Simulation of Decarbonization Objectives for the District Heating System in the Helsinki Metropolitan Area

DEGREE PROJECT IN MECHANICAL ENGINEERING, SECOND CYCLE, 30 CREDITS STOCKHOLM, SWEDEN 2021

Simulation of decarbonization objectives for the district heating system in the Helsinki metropolitan area

YIJIE SU

KTH ROYAL INSTITUTE OF TECHNOLOGY SCHOOL OF INDUSTRIAL ENGINEERING AND MANAGEMENT

Master of Science Thesis

Department of Energy Technology KTH 2020

Simulation of decarbonization objectives for the district heating system in the Helsinki metropolitan

area

TRITA: TRITA-ITM-EX 2021:68

Yijie Su

Approved Examiner Supervisor

29.6.2021 Dilip Khatiwada Dilip Khatiwada Aalto Supervisor Contact person

Sanna Syri Pauli Hiltunen

Abstract

District heating (DH) is of great significance for the Nordic countries due to the high heat demand especially in the winter. In Finland, 40% of heat was generated by fossil fuels in DH system, and DH sector emits 10% of the total emissions. The Finnish government aims to achieve carbon neutrality as the national goal by 2035.

This study aims to evaluate the decarbonization objectives of each city (i.e. Helsinki capital city, Espoo and Vantaa) in the Helsinki metropolitan area and their influences on DH operation from 2010 to 2030 by energyPRO. A model of a joint DH system with the interconnections between Helsinki-Espoo and Helsinki-Vantaa is developed, in order to describe the whole Helsinki metropolitan area DH under the decarbonization objectives. The study provides a least-cost DH operation solution while matching the supply and demand conditions. The optimum performance of the DH is simulated considering different operation strategies (technical aspect), operation expenditures (economic aspect), CO2 emission (environmental aspect).

The results are presented from 2010 to 2030 in five years intervals. From the technological option, heat pump has great potential operating in DH in the Helsinki metropolitan area, it will be turned from peak load producer to the baseload heat producer. Instead, heat produced by combined heat and power plants (CHPs) will not be dominant in DH system in the future year. Waste incineration power plant in Vantaa will increase the total annual operation time to about 7000h, it will export more heat to Helsinki city when heat transmission is allowed. From the economic aspect, average heat production cost will decrease with more biomass penetration and heat recovery technology implemented in the future year. Natural gas may appear less profitable with higher CO2 prices after phasing out the coal. About climate change impact, CO2 emission has an 88% reduction in 2030 compared with 2010.

Keywords: District heating; CO2 emission; Decarbonization goal; Helsinki metropolitan area; EnergyPRO Abstrakt

Fjärrvärme (DH) har stor betydelse för de nordiska länderna på grund av det höga värmebe- hovet, särskilt på vintern. I Finland genererades 40% av värmen, i DH-systemet av fossila bränslen och DH-sektorn släpper ut 10% av de totala utsläppen. Finlands regering strävar efter att uppnå koldioxidneutralitet som ett nationellt mål år 2035.

Denna studie syftar till att utvärdera målen för koldioxidutsläpp för varje stad i Helsingfors storstadsområde (d.v.s. Helsingfors huvudstad, Esbo och Vanda) och deras påverkan på DH-drift från 2010 till 2030 av energyPRO. En modell av ett gemensamt DH-system med sammankopplingarna mellan Helsingfors-Esbo och Helsingfors-Vanda utvecklas för att beskriva hela Helsingfors storstadsregions DH under målen för koldioxidutsläpp. Studien ger en billig DH-driftslösning samtidigt som utbud och efterfrågan stämmer överens. Den optimala prestandan för DH simuleras med beaktande av olika driftsstrategier (teknisk aspekt), driftskostnader (ekonomisk aspekt), CO2-utsläpp (miljöaspekt).

Resultaten presenteras från 2010 till 2030 i femårsintervaller. Från det tekniska alternativet har värmepumpen en stor potential i DH i huvudstadsregionen, den kommer att förvandlas från topplastproducent till baslastvärmeproducent. Istället kommer värme som produceras av kraftvärmeverk inte vara dominerande I DH-systemet under det kommande året. Avfallsförbränningsanläggningen i Vanda kommer att öka den totala årliga drifttiden till cirka 7000 timmar, den kommer att exportera mer värme till Helsingfors när överföringen tillåts. Ur ekonomisk aspect kommer den genomsnittliga värmeproduktionskostnaden att minska i takt med större penetration av biomass samt värmeåtervinningsteknik som imple- menteras under det kommande året. Naturgas kan verka mindre lönsamt med högre koldi- oxidpris efter att kolet fasats ut. Vad gäller klimatförändringarnas påverkan så minskar koldioxidutsläppen med 90% år 2030 jämfört med 2010.

Nyckelord: Fjärrvärme; CO2-utsläpp; Dekarboniseringsmål; Helsingfors storstadsområde; EnergyPRO Preface

This thesis aims to simulate the development and operation of the district heating system in Helsinki metropolitan area from 2010 to 2030, based on the city level plans. It is also a part of the EU-funded collaboration project FINEST twins, which is intended on constructing a cross-border smart city between Helsinki, Finland and Tallinn, Estonia.

This thesis is also under the supervision of both Aalto University, Finland, and KTH Royal Institute of Technology, Sweden. First of all, I would like to express my sincere thanks to my supervisor Professor Sanna Syri, who accepted me and provide me this treasured opportunity to conduct my thesis at the Energy Efficiency and Systems group, Aalto University, who also pointed out the direction of the thesis and provided insight feedbacks promptly. I would like to thank my advisor Pauli Hiltunen M.Sc. (Tech.) from Aalto University, who guided me at every stage in my thesis process and always provide me a timely help, from information searching to model analysis. I would also like to thank my supervisor and examiner Professor Dilip Khatiwada from KTH Royal Institute of Technology, for detailed comments and modification suggestions every time. Even we cannot meet physically, he always put effort into my thesis reviewing.

To be honest, it is a quite hard experience and is also my first time to complete a project alone for 6 months, especially during a pandemic situation. Except for my supervisors and advisors’ help, I would like to thank my friends and parents, who encouraged me and was my best support in spirit. During the thesis, I learned a lot about the DH system in Helsinki metropolitan area, and other skills such as time management, scientific writing and so on.

Thanks for you all and without you, I cannot finish such a huge project for me on time. It will be the best memory in my life journey and I will keep on going, always work hard and always make progress.

Otaniemi, 2021 Yijie Su

Abbreviations

CCGT Combined-cycle gas turbines CCS Carbon capture and storage CHP Combined heat and power plants COP Coefficient of performance CO2 Carbon dioxide DC Data center DH District heating DSR Demand side response - ETS Emission trading system EU European Union FIT Feed-in tariff HDD Heating degree days HFO Heavy fuel oil HOB Heat only boiler HP Heat pump IT Information technology LFO Light fuel oil NG Natural gas OCGT Open-cycle gas turbines O&M Operation and maintenance PV Photovoltaic PV/T Photovoltaic/thermal RES Renewable energy source ST Steam turbine 4GDH 4th Generation District Heating

Content

Preface ...... 2 Abbreviations ...... 6 1 Introduction ...... 10 1.1 Background ...... 11 1.2 Research gaps and objectives ...... 12 1.3 Research Scope ...... 13 1.4 Structure of the thesis ...... 13 2 Literature review ...... 16 2.1 Components of city district heating system ...... 16 2.2 District heating system development ...... 17 2.3 State-of-the-art in district heating (DH) systems ...... 18 2.3.1 Heating supply options ...... 18 2.3.2 Fuels for DH system ...... 19 2.4 Exploring promising technologies in district heating system ...... 20 2.4.1 Heat pumps...... 20 2.4.2 Waste heat recovery ...... 21 2.4.3 Heat storage ...... 21 2.4.4 Solar thermal systems ...... 22 2.4.5 Biomass technology ...... 23 2.5 Exploring key factors affecting DH system operation ...... 23 2.5.1 Policy ...... 23 2.5.2 Electricity price ...... 24 2.5.3 Climate conditions ...... 25 2.6 A review of methods and approaches for analyzing district heating (DH) systems 25 3 Description of the case study area – Helsinki metropolitan region in Finland ...... 27 3.1 District heating system operating situation ...... 27 3.2 District heat demand and consumption ...... 28 3.3 District heat fuels ...... 28 3.4 Temperature and heating degree days ...... 29 3.5 Heat transmission ...... 30 3.6 Helsinki city DH system ...... 30 3.6.1 Helsinki district heating development ...... 31 3.6.2 Helen carbon neutrality target ...... 33 3.7 Espoo DH system ...... 33 3.7.1 Fortum carbon neutrality target...... 35 3.7.2 Espoo heating energy transition plan ...... 35 3.8 Vantaa DH system ...... 36 3.9 Basics for scenario development ...... 38 4 Methodological approach ...... 40 4.1 Description of modeling framework ...... 40 4.2 Mathematical formulation ...... 42 4.3 Model overview ...... 43 4.4 Model assumptions ...... 47 4.5 Model limitations ...... 48 5 Description of modelling parameters ...... 49 5.1 Energy/technical data ...... 49 5.1.1 Technical parameters of energy conversion units ...... 49 5.1.2 Fuel consumption by each unit ...... 50 5.2 Financial data ...... 51 5.2.1 Operation and maintenance costs ...... 51 5.2.2 Fuel costs ...... 52 5.2.3 Fuel taxes ...... 53 5.2.4 Electricity price ...... 55 5.2.5 Electricity distribution fees ...... 56

5.2.6 CO2 allowances ...... 56 5.3 Environmental data ...... 57

5.3.1 CO2 emission factor ...... 57 5.3.2 Temperature ...... 58 5.4 Other data...... 58 5.4.1 Heat demand ...... 58 5.4.2 Heat transmission ...... 59 5.5 Future DH model assumptions ...... 59 6 Result and discussion ...... 62 6.1 Model validation ...... 62 6.2 Optimal operation strategies ...... 64 6.3 Heat productions ...... 71 6.4 Heat transmission ...... 72 6.5 Electricity productions by CHPs ...... 74 6.6 Fuel usages ...... 74 6.7 Operation costs ...... 76

6.8 CO2 emissions ...... 78 6.9 Sensitivity analysis ...... 79 6.10 Discussion ...... 82 7 Conclusion ...... 84 References ...... 86 Appendix ...... 93

1 Introduction

With the intensification of urbanization and industrialization, the issue of carbon dioxide (CO2) emissions has become the focus of global attention[1, 2]. To mitigate climate change and limit global temperature warming to within 1.5 degrees Celsius under the Paris Agree- ment[3], the whole world has committed to transitioning from fossil fuel-based energy systems to using sustainable energy sources. The European Union (EU) has set a carbon-neutral goal by 2050, along with the target for increasing 20% renewable energy resources (RES) share and decreasing 20% greenhouse gas emission in 2o2o[4].

Heating is the world's largest final energy consumption field. It is essential in providing space heating and maintaining the thermal comfort for households; ensuring the certain temperature that products needed for industry; as well as many other applications. The In- ternational Energy Agency (IEA) reported that heating represents 50% of the total world's final energy consumption in 2018[5], making it a crucial sector to decarbonize. For heat consumption, the industrial sector (such as heat production process) accounts for about half a percent, while the building sector (space heating, domestic hot water, cooking, etc.) uses 46%[5]. Fossil fuel-based technology dominants in global heating production, and renewable energy resource (RES) share is only 10% at the global level[5]. In Europe, approximately 75% of heating and cooling is generated from fossil fuels, while only 22% is met by RES[6]. Moreover, about 40% of global CO2 is generated from heating sector, with the total emissions growth rate at 2% in 2018[7]. How to achieve a clean heating system has received considerable attention in the literature[8-10].

District heating (DH) system is one of the most popular methods to provide heat and it has huge development and energy conservation potential with the cost-effective and centralized characteristics, making it an essential pathway to decrease pollution[11]. DH is of great significance especially for the Nordic countries due to the geographical location and climate conditions, as well as higher heating demand[12]. In Finland, the DH system consumes 33200 GWh of energy[13], while residential buildings consumed 54% and industries consumed about 9%, with a heat loss of about 11% in 2019[14]. Of the heat production, 90% was generated by the fuel-based power plant, while 10% came from heat pumps (HPs)[13]. The fuel in DH supply consists mainly of fossil fuels(40%) with 17.4% of coal and 15.1% of peat, natural gas(10.6%), as well as biofuel including forest wood about 40%[13]. Furthermore, DH in Finland shares 10% of the total emission and covers 12% of total end energy consumption[15]. As a result, decarbonizing DH is critical to attaining climate goals. Additionally, to reduce the energy consumption during the process, it is necessary to ensure the effectiveness of energy-saving and low-carbon technologies[11, 16-18].

