How can district heating compete in a heating market dominated by electrical heating based on renewable energy? For most European countries, this question may seem irrelevant since we all know the European heating sector is dominated by fossil fuels.
In Norway, the situation is different.

By Trygve Mellvang Tomren-Berg, Norsk Fjernvarme (Norwegian DH association)

Norway has been blessed with unique possibilities for hydropower through nature, and hydropower has been the backbone of our power system for decades. Today, almost 100 percent of electricity production is based on renewable hydropower. Normally, domestic production is larger than domestic consumption, and electricity prices have been low.

Because of this hydro power-dominated system, large-scale combined heat and power plants (CHP) have never really been necessary for Norway. The concept of using excess heat from power production has likewise never been an alternative in the heating market.

Consequently, when the oil crisis hit in the 1970s, heating solutions based on mineral oil were replaced or supplemented with much cheaper direct electrical heating, not other heating solutions.

This contrasts with our neighbors in Sweden, where CHP was the go-to solution in urban areas and a driving force for the district heating revolution in the Swedish heating market in the 1970s.

The market share of renewable energy in the Norwegian heating market is almost 100 percent. At the beginning of 2020, a national ban on using mineral oil for heating entered into force.

Waste heat is key

It was first in the 1980s that modern, large-scale district heating started to emerge in the Norwegian heating market, driven by the development of municipal-owned waste incineration plants in cities like Trondheim, Oslo, and Ålesund.

The purpose of waste incineration was, and still is, to get rid of unsustainable landfills, but the excess heat from the plants was regarded by the municipalities as a valuable, local energy resource that could be used to free up capacity in the cities’ power grids during the cold winter months.

The bottleneck of our power system has always been the access to electricity during winter, and district heating provided a solution that can be framed as the Norwegian district heating model: to utilize excess heat and local renewable energy sources to shave off peak hour demand in the power grid.

The concept of district heating using energy resources that otherwise would be wasted was catching on in the next decades in several parts of Norway. In 2009, a national ban on landfills was introduced, which led to even more waste incineration plants being built. However, the development of urban district heating was not exclusively linked to the utilization of excess heat from waste incineration but also waste heat from other industries and the use of local bioenergy sources.

In addition, the use of power to heat in district heating systems was starting to grow.

Flexible use of electricity

It may seem like a paradox, but Norway’s history of using electricity for heating and a tariff system designed for it has been paving the way for power solutions for district heating as well.

Already in the 1980s, large-scale heat pumps using sewage water as a source were introduced in Sandvika, close to Oslo. Other cities followed, and similar heat pumps, most of them sea-water-based, are the backbone of several district heating systems in Norway today.

In addition, electrical boilers have also been present in developing district heating systems throughout the country. In practice, the electrical boilers are used as a flexibility mechanism for the power grid with a specific tariff system. The grid operators are allowed to turn off the electrical boilers in the district heating systems at short notice whenever peak demand threatens the stability of the grid. The district heating companies will then immediately switch to other sources in their production. In return, district heating companies get a rebated tariff for using the electrical boilers.

Because of this flexibility mechanism, approximately 10 percent of the Norwegian district heating production came from electrical boilers in 2019.

However, the share of power-to-heat was much larger in some DH, most notably in the capital Oslo, the by far largest city in Norway. Here, the share of the production from electrical boilers was 19 percent in 2019. The district heating system in Oslo has an installed capacity of 250 MW in electrical boilers, and the flexible use of those boilers gives the power grid operator a powerful tool for balancing the grid.

EV + DH = true

The absence of (fossil) CHP in Norway and the large share of direct electrical heating gives Norway a unique possibility to use the heating and cooling sector as a means for freeing up capacity in the power grid for the necessary electrification of other sectors.

A great example of this is the ongoing electrification of the transport sector. Through heavy government tax cuts for electric vehicles in the last decade, Norway now has the largest market share of electric vehicles in the world.

However, the EV revolution has put our power grid to the test and highlights how electrification drives the need for costly strengthening of power grids at the local level, especially in the cities.

On the other hand, the roll-out of charging infrastructure is a market opportunity for the district heating companies. We are experiencing several cases of real estate companies switching from stand-alone electrical boilers in commercial buildings to district heating, making room for EV charging without additional grid cost.

A telling example of this trend is Storogården in Oslo, where the owner, Malling & Co., replaced two 700 kW stand-alone electrical boilers with district heating, freeing up capacity for 700 normal EV charging stations.

The way forward? Avoid losses!

The recent EU strategy on energy system integration highlights the need to reuse energy in urban areas as the starting point for developing an integrated, circular energy system.

The strategy is a perfectly timed push in the right direction for policymakers all over Europe. For district heating companies in Scandinavia, the strategy feels like a pat on the back for a job well done so far, but it also serves as inspiration for the years to come.

In Norway, the reuse of recovered heat from waste incineration, other types of waste heat, heat pumps, and bioenergy (mainly waste fractions from forestry, buildings, and sawmills) already accounts for 85 percent of the energy output from district heating.

This will continue to be the main source in the next decade. However, we now also see a large potential for the reuse of waste heat originating from both electrification and hydrogen production, which are the two other trends highlighted in the EU strategy.

In short, in a circular, integrated, renewable energy system, district heating will be an efficient tool to reduce energy losses.

Waste heat from large-scale data centers is a perfect example of this and an obvious source for district heating. In Sweden, most notably in Stockholm, data centers have been built into district heating systems for years.

In Norway, the use of waste heat from smaller, in-house data centers is nothing new, but next year, the first large-scale data center will be connected to the district heating network in Oslo. The waste heat from this data center alone will annually provide heat corresponding to the heat demand of 5.000 apartments through the district heating network.

It makes sense to reuse data center heat for those apartments instead of providing them with direct electrical heating solutions, which would only add to peak hour demand in the power grid. In a circular energy system, this kind of reuse will be required.

The same will apply to the production of green hydrogen from electricity, a process that generates a large amount of waste heat. In order to achieve the ambition of circularity in the energy system, the potential for utilization of waste heat should influence the location of both data centers and hydrogen production plants.

Innovation needed

The case of Norway can serve as an example of how district heating can function as a cost-cutting flexibility mechanism for the power grid. However, the challenge for the Norwegian district heating companies is the relatively small penetration of waterborne heating systems in the existing building stock due to the large share of direct electric heating systems. In this respect, the potential for district heating is much larger in other European countries, where waterborne heating is the standard.

On the other hand, there are now signs of new, innovative waterborne heating solutions designed for the retrofitting of electrically heated buildings. This kind of innovation will be key to unleashing the true potential of the Norwegian power grid’s best friend.

For further information, please contact Trygve Mellvang Tomren-Berg, trygve@fjernvarme.no