The risks of electrified district heating in Finland's cold climate

Abstract

Decarbonizing fossil fuel-dependent district heating systems is essential for achieving carbon neutrality, particularly in cold climates. In Finland, district heating operators are concentrating on electrifying these systems. However, the 2022 energy crisis in Europe has highlighted concerns about heat production costs and the security of heat supply with this approach. This study examines the economic feasibility and risks associated with electrified district heating systems and the early decommissioning of thermal power plants in the interconnected district heating systems of Helsinki, Espoo, and Vantaa. The case study is simulated and optimized to find the least-cost solution while meeting heat demand for various 2025 scenarios, assuming high energy market prices as in 2022 and more normal circumstances. Simulation results indicate that shutting down fossil fuel-based combined heat and power plants in Helsinki and Espoo would create a shortfall in base-load heat production, increasing dependency on heat imported from Vantaa. Both cities are expected to employ more cost-competitive biomass boilers to mitigate the reduction in coal-based heat production, which would decrease operational costs but also reduce revenue from electricity sales due to reduced combined heat and power capacity. Consequently, Vantaa is likely to benefit from its substantial storage and waste and biomass combined heat and power capacity, enabling efficient heat production at reduced costs. Across both scenarios, the analysis demonstrates a significant decrease in emissions and less reliance on imported fuels, highlighting the potential benefits of electrified district heating systems even amidst high electricity market prices.