The Finnish government has declared to achieve carbon neutrality by 2035[19]. Following the global and national trend, all the cities in the Helsinki metropolitan area have different decarbonization objectives regarding to their DH system, since DH system in each city is command by different operation companies: Helen Ltd in Helsinki aims to reach the carbon- neutral goal by 2035 according to the National goals[20], while Espoo plans to achieve such a goal in 2030 under the Fortum Oy clean heat pathway[21]. Vantaa will achieve a carbon neutrality DH system by 2045 by Vantaan Energia Oy to keep pace with the Government’s policy[22]. Since the energy used for heat production accounts for 56% of total CO2 emissions in Helsinki city[23], DH sector plays a significant role in realizing the global decarbonization goals. The transition of DH includes reductions in the dependence on fossil fuels, and will need to be reached through a variety of renewable and new conversion technologies.

1.1 Background

DH is a system that distributes heat from a centralized generator through the underground pipeline and provides heat needs (space heating and hot water) for users[24]. In Finland, the DH system has been effectively implemented in cities. 32700 GWh heat production out of a total of 36600 GWh Finland DH in 2019 was generated by fuels, the rest 3900 GWh was from heat recovery and heat pumps (HPs). Among the fuel-based production, coal amounted to 21.8% while 16.6% was generated from peat, 40.6% of which was generated from biomass[13], as shown in Figure 1. At the same time, 67% of energy is consumed by household space heating[25]. The heating supply system should be reliable and efficient in Finland during the long wintertime. In Helsinki city, the total DH demand was about 7 TWh in 2019, accounting for about 20% of the entire DH demand in Finland[23]. The emissions from the heat-producing process are highly significant, 44% of all the emissions in Helsinki city are from the heating sector, thus leading to the heat-producing an unneglectable and potential sector to decarbonization [26].

Figure 1 Source of production for district heating in Finland, 2019[13]

Combine heating power plants (CHP) are widely utilized in the DH system in the Helsinki metropolitan area, which produce heat and electricity at the same time at high efficiency. In 2017, CHPs generate 64% of the total DH production which provides base load supply in DH system, followed by the heat-only boilers (HOBs) and HPs[15]. Heat production is the by- product of electricity generation processes, which is provided for consumers through heating pipelines. However, fossil fuels such as coal (46% in Helsinki city in 2019), and natural gas (42% in Helsinki city in 2019) domain the production for DH, generate a large amount of emissions, even there is a growing trend of the non-fossil source of generating heat[27].

Hence, how to decrease fossil fuel consumption, realize the decarbonization goals, and sta- bilize the heating supply is of great significance for the Helsinki metropolitan area. The DH system in Helsinki is undergoing a transition to a more sustainable, less pollution and fossil- free direction[11, 18], under the city level goals[20-22]. To improve the DH system through decarbonization objectives and plans, which not only guarantees the heating quality requirements of the users but also optimizes the operating conditions of the system.

1.2 Research gaps and objectives

Under the national goal in Finland of achieving carbon neutrality in 2035, the Helsinki metropolitan area (Helsinki, Espoo, and Vantaa) has declared their own city-level decarbonization plans regarding to DH system, which includes existing technology updates, new technology implementations, as well as other energy-saving methods. Considering the DH case in Finland, especially the Helsinki metropolitan area, the literature concentrates more on the single city DH in such a region[11, 18, 28] regardless of connections with neighboring cities, further details see section2, literature review. This research will simulate the overall DH network in the Helsinki metropolitan area by energyPRO, which only focuses on the heat generation and production side, without considering how heat productions transmit and how they are distributed to different consumers.

Additionally, the existing Helsinki DH system simulations focused more on the short-term (mostly one year)[28] or only future scenarios of DH operation[18], which may lack fluctuations in the historical period. This research will simulate DH in Helsinki metropolitan area from 2010 to 2030, making it potential to reflect the CO2 emission as well as operating expenditure trend of the development DH system.

The objective of this study is to analyze how the decarbonization plans in each city by different operation companies would affect the DH system from 2010 to 2030 period, in terms of DH system operation strategy (technic aspect), expenditures (economic aspect), CO2 emission (environmental aspect) and by energyPRO. Simulating DH system each year and comparing results will be possible to clarify the efforts needed for the plan. The performance indicators of DH are divided into three categories:

• Flexibility operation strategy (Technical aspects): heat production, fuel consumption, working hour of energy conversion units. • Economic performance (Economic aspect): average heat production costs, revenue from electricity market and operation expenditures. • Climate change impact (greenhouse gas emissions): CO2 emissions from 2010 to 2030 at Helsinki metropolitan area at DH system level.

The results will be analyzed by indicators in technical, economic, environmental aspects: how power plants operate in DH including heat production, fuel consumption, working hour and so on during the simulation year, is from technology aspect; a least-cost solution of DH systems will be provided, and the indicators include revenues, operation expenditures are from economic aspect; the trend of CO2 emissions is the indicator of the environmental aspect.

This study first creates the DH system of Helsinki, Espoo, Vantaa separately, from 2010 to 2030, in five-year intervals, to analyze the energy transition trends and evaluate the decarbonization actions that occur in the system. This is due to the decarbonization plan varies in cities which depends on their heating supply situation and network. It focuses on what has been done in the DH system along the way to realize the carbon-neutral goal. The study further combines the 3 cities into a whole DH system, simulating the connection and trade of the heat production between the 3 cities. This demonstrates the linkages of the DH network within the Helsinki metropolitan in a broad and systematic perspective.

Through results analysis, the study aims also to make suggestions for appropriate low-carbon development methods for use in the DH system in the Helsinki metropolitan area. Ac- cording to the decarbonization objectives of different companies, the commissioning of carbon-free projects while decommissioning the fuel-based units, will influence the system operation from the technical, social, environmental, and economic perspectives.

The research question about simulating the DH system and decarbonization objectives from 2010 to 2030 in Helsinki, Espoo and Vantaa area shows as following:

1. How does the DH system operate in terms of heat productions, power plant operations strategies, fuel consumptions under the decarbonization goals in the Helsinki metropolitan area from 2010 to 2030? (Technical aspect) 2. How do the city-level decarbonization objectives affect DH from operating costs and average heat production costs from 2010 to 2030 in Helsinki decarbonization objectives? (Economic aspect) 3. How much CO2 emission will be reduced from DH in the Helsinki metropolitan area will be from 2010 to 2030 under the clean energy transition? (Environmental aspect)

1.3 Research Scope

The studied region includes three cities in the Helsinki metropolitan area: Helsinki, Espoo and Vantaa. Each city has its concrete decarbonization strategies related to mitigating climate change by different dominant DH companies.

EnergyPRO will be used to simulate DH system operation situation from 2010 to 2030 (see Chapter 4). After establishing each city’s DH system, the study combines the 3 regions into one model with all the necessary heat transmission details, forming a complete DH network in the Helsinki metropolitan area.

Since in the Helsinki metropolitan area, the city-level goals to realize carbon-neutral will mostly be achieved before 2030, in order to simulate along with the plans, this research also includes 2 future year simulations: 2025 and 2030 DH system operation situations. The model for future year will be established based on decarbonization plans on city level, such as phase out coal-based power plants, or implement some power plants with benefit for the environment in the future simulation year. The parameters assumptions will be projected from the historic situation or based on relative references (see section 5.5).

1.4 Structure of the thesis

The basic thesis structure is shown in Figure 2Figure 2 It develops from presenting objectives and literature review of DH, especially the features in the Helsinki metropolitan area, followed by modeling methods and ended in conclusion discussions.

Figure 2 Schematic layout of the thesis structure

First, the introduction will address the importance and necessity of mitigating climate change especially focusing on the district heating system and the background of the Finnish DH system. Then the introductory chapter will present the objectives, scope, and limitations of the research.

In chapter 2, the existing DH system literature will be reviewed. It begins with an introduction to the operating theory and components of the current DH system at the city level. Then, there will be an analysis of the DH systems developed in Europe, which provides examples of different DH system development cases. The potential technologies which could be applied to reduce the emission will also be presented. This will be followed by the factors which may influence the system operation. Lastly, methods used for simulating the DH system in terms of operation strategies, simulation software and so on, from different dimensions will be reviewed.

A detailed description of the DH system in Helsinki, Espoo and Vantaa city will be presented in chapter 3. This will be based on the statistical data from the District Heating in Finland report in 2010, 2015 and 2019 as well as the webpage of the command companies (DH in different cities is provided by different companies). The concrete plan for decarbonization for each city which is aggregated from the company website will also be provided in this chapter. The timeline of a power plant entering or leaving the DH in each city will also be presented in order to map a brief plan for carbon neutrality.

Chapter 4 describes energyPRO software including algorithm, applied situations, and limitations. A global DH system in the Helsinki metropolitan area with the heat transfer connection between each city will be simulated using the energyPRO. Entering the demand data of the region with the existing power plants to establish the DH system model. In chapter 5, the data descriptions and assumptions focus on the 2010 to 2020 situation. Types, feedstocks, and capacity of power plants for generating heat (technic parameters); operation expenditure and revenues (financial parameters); amount of emission, outdoor temperatures (environmental parameters); as well as other parameters such as heat demand and heat transmission will be involved in this chapter. Chapter 6 will also describe the parameters using for year 2025 and 2030 scenario, it is based on the developing trend as well as the realistic assumptions.

The result and discussion will be presented in chapter 6. Since different fuel input, the capacity of the technology implementation and other factors will influence DH system operation, comparing the results of the different years, a roadmap will be provided for the Helsinki metropolitan area to realize the carbon-neutral goals in the DH system, and the potential merit of different technologies will be discussed. While the conclusion and further steps will be included in chapter 7. 2 Literature review

This chapter will illustrate the development of the DH system from an international perspective. From literature review of different countries with robust DH systems, it could be compared with the Finnish DH system, identify differences and transition experience. Besides, evaluating the potential technology which could be implemented in a DH system, this section discusses possible approaches and choices to mitigate climate change through the DH system. Then the chapter identifies the factors that may affect DH system operation, addressing the importance of a stable DH system. This chapter also summarizes methods from different aspects used to conduct the DH system analysis, which provides an overview of the focus on DH development.

2.1 Components of city district heating system

An independent DH system consists of three components: heat generation, a heat network (transmission and distribution), and the end-users[8], see Figure 3. The obvious advantage of DH is that it not only greatly improves fuel utilization, but also minimizes environmental pollution. Such a heating system provides domestic hot water while providing space heating. At the same time, the center of each residential area or residential buildings can also adjust the heating temperature in accordance with the change of outdoor temperature[8].

One or more heat sources are provided to consumers through a regional unified heating pipe network to satisfy their heating demands. A central generation company produces heat from various power plants such as CHPs, HOBs, and HPs, based on different fuels. After generation, the heat is delivered by a transmission and distribution system, which is the most costly component in DH and covers 50% to 75% of the total overall system capital cost[29]. Finally, the heat is supplied to end-users, including in-building equipment. Generally, buildings require space heating and hot water, while industrial companies obtain steam and hot water from DH[30]. The hot water can be transferred directly for space heating or indirectly from a heat exchanger as a closed loop[31].

Figure 3 Main components of DH system[29]

2.2 District heating system development

DH systems have a long history in Europe and have developed rapidly. They originated from a geothermal heating system in France in the 14th century. In 1853, the United States Naval Academy established a district heating system to provide heating services for the Annapolis campus[32]. In 1893 in Germany, 1903 in Russia, and 1924 in Canada DH system projects also began to develop[33] leading to more than one hundred years of development in Europe and the United States. Due to the growth of energy demand and rising prices, to save the use of primary energy and improve the atmospheric environment, CHPs have been widely implemented in the DH system. With the development of energy and utilization technology, various heat sources such as solar energy, geothermal, waste incineration, industrial waste heat recovery, and heat pumps have been used in DH[34].

DH system undergoes a transmission with several generations. The first generation of DH used steam as heat carriers. Then the second and third DH generation used pressurized hot water to transmit heat through pipelines, with a temperature over 100°C [33]. DH has been transitioning towards the 4th Generation District Heating(4GDH) since 2020, with features such as low-temperature operation (55°C as the water supply temperature and return water at 25°C), the use of more sustainable energy sources and renewables, fewer heat losses, shifting from a centralized to a decentralized model including individual household contributions[33]. 4GDH addresses the flexibility and diversity of heat sources enhances the coupling with various sources of energy, such as solar, wind, biomass, industrial waste heat, geothermal and so on. Moreover, with the support of large-scale heat storage technology, which not only achieves a system with sufficient capacity but also improves DH efficiency [33]. With the penetration of HP, solar collectors, and heat storage systems in individual households, residents could generate heat with the input electricity from solar or the central grid, which will enable end-users to act as both consumers and suppliers with individual HPs entering the market, creating new prosumer stakeholders[35].

