What role can district heating play in the energy transition?
Heating homes with excess heat from power plants instead of individual boilers seems like a climate no-brainer, but given its historical reliance on coal, does the technology have a place in the clean energy transition?
When Paul Voss, managing director at industry association Euroheat and Power, was first approached about working in district heating for Danish industrial company Danfoss, he said no.
“I had seen a couple of big systems in China and I thought, ‘that is just making heat from coal’,” he recalls. “But then I talked to my brother, and he said, ‘aren’t you aware of what they are doing in Denmark?’ I went to Denmark, and I noticed there were no chimneys in Copenhagen because there is no combustion for heat. I took the job, and ended up falling in love with the technology.”
This is the dichotomy at the heart of district heating’s role in the energy transition. On the one hand, it is a no-brainer that pumping excess heat generated by a power plant or industrial facility around a city to heat people’s homes is good for climate change. On the other hand, these large systems, which were especially popular in Communist countries, were historically mostly fed with coal.
In the age of climate action, cities with these old systems can, in theory at least, boast of lower heating emissions. This is important, given that 50% of global final energy consumption – and 40% of the world’s CO2 emissions – comes from heat. Heating buildings with individual boilers or furnaces is the least efficient way of keeping them warm. One of the most efficient ways is using the excess heat generated by power plants or other sources that would otherwise be wasted.
A combined heat and power (CHP) plant typically has site efficiency (usable energy out divided by energy in) of around 75%. A normal power plant has less than 33%. However, the situation becomes more complicated when thinking about setting up a new system.
Anyone who has lived in an apartment using one of these older systems may be sceptical of considering district heating as a cutting-edge solution to climate change. Often, residents are unable to control the temperature in their own home and when it gets too hot the only solution is to open a window.
Despite these negative connotations, Voss insists district heating can be green and forward-looking. “District heating is just pipes and water – whether it is good for the climate depends what you put into it,” he says. “If you are filling it with coal, there is an energy efficiency gain [compared with home boilers] I suppose, but even that presumes the network is properly designed and maintained.”
The key question, therefore, is whether district heating systems can be fed with renewably generated heat rather than by fossil fuels. The Nordic countries, which get 65% of their heat from district heating, have led the way on this. Sweden, blessed with plentiful hydropower, sources over 70% of its district heating from renewables. Iceland is close to 100%, thanks to its geothermal resources. A total of 70% of the district heating in windy Denmark is from renewables or waste heat. So far, Denmark is the only country with a significant amount of district heating coming from wind and solar installations rather than hydro, geothermal or biomass. The country accounts for a whopping three-quarters of the installed capacity of solar thermal energy in district heating worldwide, according to the International Energy Agency (IEA).
Outside Europe, large district heating systems supplied by renewable energy are almost non-existent. In the US they are, for the most part, only found at small scale on university campuses. The long payback time for capital-intensive investment in district heating has largely stifled its development.
The US is no stranger to the technology, it is just that most legacy systems are supplied by fossil fuels. There are more than 900 district heating systems in North America, largely in city centres. They were first set up at the turn of the century by the Edison electric companies, and many use steam.
“The use of coal for these systems has dramatically declined, and today about 70% of the primary fuel is gas,” says Rob Thornton, president of the International District Energy Association based in Boston, Massachusetts. “That has been largely driven by federal and state air-quality regulations.”
Some smaller towns are, however, looking at other solutions. “A good example is Saint Paul, Minnesota,” says Thornton. “In 1980, they had a coal-fired steam system serving downtown. They converted it first from steam to hot water in the 1980s. Then in 2000, they built a biomass system using wood waste – tree trimmings, not forest wood that would otherwise be timber. They went from 250,000 tonnes (t) of coal a year to all waste wood.” This has reduced CO2 emissions by 27% or 21,000t of carbon, says the city, equivalent to removing 4,400 cars from the road each year.
