Flexible use of heat pumps and district heating

Mölndal Energi x Västfastigheter x Bengt Dahlgren x Utilifeed

A common challenge for district heating companies is that their largest customers disconnect from the district heating network and create their own "energy islands". On the surface, it may seem like the right thing to do, but if the entire system picture is to be taken into account and also the environment is allowed to have its say, then there are better ways. Namely, to co-optimize beyond the system boundaries.

So why isn't this happening today? There are some basic conditions that have so far limited the possibility of the above-mentioned co-optimization; There have been no systems that can handle the joint control, current pricing models do not create incentives for co-optimisation and the price of electricity has been historically low for a long time.

Now everything has changed and all the conditions are in place. Let's highlight the issue with a live case from Mölndal:

In 2022, in collaboration with Mölndal Energi, Västfastigheter and Bengt Dahlgren, we investigated and calculated the potential for optimising Mölndal Hospital's use of district heating, district cooling and electricity in heat pumps/chillers at the lowest system cost. Mölndal Hospital intends to make major investments in equipment to supply the hospital with heating and cooling. These investments consist of ground source heat pumps with associated boreholes, the heat pumps can also be used as cooling machines. Today, Mölndal Hospital's heating needs are only covered by district heating, and in the future system, district heating will be used for domestic hot water and as redundancy in addition to the heat pumps. In Mölndal Hospital, there are thus opportunities to utilise two different energy systems, electricity and district heating/cooling. Mölndal Hospital could use the respective energy systems, exploit differences in prices between them, and minimize their energy costs while using the two energy systems more efficiently.

Electricity prices vary every hour at Nordpool, which means that Mölndal Energi's production costs for district heating and cooling can vary every hour. However, the current price models for district heating and cooling at Mölndal Energi do not reflect this, as energy prices for district heating and district cooling are set per month. If Mölndal Energi allows the prices of district heating and cooling to vary with the production costs per hour, Mölndal Hospital can more often move energy use from the electricity system to the district heating/cooling system. This results in lower costs for the hospital, higher revenues for Mölndal Energi, lower power utilisation in the electricity grid and lower carbon dioxide emissions.

If Mölndal Energi gives Mölndal Hospital marginal prices for district heating and cooling, and if Mölndal Hospital buys electricity at spot prices, Mölndal Hospital could make total savings of SEK 400 thousand per year, compared to today's district heating/cooling prices and a fixed electricity purchase agreement. A saving of about 10% of the total annual heating costs of the hospital. At the same time, Mölndal Energi's total revenues would increase by SEK 900 thousand per year, while their variable production costs would remain largely unchanged.

All participants in the project see the concept as promising. Above all, Västfastigheter, which is responsible for the operation of Mölndal Hospital, believes that in addition to the economic potential, the initiative is very positive in order to be able to benefit the energy systems and the climate by using the right energy at the right time.

The total value of the co-optimization thus lands at SEK 400 thousand + SEK 900 thousand = SEK 1.3 million and this for a single customer. Interesting to see how big the value is at each district heating company if similar optimization has been applied to their 10, 20, 100 largest customers!

FYI - We are very happy to tell you that Fredrik Martinsson at Mölndal Energi will tell you about the above case during the District Heating Days in Stockholm on April 27th - if you are curious to hear more, come to that moment and he and we will be happy to tell you more!