Compared with 4GDH systems, 5GDH will contain all the heat sources the 4GDH system has, additionally with a two-way DH network and distributed heating system. It will also focus on the development of seasonal thermal storage. Buffa et al. [36] surveyed the Euro- pean countries finding that Germany and Switzerland have the best potential in this regard and could be pioneers of such developments.

Figure 4 Comparison between 4th and 5th GDH [33, 36]

In the transition of the DH system, feature improvements mainly appear in the existing perspectives, see Figure 4. Temperature shows a decreasing trend under the transition and 5GHDs will operate at a lower supply temperature. For the heat supply side, there will be a transfer from centralized heating-produced power plants to decentralized small-scale HPs, with the same trend in the heat storage system. For the power supply, 5GDH will be integrated with more energy sources and will increase the share of RES. Electric vehicles will gradually penetrate the DH system, and may act as storage devices. With the DH transition to a cleaner energy supply, CO2 emission will show a decreasing trend in most EU countries[37].

2.3 State-of-the-art in district heating (DH) systems

Many DH-related technologies were developed in Europe, and it represents the highest level of independent systems internationally. The Nordic countries especially have a more advanced DH system due to the weather condition and long wintertime. In Iceland 92% of the country’s residents are served by DH, which is the highest percentage in Europe, followed by Latvia(65%) and Denmark(63%)[12]. Based on the different DH situations relating to the location, development, weather conditions, policies and so on, the heating supply options vary from country to country.

2.3.1 Heating supply options

With one of the most developed DH systems in Europe, Denmark has been served by CHPs since 1903. Of the 24 GWh of installed DH generation capacity in 2018, 33% is from natural gas, 24% is other fossil fuel[38]. The structure of DH has also improved in recent years and is undergoing a transition with the aim to rely more on electricity for heating. With the ad- vancement of 5GDH in Denmark, the interconnection and interaction between the electricity system and the heating system have become closer. To guarantee quality standards for domestic hot water, HP or electric heaters could be used for secondary heating, at the same time domestic equipment with a small water tank could benefit the overall system in both economy and energy efficiency[39]. Different types of technologies and energy sources have been integrated into the existing system, enhancing the DH system and making it more stable and diverse. In terms of decarbonization goals, DH contributes greatly to reducing emissions, more countries are taking actions towards a more sustainable future. Denmark itself has set a non-fossil fuel goal to be achieved 2035, with renewable energy to cover 100% of the electricity and heat generation in the sustainable development of the DH system[40]. For this purpose, heat could be supported by waste heat. In a spatial analysis, Bühler et al.[41] identified that industrial waste heat could be recovered for DH in Denmark, and could serve 5.1% of the DH demand with varying potential for regions with different levels of industrialization in the country.

With the development of the DH system, HP is penetrating the market. David et al. [37] collected the technical parameters about HP through online research from companies and associations, finding that current HPs in Sweden are quite old, while Denmark and Finland have been establishing new HPs projects since 2006. Additionally, newly-built nuclear power plants are providing the temporary electricity needed for HP. An analysis by Comodi et al.[42] on the development of CHP in central Italy’s DH system found it could provide the baseload energy combined with HP to ensure performance improvements, while thermal energy storage was losing profitability due to the long payback period. The heating system in Norway is highly electrified based on individual heating units, only domestic hot water is supplied by DH. With abundant hydropower resources, Askeland et al. [43] investigated that shifting from individual heating to DH could reduce the load on the generation capacity and reduce the demand for importing electricity from Europe, especially avoiding the lack of hydropower reserves during the winter months.

In conclusion, the DH system in Europe is addressing more sustainable heating methods, although CHP still acts as the fundamental unit in most countries. Even though the heating generation structure varies, the penetration of different low carbon technologies into heating generation is the main trend. Especially the contribution of HPs in the DH system strengthens the connection between the electricity market and heat market, which makes the integration of different renewable resources possible and important. New business models for heating can be derived from the implementation of these new technologies.

2.3.2 Fuels for DH system

In Lithuania, the fuel transition from fossil fuels to bioenergy or other renewable energy in DH systems could reduce the CO2 emissions by 60% in 20 years [44]. Additionally in Esto- nia, under the drive of government regulations, fuel oil boilers have been gradually replaced by biomass boilers and CHPs[45]. In Denmark, CHP generates heat shifting from mainly coal-fired to biomass-fueled solutions[46]. Apart from that, Denmark plays the leading role in the numbers and capacity of solar DH plants around the world, Tian et al.[40] found that equipped with solar heat technology, the DH system could reduce system costs and increase the DH system efficiency. They also found that low prices and long lifetimes motivated the consumers’ willingness to switch to using solar power. Renaldi and Friedrich[47] conducted a simulation model and identified the potential for solar DH systems in middle to high lati- tudes in the UK. Larger HP capacities could also be achieved by increasing the use of wind power. Both biomass boiler and wind power could be an optimal solution for economic and environmental benefits[48]. Under the goal of achieving carbon neutrality, coal is gradually being phased out by the supplementary use of other clean fuels such as biomass for CHP plants.

2.4 Exploring promising technologies in district heating system

The most common low-carbon technologies implemented in DH systems generally include heat pumps, the usage of waste heat, as well as thermal storage. The existing literature identifies the functions which could reduce DH system emissions somehow. Even the electricity must be consumed during the HP operating process, the power could generate from RES to ensure the whole process fossil-free.

2.4.1 Heat pumps

The mechanism of a HP is to transfers the heat from a low-grade to a high-grade temperature by consuming only a small amount of low-grade heat in a reverse circulation network but releasing a large amount of heat supply. The system is highly effective at reducing wastage, thus achieving energy-saving [49]. Applying HP in the DH system could eliminate production restrictions on co-production products in CHP plants[50], reduce emissions[31], and has ability to adapt to varied climate conditions [51, 52].

HP can perform well in low-temperature environments, such as in Alaska[51], and it has been found to be applicable in commercial and residential buildings in the United States[52], The potential has also been identified in Europe in 2050[53]. Its adaptation to diverse situation, especially the technical potential in cold regions make it an integral part of the future of the DH system. The performance of HP is dependent on the coefficient of performance (COP), which is the ratio of heating and cooling output and work input into the pump. Generally, the COP varies from 3 to 6 which indicates that HP units can generate different units of thermal energy by consuming a unit of electricity[31].

Implementing HP within the DH system could increase the renewable energy fraction in the electricity supply thus reducing the CO2 emission from the supply side. The DH system varies from country to country, which means there is a different potential for eliminating emissions for HPs in DH systems. Sayegh et al. [31]compared different scenarios, found that when the seasonal performance factor (SPF) equaled 3, in Sweden 100% penetration of HP could reduce the existing DH system pollution to 3%, while in Poland only 31% was achieved because the share of renewables varied in the power systems.

However, it still faces competition with conventional stakeholders in the DH system. Kontu, et al. [54] found that HPs hold potential in small district heating systems, but less in middle and large size DH systems due to the profitability of CHP. Three main placement options which are defined by the capacity difference, include central HPs with high thermal capacity, medium capacity local HPs, and low capacity individual HPs in the DH network [31]. With the development of the technology, a new business model could be generated for the DH system, making it possible to transform the consumer into a producer.

2.4.2 Waste heat recovery

To solve the energy consumption problem in the DH system, on the one hand, new energy sources could be developed continuously, on the other hand, it is also necessary to improve the utilization rate of existing energy. Waste heat could be recovered from residential buildings, industry production processes, even from data centers(DCs).

Heat is generating during industrial processes. A low-temperature heat source mainly refers to low-grade heat energy below 100 , while high-temperature heat is over 300 [55]. Especially in the steel, cement, chemical and other industries, a large amount of high- temperature waste heat is produced℃ incidentally when fuel is combusted or in℃ other processes[56]. Industrial waste heat is not only widely distributed but is also easy to collect, and the recovery of these heat sources for power generation has become an important part of improving the efficiency of the energy system. With such high-temperature waste heat recycling technology such as regenerators, or heat recovery from cooling lines[57], not only reduces environmental pollution, but the utilization rate of resources can also be improved. Residential buildings or other sectors may generate waste heat during their daily processes, which they could sell to a DH company instead of releasing it into the air. Fortum, the largest energy company in Espoo has launched a two-way district heating network, heating pipes to transfer waste heat to Fortum for recycling[58].

DCs produce low-grade waste heat when cooling information technology (IT) facilities mainly involving mainly minor physical components in advanced cooling systems. The waste heat can be used directly or heated up by HP depending on the temperature[59]. Huang et al.[60] found that the DCs could recycle the heat to the DH system by combining more evaporators in multiple-stage cycles. Davies et al.[59] studied the potential of utilization of DC waste heat in London and found that a 3.5 MW DC could reduce over 4000 tonnes of CO2 and around one million pounds costs annually. Hiltunen, Syri[28] investigated that heat recovery from DC can be utilized to improve the DH system efficiency in Espoo, Finland, and could also decrease the existing power plants operating hours. However, a barrier to use waste heat from DC was a lack of profitable solutions as well as a less transparent business model for DC operators[61].

2.4.3 Heat storage

The heat load difference causes a contradiction between supply and demand. To solve the problems of traditional DH technology in the long-term operational efficiency may low due to the difference in demand. With the rapid increase of different technologies involving DH systems, heat storage technology could regulate the heat supply, thus playing an important role.

Heat storage technology could be used for heat load shifting and renewable energy coupling instead of fossil energy for heating, which would be conducive to regulating the balance of power supply load and could reduce the electricity cost of the heating system. Hast et al.[18] compared to Helsinki, Warsaw, and Kaunas with the scenario analysis in 2030 and 2050 and found that thermal storage and carbon capture technology play a significant role in achieving carbon-neutral and reduced coal consumption. Heat storage is to convert other forms of energy into heat energy, store it under good heat preservation conditions through a specific heat storage medium, and extract heat for use through heat exchange. The operating reliability of a clean heating system could be achieved after applying the energy storage. Hirvonen et al.[62] used the MOBO optimization tool to simulate HP and solar thermal storage technologies in different sizes of the communities, finding that in a large community (more than 500 buildings) heat storage performed better and could cover 44% of heat generation by HPs.

2.4.4 Solar thermal systems

A photovoltaic/thermal system(PV/T) is an attractive concept that integrates solar thermal collector components with PV modules, making it possible to generate thermal production and electrical energy simultaneously, see Figure 5. As a support of the single PV, the PV/T system extracts heat by cooling PV panels, it also prevents excessive heating at the same time. Performance analysis of a PV driven heat pump system during a heating season in high latitude countries[63]. In Helsinki, solar irradiation varies significantly in the winter and summer seasons. It differs from approximately 20 kWh/m2 in winter(January - March) to more than 100 kWh/m2 during the summer period(June - September)[64]. Thus making it a potential energy for coupling to the energy system by PV/T system.

Figure 5 concept of solar thermal system integrated to DH[63]

As a promising technology, it drives the traditional centralized DH system to decentralized DH. Heymann et al. [65] identified that the collector of the PV/T system could provide thermal output of around 10% in total DH demand, and it is even possible to operate without the storage system. Chwieduk and Chwieduk[66] simulated a house in Warsaw with PV system, finding that PV coupled with HPs for space heating could perform well compared with a single PV and storage system from economy and technology analysis.

Helen Oy in Helsinki city currently owns two solar power plants. The Suvilahti solar power plant has 1194 solar panels, while the Kivikko solar power plant is the largest solar power plant in Finland with a production of about 700 MWh annually[67]. Solar PV allows the concept of sector coupling and utilizing excess electricity for heating. At the same time, solar thermal heating has potential in Helsinki in terms of a community-level solution with integrated hot water storage tanks or even ground source HP[23].

2.4.5 Biomass technology

Biomass is suitable for collecting raw materials nearby and provides clean combustion of heating in special equipment. It is considered to be clean heating energy since the power cogeneration meets the corresponding environmental protection criteria. Lindroos et.al [68] found that biomass combustion technology together with HPs and other technologies could gain the benefits to replace fossil fuel. At the same time, the accessibility cannot be ignored, it should be optimal based on the local situation.

Helen has built the largest pellet-fired plant in Finland with a capacity of 100 MW. It consumes 40 000 tons of wood pellets annually[67]. Domestic supply of biomass, on the other hand, is forecast to grow by only 8 TWh between now and 2030. IEA estimates show biomass will account for nearly 60 percent of the fuel mix in Finland’s CHPs in 2030, up from less than 30 percent currently[69].

2.5 Exploring key factors affecting DH system operation

DH is a complex system project with many influencing factors, internal correlations, the demand fluctuates with the seasonal changes. All links must be considered and comprehen- sively controlled to achieve the system operating, efficiency improving as well as energy saving.

