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District Heating and Cooling

Annex VII Project 01

The Research / IEA DHC Annexes / 2002-2005 / Annex VII / Annex VII Project 01

A Comparison of distributed CHP/DH with large-scale CHP/DH

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Description of the project

The project will be led by the UK engineering consultant PB Power Ltd Energy Services Division, but will also benefit from experience from Denmark, the Netherlands, Finland and Canada as the proposed team includes sub-consultants: Ramboll, W/E Consultants, VTT, and CANMET. The aim has been to assemble a team of experts which have experience of both large-scale and small-scale CHP/DH systems and with a range of countries with differing energy perspectives.

In the UK there are a number of small-scale CHP installations, typically below 1MW and installed within the buildings that they serve. Larger CHP installations are found mainly in industry and there are relatively few applications of CHP with District Heating. Researchers in the UK have concentrated recently in seeking new approaches to CHP/DH in order to achieve a higher market penetration. The UK has a target for 5,000MWe more CHP capacity and there is much debate about the form this should take. The recent advisory report to the UK Government from the Policy and Information Unit indicates that CHP in individual buildings could play a major role in the future.

Denmark has traditionally been associated with large-scale CHP/DH systems supplied from central power stations. The advent of natural gas in Denmark and the potential identified for renewable sources has led to a diversification of CHP plants and smaller-scale CHP/DH schemes being developed to serve smaller communities.

The Netherlands has the largest capacity of small-scale CHP in Europe and has a strong commitment to maximising the environmental benefits of CHP. It also has a number of large-scale CHP/DH schemes.

Finland has also traditionally been associated with well established large-scale CHP/DH systems although small-scale (less than 20MWe) plants account of 18% of heat supplied from CHP.

Canada has relatively few CHP/DH schemes but has similar concerns to the UK in that there is a need to investigate and determine the best strategies for the future. Many of the recent advances in small-scale CHP, e.g. fuel cells and micro-turbines have taken place in Canada and the USA.

In many countries but particularly the UK where CHP and District Heating has not been widely developed, there is no clear view as to the type of CHP projects that will be developed, even though the Government target is for a further 5,000MWe CHP capacity by 2010. Whilst much of this development may be in industry, some 1000-1500MWe is expected to be in the buildings sector.

There are perhaps two future models of CHP/DH development:

  • the traditional large-scale CHP/DH model where heat is extracted from major power stations and supplied to a large-scale district heating network. Typically the DH network is developed over time with heat only boilers used in the early years. Often the CHP station is some distance from the city and a transmission pipeline is required. To develop the network on this scale requires a strategic commitment to the DH concept and frequently requires some form of Government regulation or legislation. This model has been seen in Scandinavia, Eastern Europe and Korea. Future expansions of these schemes into lower density areas is seen as the next stage in development as well as obtaining maximum market penetration in established areas.
  • The distributed CHP/DH model involves a much larger number of smaller CHP plants, typically below 20MWe, linked to localised heat networks. The CHP plants are likely to be gas-fired or use renewable fuels and will be installed progressively from the start of the scheme often with multiple units. They will generally be operated to follow the heat demand and use a thermal store to maximise the heat utilisation from the plant and target power generation at high price times of the day. A key factor in the economics of such schemes is the price that can be obtained for the relatively small quantity of electricity produced at each site. A host site may be found for the CHP plant so that some electricity can be sold directly to an electricity customer. As the heat networks are smaller, the operating temperatures and pressures are usually lower enabling technological approaches such as low temperature DH, direct connection and plastic DH pipes to be used. This model has been seen in recent years in both Denmark and the Netherlands and is more likely to be the model in the UK given the liberalisation of the energy markets.

The aim of this study will be to review these two models with respect to economic worth, environmental benefits and other impacts. In addition, however, there is increasing interest in the use of CHP installed in individual buildings and this approach is a potential alternative to both of the CHP and District Heating models described above. There have been many CHP projects at sites such as hotels, leisure centres and hospitals and new technologies such as fuel cells, micro-turbines and Stirling engines are being developed to extend the market for such CHP installations even down to the individual household level. The study would therefore be incomplete if it did not take account of these recent developments. It is expected that both of the CHP/District Heating models described above will be superior to the individual building CHP with respect to environmental performance and could also show economic advantages as a result of exploiting diversity of heat demands.

