Economic–environmental trade-offs based support policy towards optimal planning of wastewater heat recovery

Wastewater heat, a promising alternative to traditional district heating and cooling sources, can be recovered using heat pumps and transmitted to surrounding buildings for winter heating and summer cooling. Despite its potential benefits, the policies to support wastewater heat recovery remain limited. This study provides support policies for local governments to encourage energy recovery in urban wastewater treatment plants, incorporating subsidies and renewable energy certificates. The local government aims to maximize the recovered energy, minimize the subsidy expenditure, and minimize the certificate price. Urban wastewater treatment plants seek to optimize producer profits under realistic planning constraints. This model was applied in Chengdu, China, which indicates that plants with a daily treatment scale exceeding 30,000 m3 can invest in heat recovery without support policies, achieving recovery ratios of only 27%–29%. As the calculated electricity charge accounts for about 90% of operating cost, the electricity price subsidy proves the most significant in improving the installed capacities, followed by renewable energy certificates, capital refunds, and tax reductions. Electricity prices and renewable energy certificates have combination and substitution effects. Further analysis shows that heat pump efficiencies have low sensitivity in project feasibility. Fluctuations in infrastructure costs have a minimal impact, while charges for heating and cooling services significantly influence feasibility. Lowering the available thermal energy ratio also affects project returns. The government can reduce risks in sensitive parameters by electricity price subsidies or renewable energy certificates.