Discussion Papers, Department of Finance and Management Science, Norwegian School of Economics (NHH)
No 2007/17:
Optimal heating of large block of flats
Stig-Inge Gustafsson ()
and Mikael Rönnqvist ()
Abstract: Large number of block of flats are today often connected
to municipal district heating grids. Such systems became very popular in
Sweden some fifty years ago. The reason for this was that cheap low-quality
oil was abundant on the energy market but normal building owners could not
use it in their own low-cost oil-fired boilers. They had to use better and
more expensive oil for their heating purposes. In a district heating plant
low-quality cheap oil could be burnt in a sophisticated, but expensive,
boiler. Such a plant was also large enough to afford investments in other
equipment, e.g. for sulphur reduction. Further, the municipalities saw
their chance to get rid of many other sources of heat, such as coal and
wood, which polluted the air for many inhabitants. It was better with one
high and large chimney than thousands of small. During many years heavy oil
was the dominant fuel in our district heating plants. Unfortunately, the
use of oil made the trade balance of Sweden problematic and the country
vulnerable to fluctuations on the energy market. The oil-crises during the
1970-ties made the situation even worse. Sweden had to get rid of the
dependence of oil and district heating based on other fuels, or even
electricity, where available alternatives. Environmental hazards, high
prices and the obligation to reduce greenhouse gas emissions have led to
modernisation of the plants and nowadays, a number of energy sources are in
use, many of them with very competitive prices. Waste, garbage, worn out
rubber tyres, demolished wooden buildings are used as fuels today. There
are however drawbacks. Boilers and equipment for waste incineration are
expensive devices and it is many times not possible to cover the total heat
demand by use of garbage etc., as the only sources. The amount of waste
might also be too small. Sometimes coal and oil must be used during peak
conditions but taxes and emission allowances make such fuels expensive and
the utilities try to do their best in order to avoid such fossil heat
sources. If it was possible to reduce the demand when peak conditions
emerge, fossil fuels could be avoided. Up to now, normal Swedish district
heating tariffs were not thought to encourage such a behaviour, but as this
study shows, the cheapest solution for a proprietor is many times to
abandon district heating during the winter and use alternative solutions.
The utilities of course want to sell district heat also during the winter
but if the building owners want to reduce their costs as much as possible
the district heating tariff tells them to use heat from the utility only
during summer.
Keywords: Optimisation; Modelling; (follow links to similar papers)
JEL-Codes: C61; (follow links to similar papers)
23 pages, July 6, 2007
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- This paper is published as:
-
Gustafsson, Stig-Inge and Mikael Rönnqvist, (2008), 'Optimal heating of large block of flats', Energy and Buildings, Vol. 40, January, No. 9, pages 1699-1708
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