2.5.1 Policy

Generally, policy instruments which may affect the DH system show in Table 1. DH is one of the important sectors to mitigate climate change and limit world temperature warming up. The Kyoto Protocol was released in 1997 with 15 EU members involved in, took 8% of the total target[70]. In 2009, the Copenhagen process took the developing countries into the mitigation of climate change. Then Paris Agreement announced the 2-degree Celcius limitation and the whole world should take action[3]. Sayegh et al.[8] noted that except for the climate conditions, the DH size and location are highly dependent on national energy policies.

Narrowed down to the EU level, the EU commission suggested in September 2020 to tighten the EU climate goals for 2030 to a 55% reduction compared to 1990. The existing ambition is at a 40% reduction the European Emission Trading System(EU-ETS) set a cap on the total amount of CO2, which started in 2005 and is the first emissions trading system in the world [71]. All power plants with the thermal capacity excessing 20 MW are covered by the trading system, making the DH system regulated by a large share of CHPs. When implemented the EU-ETS, it would help to decrease the emissions from DH system in a long term in Finland, even identify the abatement potential in the non-ETS heating sector[72].

Comparing with EU ETS, CO2 tax is a cost predetermined policy tool that aims to increase the fossil fuel price and decrease its contribution to the DH system, while the total emission level is pre-fixed for EU-ETS. Büchele[73] compared different policy measures including loans, subsidy and tax in Brasov, Romania, CO2 tax higher to 130 €/t would increase the natural gas cost thus influencing HP penetration on both the individual and community scale; while a CO2 tax in 31.5 €/t had a similar effect on increasing the RES share in DH system. Priced CO2 could contribute to the reduction of emission through the expensive heating supply and combination of variable RES[1]. In Nordic countries such as Denmark, plans to get rid of fossil fuels by 2050. Such policy forces to integrate different energy sources and couple the sectors, thus influencing the DH resource supply[74].

Table 1The common energy and climate policies affecting in the DH system

Content Policy Description CO2 Tax tax on fossil fuels heating technologies which causes CO2-emissions. Global Cli- Kyoto Protocol country-specific targets for developed countries about de- mate Agree- (1997)[70] creasing CO2 ments Copenhagen developing countries involved in mitigation action process (2009) Paris Agreement limit the global warming into 2, developed countries are (2015)[3] expected to provide funding to help developing countries make the shift to cleaner energy sources EU Energy EU 20-20-20 pol- Increase 20% RES and energy efficiency by 2020; reduce & Climate icy[4] 20% CO2 emissions Package EU 2030 tar- 27% RES share across EU and decrease 40% GHG get[75] European Emis- By setting a limitation on CO2 emission, companies must sion Trading Sys- hold sufficient emissions allowances to cover their total tem(EU-ETS)[71] emissions Renewables Feed-in tariff renewable electricity generator receives a fixed fee for support (FIT) each unit fed into the grid schemes Green certificate renewable generators receive a certificate for each unit of and could trade with electricity suppliers

Renewables support schemes mainly include feed-in tariff and green certificate to force the penetration of RES. Since the connection between the DH system and electricity system, increasing the share of RES in the energy structure could decrease the CO2 emission in energy consumption. Gullberg et al. [9] determined that even though feed-in-tariffs plays a significant role in expanding renewable electricity in Germany, issuing new policies could assure a stable energy supply.

Even though single policy tools or the combination of policies could have different impacts on the DH system operation, policy instruments may drive the DH system transition in a more sustainable and clean direction, emphasizing the coupling with RES and reducing the emission.

2.5.2 Electricity price

The electricity price influences a DH system since the connection between the heating market and power market is linked when implementing energy conversion units such as CHPs and HPs. When the HP shares the supply in the DH system, considering the electricity it will consume during the producing heat process, the higher the electricity price is, the more profitable the CHP plant will be[17, 76]. With the penetration of solar DH technology in Denmark, higher electricity prices enabled the profitability of solar heat compared with natural gas boilers[40]. In Norway, a pumped hydro storage system, as well as the development of new renewable energy, may be affected by high electricity prices[9]. Dorotić et at.[48] developed a model with a day-ahead market electricity bidding price, and found that increasing the wind power share would reduce the electricity prices, which in turn would affect the capacity expansion and thermal production of HP. Helin and Syri[17] evaluated that the electricity price may affect the penetration of large scale HP, and that a CHP power plant may lose its competition in the heating market with decreasing price, thus making the HP profitable to generate the heat for the DH system in the Helsinki area.

2.5.3 Climate conditions

With the climate conditions different, the heat demand will show a seasonal fluctuation, since it is correlated with the outside temperature. Thus, the heat demand follows a daily systematic schedule due to large consumer masses having a similar consumption profile. Fabian[77] found that during the winter months, when heat demand is higher than in the summer, greater volatility is necessary to provide the power of using heat pumps to balance excess or deficit in the power system. Cold winters increase demand for heating, and ambi- ent temperature is one of the key factors affecting demand. According to climate forecasts, average temperatures are expected to rise in the future, resulting in lower heat demand[23].

2.6 A review of methods and approaches for analyzing district heating (DH) systems

The research method for analyzing the DH system is generally a multi-disciplinary analysis, including economical, technical, environmental as well as political aspects [10]. From a technical perspective, it is common to use simulation software on a building or the system scale to examine when the technologies to be implemented. From the social perspective, qualitative interviews with different stakeholders involved in the DH system are commonly used in research[36, 78]. In addition, the combination of different views such as social-economic aspect or techno-economic aspect could also be addressed, thus leading to concrete results. Paiho and Saastamoinen[78] investigated 29 stakeholders concerning the challenges and opportunities that may occur in the development of the DH system in Finland and recom- mended the utilization of waste heat and renewable production in the decarbonization target. Ma et al.[79] surveyed stakeholders about energy flexibility in DH concerning the dimensions of motivation, barriers and policies.

Amer et al.[80]applied energy system model, Balmorel to analyze the Copenhagen energy supply scenarios from the socio-economic aspects, the penetration of potential technology such as heat storages and excess heat would force the energy transition. Renaldi and Frie- drich[47] simulated solar DH system applied in UK building, showing the potential of implementation, without the stable sunlight could be solved by seasonal storage. Kazagic et al.[81] simulated the DH system by energyPRO from the environmental aspect to indicate the CO2, NOx, SO2 emissions, while the investment cost and fuel cost as the indicator for the economical aspect.

Table 2 Summary of the method used to analyze the DH system operation Perspective Authors Method Content Social S. Paiho and H. Qualitative analysis By sending the questionnaire to Saastamoinen[78] ;M collect the challenges and oppor- a et al. [79] tunities that happen in DH development; energy feasibility poten- tials in DH Socio-economic Amer et al. [80] Model simulation- Potential technologies affect Co- Balmorel penhagen DH supply Techno-economic Renaldi and Frie- Model simulation- The feasibility of installed solar drich[47] TRNSYS; Case DH system in UK study Technology Rämä and Moham- Case study, simula- The technical feasibility in distrib- madi[82] tion (Apros Process) uted and centralized systems Environmental Kazagic et al.[81] DH simulation Optimization RES coupling in DH -economic (energyPRO); Case procedure in Visoko Municipality study

3 Description of the case study area – Helsinki metropolitan region in Finland

Helsinki metropolitan area includes three cities: Helsinki, Espoo and Vantaa. This chapter will discuss background information and city-level decarbonization plans of DH system in these areas.

Each studied city has its own strategies for the decarbonization and mitigation of climate change. Three companies supplied and operated the DH in each city. Helen Ltd provides heating in Helsinki city, Fortum Power and Heat Oy supported for Espoo and Vantaan Energia Oy for Vantaa. Helsinki city is the capital city of Finland and has a population of 657 291[83]. The DH sales began in Helisnki city by Helen Oy in 1957[13]. Espoo is the second- largest city in Finland with a population of about 290,000[83], it is located in the west of Helsinki and covers an area of 528 square kilometers[84]. Fortum Oy is the DH operating company in Espoo, which started to sell DH in 1967[13]. Vantaa, another inner core of the Helsinki area, has 237 632 people in 2020[83], in 1969 Vantaan Energia launched DH sale to the city.

Table 3 Summary of DH in Helsinki, Espoo and Vantaa[13, 85] Helsinki Espoo Vantaa DH starting year 1957 1967 1969 Operation company Helen Oy Fortum, Espoo Oy Vantaan Energia Connections to DH 2020 93% 77% 90% DH demand 2020 6.3 GWh 2.3 GWh 1.8 GWh Fuels before 2020 Coal, NG, LFO, Coal, NG, LFO, Coal, HFO, Waste HFO, Wood pellets Wood pellets, Bio oil Bans coal use 2029 2025 2022 Energy conversion units CHP, HOB, HP CHP, HOB, HP CHP, HOB Heat storage 2020 √ √

All 3 cities will discontinue coal usages by 2030. Biomass will compensate the reduction of the coal, while HP will increase the share in DH supply in Helsinki metropolitan area. More heat storage capacity will be involved to balance the heat production and heat demand. Geothermal is another state of art technology in DH and will be in use in both Espoo and Vantaa. Buying heat from DC as well as waste heat from industry is an alternative for clean heat transition.

3.1 District heating system operating situation

The DH system in the studied area is connected with the electricity system, see Figure 6. The main generators for heat demand include CHPs, HOBs and HPs. Electricity could also be supplied by CHPs or other electricity generation plants. The products of CHP will be distributed to both the electricity market and DH network. The storage devices for storing the excess heat or electricity will be utilized when the supply exceeds demand, aiming to smooth the supply curve and increase the system efficiency. The electricity will be consumed by HPs during its operating process, making it both a heat generator and an electricity consumer.

Figure 6 DH system schematic in the studied case

3.2 District heat demand and consumption

The total heating demand is around 7 TWh in Helsinki city in 2019, which contributes to 20% in Finland[23], followed by Espoo heat demand, which fluctuates between 2 to 3 TWh during the past 10 years. Vantaa keeps fifth place in DH supply in the whole Finland with the DH production of about 1.6 TWh in 2019, see Figure 7. Among the studied years, 2015 has the lowest DH consumption because of the warm winter. Instead, year 2010 shows the opposite. The CHP power plants operate as the main suppliers for DH with the fuel input includes oil, natural gas, coal, peat, wood, and renewable energy[27]. The hot water is distributed across the country during the power generation process, providing heating to end-users through heating pipelines densely distributed under the city.

Figure 7 District heating supply (GWh) of three companies during years 2010-2019[13]

3.3 District heat fuels

The fuel consumption of DH production in the Helsinki metropolitan area shows in Figure 8. Coal still accounts for almost half of the total fuel consumption, followed by natural gas (32%), while biomass including forest chips and wood pellets is 5%. The percent of fossil fuel will decrease according to the decarbonization plan.

Figure 8 Fuel consumption in DH production in Helsinki metropolitan area in 2019[13]

The graph of different energy sources of DH production in 3 cities is shown in Figure 9. Coal and oil-based heat productions are gradually decreasing, thanks to the compensation of HPs in both Helsinki and Espoo, as well as the expansion of waste combustion power plants in Vantaa. By addressing the importance of phasing out coal globally, there is an increase on types of energy resources in DH system from 2010 to 2019. This leads to a drop in fossil fuel usage, such as natural gas utility from 76% in Espoo in 2010 to only 15% in 2019. Bioenergy such as wood pellet is becoming increasingly important in DH. The technologies for integrating different heat sources to supply heat are still under development.

Figure 9 Fuel consumptions of DH production in the Helsinki Metropolitan Area by cities (GWh)[86]

3.4 Temperature and heating degree days

The Helsinki DH system is designed to meet outdoor temperatures as low as -26°C. The operating temperatures range from 80°C to 115°C on the supply side and 40°C to 60°C on the return side. It varies depending on the seasons and heat demand[23].

Figure 10 Heating degree days in Helsinki area,2010-2020[87]

The heating degree days (HDD) imply the time during a year that the building needed to be heated up. Hence, the average temperature during the year could be reflected by HDD. The less HDD is, the warmer the winter is in the specific year. The overall HDD shows a declining trend in Figure 10. In 2010, the HDD is 4376 which is the highest during the 10 years, HDD in 2015 is 3118 hours, while in 2020 having 2906 hours is the lowest[87].

3.5 Heat transmission

The heat transmission between the cities through heat exchanger stations. The interconnections between Helsinki and Espoo, Vantaa and Helsinki show in Figure 11. There are 2 heat transmission stations between Helsinki and Vantaa, one is in Rajatorppa with 50 MW capacity and the other is in Heidehof of 80MW. The connection between Espoo and Helsinki is located in Vermo with a transmission capacity of 80 MW[88]. In 2018, the transmission capacity in Helsinki-Espoo increased to 120 MW[23]. The transmission could occur in both directions.

