting both national and international environmental objectives. The study encompasses case studies for Finnish cities, analyzing systems including a mid-sized network reliant on local fuels biomass and high-emission fuel peat and the large-scale networks of Helsinki metropolitan region, still dependent on imported fossil fuels, primarily natural gas and coal. This approach covers environmental and economic aspects, considering the fluctuating global fossil fuel prices and the increasing costs associated with carbon dioxide emissions allowances and fuel taxes. This dissertation evaluates the feasibility of partly electrified DH systems under different market conditions, including periods of low, regular, and high energy market prices, including Europe's 2022 energy crisis. This thesis also explores the technical and economic potential of electrified DH systems in the electricity and various balancing markets across different scenarios through modeling and simulation of the case studies. The findings indicate significant environmental benefits as a reduction in carbon dioxide emissions. However, this transition is not without its challenges. Notably, increased reliance on biomass combustion and electricity market volatility were recognized, potentially leading to further environmental and energy security issues. Economically, while electrification offers protection against the volatility of fossil fuel prices and promises long-term economic advantages, the initial investment and potential increases in consumer heating costs present challenges in the short to medium term. The participation of electrified DH systems in balancing markets could provide additional operational profits, yet complexities of system operation and management require careful consideration. DH systems were found to be resilient even under extreme energy prices, however, shutting down combined heating and power plants (CHP) would result in significant losses in potential electricity market income. In conclusion, the electrification of DH systems in Finland presents a promising pathway towards a sustainable heating sector. However, achieving this goal requires a balanced and integrated approach, incorporating technological innovation, strategic planning, and economic incentives.