Evaluation of district heating with regard to individual systems – Importance of carbon and cost allocation in cogeneration units

Although, district heating has high share in the heating sector of Northern Europe, Central-Eastern European countries often do not utilize full potential for further thermal network expansion. The main reasons for this are relatively low energy market prices, such as natural gas for households, which diminish economic feasibility of the proposed projects. Even though there are numerous optimization methods which can optimize district heating system, they rarely provide cost comparison with individual heating solutions. This paper presents a novel method of evaluating district heating with respect to individual systems by using multi-objective optimization approach coupled with cost and carbon allocations in cogeneration units. Objective functions are defined as minimization of total discounted cost, including environmental impact, and maximization of exergy efficiency. To deal with multi-objective optimization, epsilon-constraint method has been used. The main outcome of this research are energy market prices for which district heating systems have lower environmental impact and exergy destruction than individual natural gas-based heating solutions, while at the same time being economically feasible. Finally, the paper demonstrates that cogeneration-based district heating systems are superior to individual heating, even for low households’ natural gas prices.