Figure 11 The existing DH connections in the Helsinki Metropolitan Area[88]

3.6 Helsinki city DH system

Helen Ltd, also known as Helsingin Energia, is in command of DH operation including heating generation, production, transmission for the Helsinki city. Helen began to sell DH production in 1957, making it the earliest DH supplier in Finland[89]. The underground pipelines of DH transfer the heat to buildings in the residential area of Helsinki city with a length of 1390 kilometers in 2019, 93% of the population is connected to the DH system[13]. For heat generators in the capital Helsinki, a total of 4 CHPs is responsible for 90% of space heating and domestic hot water supply to the city, with the other HOBs as the backup in chilly winter, see Table 5. Coal consumed 53% of the total fuel for generating DH in Helen in 2018, which decreased about 6% compared with 2017, instead, increasing the bioenergy and natural gas usage[90]. In the total heat demand in Helsinki, residential customer needs account for 62 %, while commercial buildings take 34 %, and only 4 % is needed for industries[23].

The improvement of the DH system in Helsinki city is driving to low-temperature heating and cooling systems for distribution and transmission. At the same time, heat energy from the waste heat can be recycled to improve energy utilization. In 2018, 53 % of the DH production used coal as an energy source, 35 % used natural gas, and the remaining 12 % was split into overheat pumps, biofuels, and fuel oil[23]. The large-scale heat storage system: Mustikkamaa will be completed in 2021 while Kruunuvuorenranta will be implemented by 2030.

Table 4 Summary of heat generation units in Helsinki DH network in 2019[13] Unit Unit Starting year Heat output Power output Main fuel type (MW) (MW) HOB Alppila 1964 136 - light fuel oil Munkkisaari 1969 235 - heavy fuel oil Ruskeasuo 1972 248 - heavy fuel oil Lassila 1977 324 - natural gas Patola 1982 228 - natural gas Salmisaari 1986 190 - coal Salmisaari 1977 8 - heavy fuel oil Jakomäki 1968 44 - heavy fuel oil Myllypuro 1978 240 - natural gas Vuosaari 1989 120 - natural gas Hanasaari 1977 56 - heavy fuel oil Hanasaari 2009 282 - heavy fuel oil Salmisaari 2018 92 - wood pellets HP Katri Vala 2006 105 - - Esplanadi 2018 22 - - CHP Salmisaari B 1984 300 160 coal Hanasaari B 1973 429 218 coal Vuosaari A 1991 158 160 natural gas Vuosaari B 1998 429 470 natural gas

3.6.1 Helsinki district heating development

CHPs fueled by coal and gas produce the basic heat production in the Helsinki DH network, along with smaller capacity of HOBs and HPs for peak demand in order to reinforce the stability of DH systems, see Figure 12. In detail, two CHP coal-fired plants are located separately in Salmisaari and Hanasaari, and two natural gas CHP plants stand in Vuosaari, with a total thermal capacity of 1,300 MW and electricity capacity of 1000 MW in 2019[13]. Apart from the CHPs, the total HOBs production amount was 2,500 MW[13]. In addition, there are 2 heat storage systems located at Salmisaari(20000 m3) and Vuosaari (25000 m3) with a capacity of 2250 MWh in total[23]. Under the decarbonization goals of Helen, the Hanasaari CHP will be decommissioned at 2025, instead, bioenergy heating plant, HPs as well as heat storage systems will be constructed for a stable heating supply system.

Figure 12 Timeline of main power plants in Helen Ltd. and the decarbonization goals 1960–2035[91].

The power plants fleet operated by Helen has located in different places of city Helsinki[23, 67], the detail of the power plant shows below:

(1) Hanasaari The CHP plant of Hanasaari B was commissioned in 1973 with a heat capacity of 430 MW and 220 MW for power capacity. It is mainly powered by coal but blended with pellets at the end of 2015. The plant is operated all year round except for a maintenance break during summer. Heavy fuel oil-based HOBs separate in the Hanasaari heat center with a total heating capacity of 280 MW and are used for peak demand. The Hanasaari CHP coal-fired power plant will decommission at the end of 2024 to meet the carbon neutrality goal in 2035. In- stead, a new bio heat boiler (505 MW) will be established to compensate for the closing of the Hanasaari power plant.

(2) Vuosaari The Vuosaari factory includes two CHP units powered by natural gas, with an efficiency of 93%. Vuosaari A (170 MW for heat capacity, 150 MW for power capacity) and Vuosaari B (430 MW for heat capacity and 450 MW for power capacity), as well as a HOB (120 MW) for peak load. Since natural gas is lower in the merit order than coal, the Vuosaari plants have mainly been used to complement Hanasaari and Salmisaari. Besides, the benefit of CCGT compared to CHP is the high flexibility. There are currently no plans to step away from natural gas. Vousarari heat accumulator with 1000MWh storage capacity was commissioned in 1987.

(3) Salmisaari Where Salmisaari B, a CHP unit with a heating capacity of 300 MW and a power production capacity of 160 MW. Salmisaari A consists of 2 HOBs with 280 MW for total heat capacity, 190 MW for heat capacity from a coal boiler, the remaining 90 MW is generated by a pellet HOB which was established in 2018. A heat storage unit with 100 MW as dispatch capacity commissioned in 1998 also included. Salmisaari B CHP plant is operated all year long with coal and a small portion of biomass as the fuel. During the summer months, it contributes to district cooling by wastewater. Under the decarbonization goal in Helen, Salmisaari B is planned to phase out or transformed into other fuels by 2029. The coal boiler was used more infrequently to transition away from fossil fuels, while the pellet boiler has been used to replace fossil fuels during peak demand. A new pellet HOB was built in 2018 planned at the Salmisaari production site.

(4) Katri Vala and Esplandi heat pump station The Katri Vala heat pump station operates with a 100 MW capacity for district heating and 60 MW for district cooling, which is the largest heat pump station in the world. An additional 20 MW of heat capacity should be operational by 2021, and Helen is planning another expansion of 20-40 MW to be available for use in 2022. The thermal capacity of the Katri Vala heating and cooling HP will increase to 155 MW. It utilizes heat recovered from wastewater and returns water from the district cooling. In 2019, its production covers up to around 8 % of all district heating in Helsinki and 70 % - 75 % of district cooling. During winter, only 5 % of Helsinki heat demand is recovered, mostly from wastewater. A HP connected to the Vuosaari power plant will be completed in 2020. It uses the power plant's own cooling water circulation as well as the heat from seawater, with a heating capacity of 13 MW and 9.5 MW of district cooling power.

(5) Mustikkamaa and Kruunuvuorenranta The Mustikkamaa heat storage unit has a heat dispatch capacity of 120 MW promote flexibility of the Helsinki DH system. It is established in an old underground fuel oil cavern and will be equipped with hot water and join the DH system using a heat exchanger. Such heat storage unit will be completed in 2021 and could store 12 GWh heat. Additionally, the Kruunuvuorenranta heat storage system will be completed in 2030, as the first seasonal storage system in the world.

3.6.2 Helen carbon neutrality target

Helen has set to realize the carbon-neutral goal by 2035, during the process, it will first reduce the CO2 emission by about 40% compared with 1990 in 2030[10], the main replace- ment and the milestone show in Figure 12. T0 cease the Hanasaari coal-fired plant by 2024 for meeting the coal-free requirement before 2029, about 250 MW bioenergy heating plant (wood pellets as the main fuel) will be built on Vuosaari in 2023 to ensure the Helsinki heat demand during the winter. Helen will halt the use of coal entirely by 2029[20].

3.7 Espoo DH system

The DH network in Espoo is commanded by Fortum Power and Heat Oy, which is a Finnish majority state-owned (about 50.8%) energy company as well as the largest Finnish energy company. It is also the third-largest electricity producer and the largest electricity retailer in Northern Europe[21]. As the electricity production comes from hydropower and nuclear power, making Fortum one of the lowest carbon emission producers in Europe. During the year, the temperature in Espoo usually varies from -9°C to 22°C and the daytime varies greatly throughout the year. In 2020, the shortest day has 5 hours and 48 minutes of daylight, and the longest day lasts 18 hours and 57 minutes of daylight[92].

In the Fortum clean heat transition journey, the main replacements of power plants in Es- poo’s DH show in Figure 13. Fortum plans to shut down Suomenoja1 coal-fired unit by 2025, a HP utilizing waste heat from wastewater will be implemented instead. Another Suome- noja3 coal-fired unit starting since 1986, will be closed at 2021. A HOB (49MW) utilizing wood pellet was commissioned in Kivenlahti to generate heat production in 2020. In addition, a bio-oil fueled HOB was established in Vermo in 2017 as compensation. Otaniemi geothermal HP as well as waste heat usage from data center will be added to the DH system in Espoo gradually.

The fuel using in the DH network of Espoo was mainly natural gas in 2010; in 2015, fuel- fired heating was mainly by coal-fired heating; in 2019, the proportion of coal-fired heating declined, and biomass contribution has risen significantly, but it is clear that fossil energy still domains the energy consumption[86]. Increasing utilization of natural gas as well as biomass while decreasing coal, expanding the capacity of HPs, adding excess heat from shopping malls, hospitals, and data centers, are the choices for DH system decarbonization operation. It also shows in Fortum clean heat plan, which addresses the milestone of how to ban the use of fossil fuels and increase the variety of heat resources.

Figure 13 Timeline of main power plants in Espoo DH system[21]

The existing heat generation units in Espoo show in Table 5. The DH system consists of the CHP as the base load suppliers, HOBs and HP as peak load generators. The feedstock includes oil, natural gas and coal.

Table 5 Summary of heat production units in Espoo DH network in 2019[13] Unit Unit heat output Power output Main fuel type (MW) (MW) HOB Kivenlahti 40 - wood pellet Suomenoja 7 17 - natural gas Tapiola 160 - natural gas Suomenoja 3 80 - coal Vermo1 80 - natural gas Vermo2(bio oil) 35 - bio oil Vermo2(gas) 45 - natural gas Kaupunginkallio 80 - light fuel oil Otaniemi 120 - natural gas Juvanmalmi 15 - natural gas Kalajärvi 5 - light fuel oil Masala 5 - natural gas Kirkkonummi 31 - natural gas HP Suomenoja 4 40 - - CHP Suomenoja 1 162 75 coal Suomenoja 2 213 234 natural gas Suomenoja 6 80 49 natural gas

3.7.1 Fortum carbon neutrality target

Fortum has a concrete plan in transforming to clean heat in the Espoo DH system. In 2025, Espoo will discontinue the use of coal as the feedstock for DH. In detail, two coal- fired units will be decommissioned already in 2020, the waste heat recycled, geothermal and other clean energy will be implemented instead. Till 2029: 95% share of sustainable substitute fuel to realize carbon neutral district heating in Espoo[21].

3.7.2 Espoo heating energy transition plan

According to the Fortum and city Espoo carbon-neutral district heating 2020 plan, Espoo will transit to the clean heat through the following aspects[21]:

(1) Biofuel In Kivenlahti, there exists two heavy fuel oil powered HOBs with a capacity of 130MW. The 49 MW biomass-fueled heating plant has been commissioned in 2020. It aims to replace Suomenoja coal-fired plant to ensure the heat demand.

(2) Geothermal In 2017, Fortum and St1 Company cooperated to establish a geothermal power plant in Ot- aniemi, which is expected to be applied in 2021. It is using the internal heat of the earth to build an internationally unique thermal power plant with a total length of 6.4 kilometers. The production of the plant will cover 10% of the DH demand of Espoo[21]. After established, Fortum will purchase the heat from St1 to ensure the total heat production[93]. It will become an important support for Espoo to achieve the goal of carbon neutrality.

(3) Waste heat recovery In the Espoo area, when the excess heat is generated by the residential buildings or utilities, the waste can be transferred to the two-way district heating network designing and operating by Fortum. Waste heat from the data center also can be recovered and returned to the DH system thus improving the system efficiency[28]. Around 16% of the heat production is recovered from waste heat, the number will be increased to over 30% by 2022 under the clean energy transformation target[58]. In Suomenoja Fortum will establish a 20 MW HP by re- covering the heat source from treated wastewater and seawater in the summer. Such a unit is expected to be commissioned in autumn 2021.

(4) Demand side response The intelligent control of the DH system can optimize the heat generation and the heating of the building at different intervals, thereby directing the heat to where it is most needed at the time. Through the demand side response (DSR), the use and emissions of standby thermal power plants can be reduced. For example, showers in the morning require hot water, so the heat will flow directly to them, but not all buildings need heating at that time. In the meanwhile, the heating requirements of the shopping center may temporarily decrease. Khabdullin et al.[94] determined that DSR is correlated with electricity price and could in DH systems increase the share of renewable electricity. An environmental-friendly DH system allows to control the heat consumption and production and curb climate change. The more buildings with the demand-side response, the more ecologically efficient the energy system.