A further CHP/DH model could be considered as an intermediate position between the large-scale and the distributed where Combined Cycle Gas Turbine power plants of the range 30MW to 100MW are installed to supply District Heating schemes. The cost of such plants have reduced in recent years and the advantages of high electrical efficiency and lower maintenance costs are significant. Hence although the comparison of the centralised and distributed CHP/DH models as described above will form the major thrust of the project, the range of possible applications of CHP for buildings will need to cover a continuous spectrum from individual households to whole cities. This research study provides the opportunity for assessing the best strategy for CHP and Buildings and will provide key information for energy planning relevant to many member countries.

The key benefits that the research work will provide are:

  • A summary of the experience gained to date in three contrasting European countries with centralised and distributed CHP/DH and an appreciation of the advantages of this technology as seen in practice
  • A survey of the latest technologies for CHP/DH and how these will be developing into the future
  • A comparison of the economic case for centralised and distributed CHP/DH with non-CHP options and CHP in individual buildings
  • An assessment of the contribution that centralised and distributed CHP/DH can make to environmental improvements and a comparison with CHP installed in individual buildings.

Summary of the final report of the project

District Heating (DH) and Combined Heat and Power (CHP) are now mature and well-established technologies. They are technologies that can deliver lower energy costs, improvements in local air quality and a reduction in CO2 emissions, which will help limit global warming. CHP systems can now be implemented at a wide range of scales from city-wide using District Heating to individual buildings.

Between these two extremes there is a continuum of CHP/DH scales of development. Gas-engines are now being produced at larger sizes up to 8MWe capacity so that, with multiple units, large DH networks can be supplied. In addition, the Combined Cycle Gas Turbine (CCGT) technology is being introduced at progressively smaller scales with a number of designs offered in the 30MWe to 70MWe range.

Energy planners are now faced with such a range of CHP/DH options that there is interest in establishing what scale of CHP/DH would be preferred both with respect to environmental benefits and in terms of overall cost. This report compares CHP/DH systems at four different scales using a generic city model with a population of 350,000. All of the CHP plant were assumed to use natural gas as the main fuel.

The work involved the setting up of models to determine the operation of CHP plant at the different scales to meet the energy demands of the city, using peak boilers and imports or exports from a national electricity grid as required. It was also necessary to estimate the cost of installing DH at each level of scheme and cost correlations with heat density were developed.

The comparison shows that in the whole city case the most economically viable CHP system is the City-wide scenario (at a discount rate of 3.5% real). The City-wide CHP/DH system benefits from a high efficiency, low capital cost, CCGT power plant, which more than offsets the additional costs of constructing a city-wide heat network.

The environmental comparison also shows a clear advantage in moving to the CCGT plant at District or City-wide scale, particularly when compared to the Buildings CHP systems. This is because the CCGT is much more efficient in producing electricity than the smaller units even though electricity and heat distribution losses are higher. Even if all of the buildings were fitted with small-scale CHP systems the overall CO2 reduction would be only 5% compared to a 27% reduction for the City-wide scheme.

It is unlikely that only one CHP solution would be implemented in a given city. For example, in the higher density inner city area, District or Local CHP with DH may predominate and Building CHP could be introduced in the outer city, lower density areas. A city-wide CHP/DH system is most likely to be developed with strong government regulation or legislation in view of the long time scale and the inherent marketing risks for the DH developer.

In the future, these conclusions could change with the advent of fuel cells as, in addition to the low emissions, they offer the prospect of higher electrical efficiencies. At present though, the costs and lifetime of fuel cells are still significant barriers.

This report shows that the overall economic and environmental case for city-wide DH is still strong. In planning new power stations, choosing a location near the edge of a large city could enable major environmental benefits in the future to be realised through District Heating.

Prepared by:
Paul Woods (Parsons Brinckerhoff Ltd, UK)
Oliver Riley (Parsons Brinckerhoff Ltd, UK)
Jens Overgaard (Ramboll, Denmark)
Evert Vrins (W-E, The Netherlands)
Kari Sipilä (VTT, Finland)
Professor Richard Stobart (University of Sussex, UK)
Adam Cooke (University of Sussex, UK)


PB Power Ltd. - Energy Services Division, United Kingdom


University of Sussex, United Kingdom
Ramboll, Denmark
W/E Consultants, The Netherlands
VTT, Finland
CANMET, Canada