Chinese “community heat”
China is the world’s biggest user of district heating. In 2015, Chinese district heating consumed more energy than the whole of the UK. Many years ago, the Communist government decided everything north of the Yangtze River would be based on “community heating” run on localised, coal-fired boilers of 50–60MW, dedicated to heat production.
Today, 55% of heating in northern China is supplied by district heating, mostly from coal. The government is interested in reducing emissions from these systems, but it has initially focused on switching the heat-only boilers to CHP boilers to maximise efficiency. Today, CHP accounts for 20% of total electricity production in China.
Danfoss has been working with China to help reduce the significant environmental impact of its district heating systems. “Localised boilers have been taken out of the grids and grids have been connected,” says Anton Koller, divisional president for district energy at the company. “A lot is still connected to coal […] but the proportion that burns only for heating is disappearing. They are moving to CHP, which is now the primary source for district energy in China.”
The next step will be to convert existing pipe systems to non-fossil sources. Koller says there is keen interest from the government. “We have areas in China where they have geothermal and we can also see they plan to use large-scale heat pumps much more.” However, he insists greater energy efficiency is most important for China. “They are at a different level than we are [in Europe],” says Koller. “Most important is getting a metering policy up and running. In China, you pay by surface area, which is not stimulating the right behaviour for energy efficiency.”
An encouraging signal came this month, with new ‘guiding comments’ from the government that say district energy systems should prioritise renewable sources where possible. “This will frame the narrative over the next five years,” says Luke Sherlock, head of China engagement at the C40 Cities climate leadership group. “It talks about geothermal and heat pumps first and foremost, then also talks about biomass, wind and solar, put in the context of when reasonably available.”
It is a start, he says, but China has a long way to go. “It is still almost all coal, apart from Beijing, which is on natural gas, but there are five pilot projects on renewable integration in other cities.”
Given the immense size of China’s district heating network and the low share of renewables in it so far, any increase could have a massive impact on emissions. The recent rise in geothermal use, for example, means China actually has one of the fastest-growing renewable energy district heating networks in the world. According to the IEA, if China fully implements its five-year-plan, it will have the largest global use of renewable district heating in the world by 2024.
Denmark has worked closely with China on these projects, but is the success of non-fossil district heating in resource-rich Scandinavia really replicable in other parts of the world? Koller says yes.
“It is not about abundant resources, it is about technology,” he says. “We are using solar for district energy in Denmark, and Denmark is not known for being the sunniest spot in the world!” He expects that 50% of the world’s heating could come from non-fossil district heating by 2050.
However, others are less confident that current technologies can fully deliver. Matthias Deutsch, a senior associate at German energy think-tank Agora Energiewende, sees two technical barriers to establishing renewables-supplied district heating systems at large scale: space and temperature.
“In Denmark, there is a realisation that small-scale solar thermal on rooftops is different from utility-scale solar thermal,” he says. Denmark is developing “soccer field size” systems that “tremendously” reduce costs per kilowatt-hour of heat, but such big installations are still in development.
It is not about abundant resources, it is about technology. Anton Koller, Danfoss
The high temperature of heat coming from solar power farms also poses a challenge. Yet district heating from wind or solar electricity plants also offers a major advantage – a hot water tank or the thermal inertia of buildings can store heat for later. In theory, heat captured from solar power in the summer could be stored for use in the winter. That, combined with hydrogen, could be an attractive solution.
But Voss says he is sceptical about opening the door to hydrogen as a heating solution. “Our industry position is, if we are going to start talking about using hydrogen for our economy we should be thoughtful about what we are using it for, and the last thing we should be doing is burning it in individual boilers to heat our living rooms. There is no engineering justification for that at all, it is completely bonkers, and the only people saying that are in the hydrogen business.”