3.8 Vantaa DH system

Vantaa is the neighboring city of Helsinki and its DH originated in 1969 by Vantaan Energia Oy. The company is 60% owned by Vantaa city and the rest 40% is owned by Helsinki city[95]. In 2019, Vantaa has 210,000 population in DH houses out of a total of 233,775 residents, about 90% could access the DH. The total length of DH lines for Vantaa Energia is 577.8 km[13].

Different from Helsinki and Espoo, there is no HP in the Vantaa DH system since the heat demand is lower compared with other areas. Instead, combusting waste to generate heat is an alternative and specific method in Vantaa area. Vantaa waste incineration plant receives waste from the whole metropolitan area. The capacity of such technology will expand on the way to decrease coal consumption. The summary of energy conversion units in Vantaa shows in Table 6. Comparing with the power plants in Vantaa DH network in 2015, the light fuel oil fueled HOB as well as gas turbine power station in Martinlaakso has been replaced by the new bio-fueled power plant in Martinlaakso. Thus, it converts the gas and oil-fueled power plant into a biopower plant, the mixed biomass includes wood leaves, recovered wood, and by-products of the wood industry and so on, which will be considered as wood chips in the simulation.

Table 6 Summary of heat production units in Vantaa DH network in 2019[13] Unit Unit Starting Heat Power Main fuel type year output (MW) output (MW) HOB Koivukylä 1972 75 - natural gas Hakunila 1972 80 - natural gas Maarinkunnas 2002 180 - natural gas Lentokenttä 2008 92 - light fuel oil Varisto 2014 92 - natural gas CHP Martinlaakso 2 1982 145 75 heavy fuel oil Martinlaakso 4 1995 90 88 natural gas (Combined cycle) Martinlaakso 1 (bio) 2019 100 28 wood chips Jätevoimala 2014 147 76 waste

According to Vantaan Energia carbon neutrality plan (see Figure 14), along with the expansion of the waste-to-energy power plant, the natural gas and oil-based power plant have been replaced by the biopower plant in Martinlaakso in 2019. It will terminate the peat in DH in 2021. In addition, opening of a geothermal heating plant in the Varisto district to help decarbonization. Seasonal storage projects, as well as solar heat, will be implemented till 2026 to realize the fossil-free DH system. The other step including increasing bioenergy share (since 2024), recycling excess heat (2027-2030), penetrating geothermal and renewable (2030-2045), finally achieving carbon natural in 2045[22].

Figure 14 Vantaa Energia milestones to achieve carbon neutrality[22]

(1) Waste-to-energy The waste-to-energy plant was completed in 2014, fueled by mixed waste, the natural gas is also used in the process to improve energy efficiency. Combusting waste to generate electricity could reduce 40% percent of fossil fuel usage and covers 30% of electricity demand in the Vantaa region[22]. To realize the fossil-free in 2026, the waste processing project will be expanded in March 2020 and is scheduled to be put into operation in the fall of 2022. In addition to mixed waste from households, the extension of the waste-to-energy plant will enable the utilization of waste-to-energy from commerce and industry on an increasingly higher scale already in 2022. With the expansion, the heat generated by waste will be traded to Helen's DH network, which supports Helsinki's carbon-neutral goals. By purchasing heat from a waste-to-energy plant, Helen will mainly replace coal production, which can reduce its emissions by approximately 60,000 tons per year[96].

(2) Seasonal energy storage The seasonal energy storage, solar and wind-heat production will be commissioned in 2026, enabling clean energy production. Seasonal heat storage can store excess heat generated in summer as well as solar energy when heating demand is low. The stored heat during the sub- zero temperature could be used at the highest heat demand period. The facility called Vantaa Energy Cavern Thermal Energy Storage will be the world’s largest cavern thermal energy storage with 1,000,000 m3 in size and 90 GWh capacity[97].

(3) Non-fossil fuel production The Martinlaakso CHP plant which used to be fired by coal (built-in 1982) and natural gas(built-in 1995) was converted into biofuels in 2019, during the process of achieving the 2026 fossil-free goals. The peat production will be terminated till 2021. Biogas will replace natural gas as the feedstock at the end.

To sum up, both Helsinki and Espoo have the plan to abandon the coal usage in DH system till 2029, while Vantaa will discontinue to use the coal in 2022 and finalize the plan to realize the carbon-free in 2045. Processing and realizing the ambitions, Espoo especially devotes HPs from geothermal and other excess heat recovery, Helsinki promotes the capacity of the heat storage, while Vantaa expands the waste incineration power plant to replace the coal- fired power plant. With the special strategies and focus in each city, the simulation model will reflect the changes and compare the result when combing the 3 cities.

3.9 Basics for scenario development

Apart from the existing power plants in the DH system in the Helsinki metropolitan area, there are still opportunities to improve the DH and achieve the decarbonization goals along with the plan.

Helsinki city[20]: • Helen will establish a new heating facility with wood chips as main fuel in Vuosaari. a thermal capacity will be 260 MW, which will be ready for the 2022–2023 heating season. Also, a HP will connect to Vuosaari with 13 MW capacity in 2022. • Another wood pellet-fueled heating boiler in Patola with a capacity of 120 MW before 2029, and a new wood chips-fueled HOB in Tattarisuo of 130 MW. Which aims to ensure the decommission of the Hanasaari coal-fired power plant in 2024. • Helsinki City Council has decided in 2015 to increase the share of biofuel in Hanasaari and Salmisaari power plants. Wood pellets will account for 40% of overall fuel in the Salmisaari plant in the near future, up from 7% now[98]. In addition, Helen planned to replace the coal usages in Salmisaari by 2029[18]. • The thermal capacity of the Katri Vala heating and cooling HP will increase to 155 MW. • The Mustikkamaa heat storage plant with a volume of 260,000 cubic meters and a capacity of 12 GWh will be completed in 2021. • Kruunuvuorenranta rock caverns will complete in 2030 with a volume about 300,000 cubic meters.

Since in Helsinki city, there is no accurate year of the Tattarisuo and Patola HOBs commission, it will be involved in the 2025 model.

Espoo[21]: • Otaniemi geothermal power plant will be applied in 2021 with a heat capacity of 40 MW. It is owned by ST1 and Fortum could buy the heat for use in the Espoo DH network [93]. • A 58 MW wood chips-fired HOB in Kivenlahti will be installed in 2020, to replace Su- omenoja3 coal-fired power plant of about 70 MW. • A new 20 MW HP will be complete in Suomenoja in 2021. Which would use the excess heat from waste water and sea water. • The first Ämmässuo wood chips HOB is planned to complete in 2022, with a capacity of 90MW. While the second Ämmässuo HOB will be established between 2025 and 2030, with a capacity of 110 MW. • Suomenoja1 coal-fired CHP will be terminated between 2025 and 2026. Decommission- ing of Suomenoja SO6 gas-CHP between 2022 and 2023. • Utilizing HPs to recover excess heat from DCs, wastewater, and industry will be implemented in Espoo to replace coal usage. A 100 MW DC is planned to construct in 2021 with excess heat being used in the DH network[28].

Vantaa[22]: • Vantaan Energia plans to construct seasonal heat storage called VECTES (Vantaa En- ergy Cavern Thermal Energy Storage) with 1,000,000 m3 and 90 GWh storage capacity in 2026. • Expansion of Waste-to-Energy plant in 2022, there will be a new HOB fueled by waste with a fuel input as 80 MW and heat output at 68MW. It will consume the commercial waste which used to be exported from Finland, about 200000 tons [99]. • The Varisto geothermal plant will produce about 1,400 MWh of heat per year in 2021. It only has 0.16 MW capacity by calculation. Since no accurate capacity data could be found, such a power plant doesn’t affect much and will be ignored in 2025 and 2030 DH system simulation.

4 Methodological approach

In this chapter, a modeling framework (EnergyPro Software) is used to simulate the DH system in the Helsinki metropolitan area. After establishing the individual DH system in each city, 3 DH systems are combined into a global DH with transmission allowed in both directions (Helsinki-Espoo and Helsinki-Vantaa). As the model operates to match the heat demand with the heat production, a least system operation cost solution will be generated, as well as the amount of CO2 emissions from the whole DH system during the years. The performance indicators from energyPRO could estimate DH system working process through economic, environmental, and technological aspects. This chapter also provides a brief introduction of the software about how it operates, applied cases as well as limitations.

4.1 Description of modeling framework

The energyPRO is an input/output software developed to simulate the energy system, con- sisting of the electricity market and heat market[100]. The different types of fuels, power plants used for heat generation, would be involved in the model with the flexible software structure. Those power plants could connect to the heat or electricity sites in the model au- tomatically based on different working principles.

The mechanism of the DH model starts from fuel input, which provides energy for DH technologies to generate heat and electricity, see Figure 15. Specifically, CHPs could produce heat and electricity at the same time. The electricity output can be converted to heat using for HPs. After that, the hourly heat production is compared with hourly heat demand, if the heat production exceeds the heat demand, which means the heat demand will be fully met, extra heat will be retained in heat storage systems. If the heat supply is insufficient to meet the heat demand, the requisite amount of heat will be taken from the heat storage. If the heat storage is full, there will also have excess heat during the storage process.

Figure 15 Schematic diagram of the DH model

A least-cost solution will be provided by energyPRO, while it ensures the hourly heat demand could be met by heat supply. The technical report shows not only the hourly heat and electricity production graph including all power plants but also includes how different energy conversion unit operation (full load time during the year, utilization factors and so on). Economic metrics include total annual profit (revenues minus total expenditures) on each power plant in DH, and monthly cash flow in a precise format for the feasibility study. The CO2 emission amount is calculated by types of fuel consumptions in DH system and CO2 emission factors depended on fuels, reflecting in the environmental report. Those result helps to understand how DH system operation in an optimal solution. When a new power plant penetrates the DH network, the impact on the system will be reflected by the operating cost as well as the emission amount.

The parameters used in the simulation and output results may include in energyPRO shows in Figure 16. Input parameters mainly focus on technology, environment, and finance in accordance with the model operation strategy. Each energy conversion unit would consider all those aspects. For technical parameters, it involves plants' capacity, efficiency, starting- up time and so on. The economic parameters focus on revenues and operating expenditures. The operation cost will be spread in each technology unit, including fuel cost, fuel tax, operating and maintenance cost as well as the CO2 allowance. For the environment aspect, the CO2 emission is considered based on the fuel input instead of the energy conversion unit emitting of the DH system. As for output results, the energyPRO will provide an hourly heat production graph with the real operating time and full load time during the simulation years. It will also show an operation strategy of different power plants with merit order regulation as well as to achieve the least-cost solution. The monthly emission and cash flow will also be calculated.

Instead of simulating each city DH system, the research combined 3 cities into a global DH by adding the different sites and creating linkages, the heat trading through the separate city DH system could also be reflected from the results.

Figure 16 Input and output parameters used in the model

There are many cases which utilize energyPRO to simulate DH operation. Kontu et al.[54] simulated the HP penetration viability in small, middle and large-scale DH systems in Fin- land by energyPRO, and found that raising the capacity of HPs to the system would lower DH operation costs. Kazagic et al.[81] established the DH network with fossil fuel and bio fuel-based CHPs, trigeneration and other types of power plants in the Municipality of Visoko by energyPRO, the technic and economic indicators show the sustainability of DH system. Instead of simulating the realistic DH system or predict the future situation, energyPRO also could be applied to analyze factors that influence the system sensitivity, such as Helin, Syri [17] created different scenarios for DH model by energyPRO based on assumptions of the future fuel prices, and the results show the potential of large-scale HPs in the Nordic DH system in the future.

