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Vertical integration of local fuel producers into rural district heating systems – Climate impact and production costs

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  • Kimming, M.
  • Sundberg, C.
  • Nordberg, Å.
  • Hansson, P.-A.

Abstract

Farmers can use their own agricultural biomass residues for heat production in small-scale systems, enabling synergies between the district heating (DH) sector and agriculture. The barriers to entry into the Swedish heat market were extremely high as long as heat distribution were considered natural monopoly, but were recently lowered due to the introduction of a regulated third party access (TPA) system in the DH sector. This study assesses the potential impact on greenhouse gas emissions and cost-based heat price in the DH sector when farmers vertically integrate into the heat supply chain and introduce more local and agricultural crops and residues into the fuel mix. Four scenarios with various degree of farmer integration, were assessed using life cycle assessment (LCA) methodology, and by analysis of the heat production costs. The results show that full integration of local farm and forest owners in the value chain can reduce greenhouse gas emissions and lower production costs/heat price, if there is an incentive to utilise local and agricultural fuels. The results imply that farmer participation in the DH sector should be encouraged by e.g. EU rural development programmes.

Suggested Citation

  • Kimming, M. & Sundberg, C. & Nordberg, Å. & Hansson, P.-A., 2015. "Vertical integration of local fuel producers into rural district heating systems – Climate impact and production costs," Energy Policy, Elsevier, vol. 78(C), pages 51-61.
    • Handle: RePEc:eee:enepol:v:78:y:2015:i:c:p:51-61
    DOI: 10.1016/j.enpol.2014.11.037
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    References listed on IDEAS

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    Cited by:

    1. Dominković, D.F. & Bačeković, I. & Sveinbjörnsson, D. & Pedersen, A.S. & Krajačić, G., 2017. "On the way towards smart energy supply in cities: The impact of interconnecting geographically distributed district heating grids on the energy system," Energy, Elsevier, vol. 137(C), pages 941-960.
    2. Dominković, Dominik Franjo & Wahlroos, Mikko & Syri, Sanna & Pedersen, Allan Schrøder, 2018. "Influence of different technologies on dynamic pricing in district heating systems: Comparative case studies," Energy, Elsevier, vol. 153(C), pages 136-148.
    3. Malin Tälle & Lotten Wiréhn & Daniel Ellström & Mattias Hjerpe & Maria Huge-Brodin & Per Jensen & Tom Lindström & Tina-Simone Neset & Uno Wennergren & Geneviève Metson, 2019. "Synergies and Trade-Offs for Sustainable Food Production in Sweden: An Integrated Approach," Sustainability, MDPI, vol. 11(3), pages 1-22, January.

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