However, hydrogen may offer a way to ensure steady supply and temperature consistency if cities start building large district heating systems powered by renewables. It could provide heat when the wind is not blowing or the sun is not shining, or when there is not enough waste heat coming from data centres or giant fridges (the heat from which can be surprisingly variable). However, that might entail setting up new gas infrastructure and that immediately raises concerns in some quarters about fossil fuel lock-in.
A city dilemma
For city managers thinking about what to do with a legacy district heating system, the temptation will be to convert it from coal to gas to reduce emissions without losing heat. The upfront costs would be less than building a renewables installation, the supply steadier and less new space needed.
“We are concerned about the old legacy systems connected to fossil fuels,” says Deutsch. “A big question mark for these systems is whether switching to natural gas should be the default, or whether you could jump directly to one or more renewable elements.” Given that in Germany, many district heating systems have historically run on coal, the question now is how to incentivise CHP plants to “jump over the natural gas solution”, he says.
National regulations can be one way of encouraging this jump as they can have a big impact on city decisions. “In Denmark, it wouldn’t be legally possible [to switch from coal to gas]; the regulatory framework is designed in a way to say that is not an option,” says Voss.
Nonetheless, city authorities thinking about building a new district heating system powered by renewables, or converting an old one, face the same dilemma – space. District heating makes most sense in dense cities, but here space comes at a premium.
“Most communities have quite a lot of resources literally in their own backyards,” says Voss. “The Nordics literally go around heat-hunting. They find waste heat in supermarkets or anywhere else. They wouldn’t dream of throwing it away.”
The electrification comparison
The big question facing cities with old legacy systems is whether it is worth keeping them at all. Would it not be better to just shut down the heating pipes along with the coal or gas plant, and switch to electric heat?
Thornton says no. “We wouldn’t want to see the baby thrown out with the bathwater,” he insists. “We know the challenge, particularly here in New England, where the electricity grid is getting greener and cleaner because there is more renewables in it. But all our district energy systems are looking at strategies to get to carbon neutrality in the near term. Some are saying 2025, others 2030. The solution is going to vary by location. A lot of our existing assets could convert to biomass, for instance.”
He believes the notion of electrifying everything is dangerous. “If you are looking at even a medium-sized city, if you took the district heating offline and put all of that load onto wires, that would likely require a tripling or quadrupling of the [underground electrical storage] capacity,” says Thornton. “That is not just putting thicker extension cords in the ground, it is a big infrastructure investment – and a risk. I say don’t put all your eggs in one basket.”
I really believe that if we are going to have this energy transition, it is going to have to come from the local level. Paul Voss, Euroheat and Power
The big climate benefit of district heating compared with other technologies like electrification and heat pumps is that it offers flexibility, says Koller. “This is long-term infrastructure and the great thing about district energy is you are not locked in to any future technology,” he explains. “Maybe in 2030 we find some new technology to generate heat; well, we can use it with these systems, but if you convert everything to individual heat pumps, you couldn’t do that.”
Both Voss and Koller insist there is great climate potential for district heating, if done in the right way. And even though setting up such systems powered by renewable sources at industrial scale presents challenges, it is doable outside the Nordics. However, it will be up to local city planners around the world to make the push, learning from best practices in Europe.
For US cities, that may mean a rethink around ownership – in the US, assets tend to be privately owned, while in Europe many are publicly or municipally owned, says Thornton. “In the US, district energy competes with a private, investor-driven market.”
Giving local governments the power to redesign their heating systems could be the key to getting these big projects off the ground. “I really believe that if we are going to have this energy transition, it is going to have to come from the local level,” says Voss. “So much heat is local.”
He adds: “District heating is one of the rare energy industries where Europe has clear global leadership. People come here to learn about district heating, and Europe exports tons of know-how and services to China, the Middle East and Russia. There is a nice story there about industrial leadership.”
“This is a good climate choice, and a safe choice,” says Koller. “It localises the energy supply chain, creating a lot of local jobs – and now with the green recovery coming out of Covid-19, that is an important argument.”