4.2 Mathematical formulation

According to the algorithm of the model, it aims to ensure that the energy supply meets the demand by minimizing the operation cost[100]. The objective function is presented in Equation 1: ( ) Equation 1 Where, 𝑛𝑛 𝑚𝑚 𝑀𝑀𝑀𝑀𝑀𝑀𝛴𝛴𝚤𝚤=̇1 ∑𝑗𝑗=1 𝑓𝑓𝑖𝑖 𝑥𝑥𝑖𝑖𝑖𝑖 ( )= hourly heat production costs for different types of energy conversion power plants(€) = heat production from energy conversion units (MW), each unit produces heat at hour 𝑓𝑓𝑖𝑖 𝑥𝑥𝑖𝑖𝑖𝑖 𝑖𝑖𝑖𝑖 𝑥𝑥 𝑖𝑖 To𝑗𝑗 be specific, for HOB the cost is calculated by multiplying the (fuel cost, €/MWh),

(fuel taxes, €/MWh), (operation and maintenance costs, €/MWh) and (CO2 & 𝑃𝑃𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓 emission allowance, €/MWh) with (the amount of heat generated, MW) and dividing by 𝑃𝑃𝑡𝑡𝑡𝑡𝑡𝑡 𝑃𝑃𝑜𝑜 𝑀𝑀 𝑃𝑃𝐶𝐶𝐶𝐶2 the efficiency ( ). CO2 emission costs are excluded if the units is fueled by biomass, since it 𝑥𝑥𝑖𝑖𝑖𝑖 was assumed as carbon neutral. 𝜂𝜂

= ( + + & + ) Equation 2 𝑥𝑥𝑖𝑖𝑖𝑖 𝑖𝑖 𝑖𝑖𝑖𝑖 𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓 𝑡𝑡𝑡𝑡𝑡𝑡 𝑜𝑜 𝑀𝑀 𝐶𝐶𝐶𝐶2 𝑓𝑓 �𝑥𝑥 �𝐻𝐻𝐻𝐻𝐻𝐻 𝜂𝜂 𝑃𝑃 𝑃𝑃 𝑃𝑃 𝑃𝑃 CHPs could generate both heat and electricity. The fuel input will be used for producing both (heat, MW) and (electricity, MW) in the simulation, (fuel cost, €/MWh) is multiplied𝑖𝑖𝑖𝑖 by total power production𝑖𝑖𝑖𝑖 divided by the total efficiency.𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓 Fuel taxes in Finland are based𝑥𝑥 on 90% of heat𝑞𝑞 production, which aims to decrease the𝑃𝑃 taxation on CHPs[101] (see 5.2.3) . Apart from the same expenditures components ( & and ) as HOBs, the revenue from selling electricity to the day ahead market will be𝑜𝑜 removed𝑀𝑀 𝐶𝐶𝐶𝐶 from2 the total costs of CHP. The revenue of CHP will only be gained from the𝑃𝑃 electricity𝑃𝑃 market in energyPRO simulation based on , (the hourly electricity price, €/MWh) multiply by electricity production (MW). 𝑒𝑒𝑒𝑒 𝑗𝑗 𝑃𝑃

= ( + & + ) + 0.9 , , Equation 3 𝑥𝑥𝑖𝑖𝑖𝑖+𝑞𝑞𝑖𝑖𝑖𝑖 Where, 𝑖𝑖 𝑖𝑖𝑖𝑖 𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓 𝑜𝑜 𝑀𝑀 𝐶𝐶𝐶𝐶2 𝑖𝑖𝑖𝑖 𝑡𝑡𝑡𝑡𝑡𝑡 𝑒𝑒𝑒𝑒 𝑗𝑗 𝑒𝑒𝑒𝑒 𝑗𝑗 𝑓𝑓 �𝑥𝑥 �𝐶𝐶𝐶𝐶𝐶𝐶 𝜂𝜂 𝑃𝑃 𝑃𝑃 𝑃𝑃 ∗ 𝑥𝑥 ∗ 𝑃𝑃 − 𝑞𝑞 𝑃𝑃 = electricity output from CHP (MW), CHP unit produces electricity at hour

𝑞𝑞𝑖𝑖𝑖𝑖 𝑖𝑖 𝑗𝑗 HPs are used on the system to generate heat and will consume electricity. (electricity tax, €/MWh), (electricity distribution fee, €/MWh) which is the are considered 𝑃𝑃𝑒𝑒𝑒𝑒 𝑡𝑡𝑡𝑡𝑡𝑡 as constant. CO𝑑𝑑P𝑑𝑑 𝑑𝑑is𝑑𝑑𝑑𝑑 𝑑𝑑the𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑 coefficient of performance of HP. 𝑃𝑃 = , & Equation 4 𝑃𝑃𝑒𝑒𝑒𝑒 𝑗𝑗+𝑃𝑃𝑒𝑒𝑒𝑒 𝑡𝑡𝑡𝑡𝑡𝑡+𝑃𝑃𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑+𝑃𝑃𝑜𝑜 𝑀𝑀

𝑓𝑓𝑖𝑖�𝑥𝑥𝑖𝑖𝑖𝑖�𝐻𝐻𝐻𝐻 𝐶𝐶𝐶𝐶𝐶𝐶 S.t. , , , , ; 𝑥𝑥𝑚𝑚𝑚𝑚𝑚𝑚 𝑖𝑖 ≤ 𝑥𝑥𝑖𝑖 ≤ 𝑥𝑥𝑚𝑚𝑚𝑚𝑚𝑚 𝑖𝑖 , , , + , , , , ; , 𝑞𝑞𝑚𝑚𝑚𝑚𝑚𝑚 𝑖𝑖 ≤ 𝑞𝑞𝑖𝑖 ≤ 𝑞𝑞𝑚𝑚𝑚𝑚𝑚𝑚 𝑖𝑖 ∀𝑖𝑖 ∈ 𝐼𝐼 𝑑𝑑𝑚𝑚 ≤ ∑𝑖𝑖∈𝐼𝐼 𝑚𝑚 𝑛𝑛∈𝐴𝐴 𝑥𝑥𝑖𝑖 𝑗𝑗 ∑𝑚𝑚 𝑛𝑛∈𝐴𝐴 𝑡𝑡𝑚𝑚 𝑛𝑛 − ∑𝑛𝑛 𝑚𝑚∈𝐴𝐴 𝑡𝑡𝑛𝑛 𝑚𝑚 ∀𝑚𝑚 𝑛𝑛 ∈ 𝐴𝐴 = 0,1 , , , 0 𝑦𝑦𝑖𝑖 𝑖𝑖 𝑖𝑖 𝑗𝑗 𝑘𝑘 Where, 𝑞𝑞 𝑥𝑥 𝑡𝑡 ≥ , = Maximum electricity output of a power plant (MW) , = Minimum electricity output of a power plant (MW) 𝑞𝑞𝑚𝑚𝑚𝑚𝑚𝑚 𝑖𝑖 𝑖𝑖 𝑚𝑚𝑚𝑚𝑚𝑚= 𝑖𝑖Heating demand of area (MWh) 𝑞𝑞 = DH transit from area to (MWh) 𝑖𝑖 𝑚𝑚, 𝑑𝑑 , , 𝑚𝑚 𝑚𝑚= 𝑛𝑛Area of DH network 𝑡𝑡 = binary variable for plant𝑚𝑚 , on𝑛𝑛 (1) or off (0) 𝐴𝐴 1 2 3 𝑎𝑎 𝑎𝑎 𝑎𝑎 𝑖𝑖 4.3𝑦𝑦 Model overview 𝑖𝑖

The DH system model is established based on current system components and heat flow directions from suppliers to the consumers. The system simulation originates from the fuel input where the heat value is needed, then it flows to energy conversion units with different operating parameters based on the study cases. The heat demand would change depending on outdoor temperatures. The price of electricity is also included since the CHP could generate electricity to sell to the electricity market, while HP may consume the electricity. The hourly temperature, electricity price, and hourly heat demand are considered as modeling inputs.

Within the scope of the studied area, the models of 3 cities in the Helsinki metropolitan area DH system were created on energyPRO. Figure 17 gives a DH system overview of each city. Each DH system has three main components: fuel input, energy conversion power plants, and energy output. For energy output side, it not only focuses on the heat demand in each city but also allows to transmit the heat between Helsinki-Vantaa and Helsinki-Espoo, there is no linkage between Espoo and Vantaa. Day-ahead electricity market, as well as heat rejection for rejecting the heat for cooling the engines of CHPs, are also included in the model. Before 2020, the model created based on each city DH situation, in the future simulation, it depends on the requirements of decarbonization objectives by DH companies. a)Helsinki DH 2020 b) Espoo DH 2020 c) Vantaa DH 2020

d) Combined of 3 sites with transmission capacity allowed

Figure 17 Overview model of 3 studied cities in the Helsinki metropolitan area in the year 2020 by energyPRO All fuels in the model are inside the orange frame, the black frame involves energy conversion units and heat storage, the red frame means the heat demand of each city, the yellow frame includes the neighbor cities heat demand, while the blue frame highlights the day-ahead electricity market.

CHPs, HOBs, HPs, and heat storages consist of a complete DH system. The CHPs provide baseload heat demand of the city and are generally fueled by coal, gas as well as waste before 2020. HOB feedstocks except for those mentioned fuel, still contain light fuel oil (LFO), heavy fuel oil (HFO) and other biomass.

4.4 Model assumptions

• Heat losses in the DH transition pipeline among 3 cities, as well as heat loss of heat storage systems, are not considered. Hence, the model will provide idealized results regardless of losses. • Different HOBs using the same fuel in each city are considered as one HOB in ener- gyPRO simulation to simplify the model. However, it may not as accurate as a separate HOB unit, due to the fuel input of each unit is calculated based on the energy conversion efficiency. Because the simulation summarizes different HOBs with the same fuel large- scale boiler, the efficiency is averaged in HOBs fleets. • EU-ETS regulates that all the power plants over 20MW will be involved in the trading system. Since HOBs using one fuel are simulated as one HOB, it increases the capacity. It makes all HOBs into the trading system, even though there are some HOBs with a capacity of less than 20 MW. In addition, Vantaa waste-burning power plant also is considered as the CO2 allowance-paid CHP, with the nature gas as the backup fuel. • Mix fuel (7% wood pellet and 93% coal) is the feedstock for Salmisaari B CHP and Hanasaari B CHP in Helsinki city (see 3.6.1), where the mixed fuel price and CO2 allowance price cannot be found, thus calculating based on the same share of the fuel blend. • Waste as the feedstock is assumed as a limited amount each month during the simulation. The monthly restriction amount equals to the average of the total consumption in a year. It will ascend annually with the capacity of energy conversion units increasing.

4.5 Model limitations

• EnergyPRO only focuses on the heat generation and production side, without considering how heat productions transmit and how they are distributed to different consumers. For energy conversion units, energyPRO only considers the size, capacity, and efficiency, without other professional parameters such as construction materials. • The ramp-up/down reaction time was not considered for HOBs in the model, since they are simulated in a whole HOB if the feedstocks are the same. Different HOB has different response time in the real situation. • EnergyPRO could only simulate a one-year system operating situation, it requires collecting results (CO2 emission, operation cost, etc.) of each year manually to compare the changes of system operation. Moreover, this study only considers the CO2 emission trend, as the indicator of evaluating decarbonization goals, other emissions such as NOx and SO2 are not included in the study. • The model doesn’t involve the DH income (revenue from selling the heat production). Moreover, annualized investment costs for different energy conversion units are not considered in the cost analysis. For analysis of the economic aspect, total operation costs including whole costs of energy conversion units, as well as average heat production cost which equals to total revenues from the electricity market extracted from operation expenditures divided by total heat demand in energyPRO, will be used as indicators. • Regardless of the biomass accessibility, cost of transportation hasn’t been involved in the biomass power plant operation expenditures. Hence this model is the ideal situation of enough biomass and may be more profitable than real situation of using such a fuel. • EnergyPRO only simulates HPs as the same COP for the whole year. In the reality, the performance of HP changes during the year, it has lower COP in the winter. The result may cause the difference with the real situation. 5 Description of modelling parameters

This chapter provides the necessary parameters which are needed for the simulation. It develops in three main aspects: technical, economic, and environmental perspectives, with descriptions of each parameter and source origins. Some data which cannot be found are based on assumptions. Knowing the historic and current situation of different parameters creates a solid foundation for establishing the future scenario, and could help to explain the reason of the model results. It aims to understand the feasibility of decarbonization heating system plans for the Helsinki metropolitan area, as well as determine the variations in CO2 emissions between different years.

5.1 Energy/technical data 5.1.1 Technical parameters of energy conversion units

In order to simplify the model establishment, the simulation regards the different HOBs with the same fuel input as a whole in each area. On the contrary, the different CHPs are still modeled individually, since they connect to both the heat and electricity market and are sensitive to system dynamic changes.

From Fortum Suomenoja Power Plant technical report, the HP has slightly different operating parameters in summer and winter. Typically, it has a higher hot water supply and returns the temperature in summer, but higher COP in winter time[102]. This research has also applied the parameters in winter into the model with the input hot water from 50 °C and out at 65 °C and cold water cooled from 14 °C down to 7°C. The HP with an electricity capacity of 30MW operates in the DH system in Helsinki city, see Table 7.

Table 7 Key performance parameters for HP in Helsinki metropolitan area[102, 103] Technology COP water heated up( ) water-cooled down( ) In out in out HP[102] 2.58 50 65℃ 14 7 ℃

The operating efficiency and other operating parameters of CHPs are affected by working mechanisms. CHPs in DH system in Helsinki metropolitan area mainly have 2 types, CHP- ST steam turbine and gas-fueled CHP. CHP-ST including coal-fired CHP as well as other solid fuels (wood chips and waste in this study). The minimum operation hour is considered as 24 hours, which means such CHP should generate the energy at least 24h once it starts to run.

Both combined-cycle gas turbine (CCGT) and open-cycle gas turbine (OCGT) are gas-fueled. The OCGT has a fast start-up time at 10 minutes, thus making it often a reserve capacity. While CCGT has a longer starting up time of about 2.5 hours[104]. However, the software simulates at a time step of 1 hour. This study approximates those starting times to full hours, assuming 3h for CCGT to start and no start-up time for OCGT, see Table 8. In addition, CHP fueled by gas even with different working principles, are considered as the same for the minimum operation time, it is lower (4h) than CHP-ST (24h). The minimum operation load is around 40% for all types of CHPs. While HOB is regarded as no minimum operation hour and starting up time[16]. Table 8 Energy production units operation parameters in DH system[16, 28, 104] Unit Min. Min. Operation Starting up Shutting down Load Time period period CHP-ST 40% 24 h 4h 4h CHP- 40% 4h 3h 3h CCGT CHP- 40% 4h 0h 0h OCGT HOB - - 0h 0h Note: CHP-ST refers to the combined heating power plant with a steam turbine, generally fueled by coal and other solid fuels (in this research including waste, wood chips) Gas-fueled CHP including CCGT and OCGT (Suomenoja 6, Martinlaakso GT) Since HOBs are not modeled individually, it hasn’t considered starting up period and shutting down period in the model.

A heat rejection unit is utilized for rejecting the heat for cooling the engines of CHPs. It also has been involved in the simulation in separate cities. Heat rejection was allowed if it low- ered the production costs.

5.1.2 Fuel consumption by each unit

The fuel consumption in each power plant is different because of different energy conversion efficiency[105], as shown in Equation 5. Knowing the data of both fuel input and heat output in 2015, one can deduce the fuel input in 2010 and 2020 by calculating the energy conversion efficiency of each type of HOBs, assumed constant, which is obtained from 2015's data.

Since the study combines different HOBs with the same fuel input as a whole in each area, the efficiency here refers to the total power plants with the same fuel instead of each power plant, see Table 9. Thus, the fuel input for HOBs with different feedstocks could be calculated based on the same efficiency. The efficiency of the energy conversion unit could be calculated by Equation 5. = Equation 5 𝑄𝑄𝑜𝑜𝑜𝑜𝑜𝑜 Where, 𝜂𝜂 𝑄𝑄𝑖𝑖𝑖𝑖 = Energy conversion efficiency for different types of units (%) =total energy output in MW 𝜂𝜂 =total fuel input in MW 𝑜𝑜𝑜𝑜𝑜𝑜 𝑄𝑄 𝑖𝑖𝑖𝑖 𝑄𝑄 Table 9 Fuel conversion efficiency for different types of power plant[11] city units total fuel input total energy output energy conversion (MW) (MW) efficiency Helsinki HOB_coal 185 180 97.30% HOB_natural gas 1016 934 91.93% HOB_heavy fuel oil 1118.9 1036.7 92.65% HOB_light fuel oil 180 164 91.11% Espoo HOB_coal 89 80 89.89% HOB_natural gas 525.2 473 90.06% HOB_light fuel oil 93.9 85 90.52% HOB_pellet 45 40 88.89% HOB_bio oil 41 35 85.37% Vantaa HOB_natural gas 563 517 91.83% HOB_light fuel oil 119.8 102 85.14%

5.2 Financial data

From the financial aspect, the following parameters are considered for each energy conversion unit in the model, which aims to provide the economic analysis for DH system operation. When new technologies are implemented and old projects phase out during the studied years, it could reflect the cost changes and evaluate the feasibility in such dimensions. The operation expenditure consists of different components in Helsinki metropolitan area for different technologies, see Figure 16. For HOBs and CHPs, fuel costs, fuel taxes, operation and maintenance(O&M) costs, as well as CO2 allowance, are included in the total cost. Apart from these, CHPs would gain profit by sailing the electricity to the market. For HPs, it only considered the electricity consumption costs, electricity distribution costs and electricity taxations[18].

Figure 18 Elements of cost expenditure for different power plants in the Helsinki metropolitan area[18]

5.2.1 Operation and maintenance costs

The operation and maintenance(O&M) cost normally refers to daily activities cost such as inspecting, cleaning, adjusting and so on. O&M costs contribute to the total DH system operation, making it important in the economic analysis. Different power plants have different O&M costs. Besides, even the same type of units would have different O&M costs due to the capacity difference. The typical O&M costs for existing power plants show in Table 10, which is obtained from Danish Energy Agency[104]. Apart from the specific types, the other power plants involved in the model are considered for a different price. O&M cost for CHP is the highest in all types of power plants, which is assumed as 4 €/MWh. Followed by HPs O&M coss, which is 3€/MWh. HOBs have the least O&M costs (2 €/MWh) in the simulation[28].

Table 10 Operation and maintenance cost(€/MWhinput) for different types of power plant[18] HOBs CHP plants HPs O&M 5 € /MWh_heat 4 € /MWh_electicity 5 € /MWh_heat production production production

5.2.2 Fuel costs

The fuel costs as one of the operating expenditures are based on each unit of heat production for the specific technology, which is considered as the fixed monthly price. While investment costs are not contained due to the software only has one year of operating simulation.

Table 11 Fuel price in Finland in 2010, 2015 and 2020[106, 107] Fuel price(€/MWh) 2010 2015 2020[11] Natural gas[108] 25.1 23.24 23.2 Coal(hard coal)[108] 9.9 8.6 8.38 Bio-oil – 62 67 Heavy fuel oil (HFO) 50.5[108] 35 54 Light fuel oil (LFO) 77.5 84.2 76.2 Wood pellet*[108] 52 58 58 Waste (€/twaste) – -45 -45[11] Forest chips 22.5[108] Note: *The wood pellet price included value-added tax (24%), it will be calculated without VAT in the model simulation The price of waste is negative since the power plant could gain profit when using waste as feedstock, the unit of waste cost is €/twaste, which uses heat value of 19.3 Million Btu per ton[109], convert to 7.95 €/MWh

The fuel price varied every month, Table 11 shows the average price of different fuels in the simulation years. The price of coal is the lowest in the DH system compared with other fuels used, which has the economic benefit of choosing coal as feedstock. However, under the sustainable DH system transition plan and decarbonization goals, the tax of coal will increase to reduce consumption and incent the usage of low-emission alternatives. Wood pellets price is higher compared with coal and NG, which is about 5 forest chips have a decreasing trend of the prices, making it possible to increase the share in total fuel consumption. Both heavy fuel oil and light fuel oil have a higher price and the price decreased in 2015, then raised to almost the same level as 2010. On the contrary, the natural gas price peaked in 2015 (32.4 € /MWh) and then decreased in 2020 (23.2 €/MWh).

To convert mixed waste into energy by the waste CHP power plant, Vantaan Energia will receive payment from Helsinki Region Environmental Services HSY and Rosk'nRoll. As a result, Vantaan Energia will gain both the raw material fee and investment of about 300 million [95]. Converting 1-ton waste, Vantaan Energia will receive 45 €[11], which is about 7.95€/MWh by calculating with heating value (19.3 Million Btu per ton)[109].

Since the price of the fuel is changed seasonally by Statistic Finalnd[15], in the 2010 simulation, all fuel prices are set as time series instead of the constant price. In the 2o15 situation, except for the waste and HFO, the rest of the fuel prices are in time series input. And in 2020, only HFO and bio oil are considered as a constant price for simulate. It could reflect the fluctuations of the price and make simulation results more accurate.

5.2.3 Fuel taxes

The taxes for fuel and electricity which are consumed by the energy conversion units should be involved in the whole operation expenditures for economic analysis.

Finnish energy resources for district heating are levied under Energy Taxation Directive which was issued on January 1, 2011[101]. The fuel taxation used for heat production in Fin- land shows in Table 12, it is generally comprised of energy components (energy content based taxes), carbon component (carbon content based taxes) as well as the security supply fee[110]. Energy content tax is levied based on the calorific value of the fuel. While CO2 tax, instead of a standby tax that depended solely on carbon content before, was modified and included into a fuel tax in Finland. Besides, strategic stockpile fee is much less than other components in fuel tax, thus making fuel taxes a combination form of energy tax and CO2 tax for simulation, neglecting the security supply fee. Fossil fuel (coal, natural gas, peat, oil and so on) will be taxed on for HOBs and CHPs. While electricity taxes impact HPs operation cost.

Table 12 Taxation for heat production in Finland[23] Taxes Description Comments Energy Fossil fuels for heating generation are CHP has a lower energy tax; Peat content subject to an energy tax depending on the has a lower tax; Biogas is taxed the tax calorific value same way as energy crops for its pos- Fuel sibility of environmental damage[101] Tax CO2 tax Fossil fuels for heating generation are This research considered the CO2 al- subject to a CO2 tax based on carbon di- lowance as one of the operation ex- oxide emissions from combustion penditures Strategic It is charged on fossil fuels and electricity Which is the least component in the stockpile to offset the costs of the Finnish govern- total fuel tax fee ment's emergency fuel stockpiles and ensure energy security

Electricity tax The level of tax on electricity is determined Industry, data centers, and profes- by the end-use sector. In addition, electric- sional greenhouses have lower tax ity is also subject to security of supply fee compared to other end-use sectors

Other biofuels (e.g., wood and biogas) are exempt from the energy content tax. Moreover, biogas is tax-exempt in Finland. Those biofuels which are generated from waste with a carbon-neutral characteristic, such as bio-oil, are exempted from CO2 tax[101].

In addition, the fuel tax also varies by type of heat generators. Generally, CHPs have a lower fuel tax than HOBs, two tax rules are operating simultaneously on reducing the fuel tax for CHP. According to Energy Taxation Directive, fuel taxes on CHP is 100% exempt from an energy content tax from 2011 to 2020[101]. In another word, CHPs fuel tax is equal to the total fuel tax exclude the energy content tax. After 2020, the fixed reduction will be 7.63 €/MWh instead of the total energy content tax for CHPs. Along with it, total taxes on CHPs are calculated by multiplying the coefficient 0.9 on the heat released for consumption, which means only 90% of the total fuel for heat production will be taxed, thus reducing the taxation of heating fuels in CHP about 20% to 25%. Hence, fuel taxes for CHP are simulated based on the regulation by setting 90% heat production of each CHP plant in the model. It is also the reason that HOBs mainly produce the heat for the peak load while CHP operates for the baseload regarding the merit-order regular.

Figure 19 shows fuel taxes in Finland since 2010. Hard coal and natural gas, heavy fuel oil and light fuel oil, have almost the same pace on tax ascends. Due to the tax regulation changed in 2010, there was a surge of fossil fuel tax from 2010 to 2015, making it less competitive compared with the other fossil fuels. This is because of the clean energy transition goals in Finland that control the emission from fossil fuel, lead to higher tax and reduce the share of the resource in DH energy consumption. However, biomass is exempt from the energy content tax, making it increasingly contributions to DH system when phasing out the coal.

Figure 19 Tax changes on different fossil fuels in Finland[15] a) hard coal taxes, b) natural gas taxes, c)light fuel oil taxes, d) heavy fuel oil taxes

Table 13 coal and natural gas tax for CHP operation expenditure simulation Year Fuel Tax Energy content tax Tax for CHP €/MWh €/MWh €/MWh 2015 coal 22.2 6.8 15.3 natural gas 15.4 6.7 8.7 2020 coal 29.2 7.6 21.5 natural gas 20.7 7.6 13.0 Notes: Tax for CHP equals to fuel tax minus energy content tax; The data is collected from Statistic Finland[15, 101] Coal price unit: €/t transfer to €/MWh by multiplying heating value 24900.1 MJ/t from OCED data[111] Heavy fuel oil price is collected from[101], with the assumption of energy content tax of about 7.6 €/MWh

It will be simulated based on fuel consumption of each energy conversion unit in order to calculate the operating cost of the system. The fuel tax will be the same in 3 cities for the model simulation. According to the Government Program in 2020, CO2 emissions from waste incineration will be examined in order to encourage a circular economy[101].

Electricity utilization for manufacturing, DC facilities, or other professional greenhouse cul- tivation are eligible to apply for electricity tax class II, which only costs 6,9€/MWh, apart from those including HPs, the tax of electricity is 22.53 €/MWh currently[112]. The Govern- ment Program target of converting HPs and DCs that generate heat for DH networks to category II should be realized at the beginning of 2021[101].

Table 14 fuel tax based on the energy conversion unit[23, 101, 106, 113] Fuel Tax in 2010[114] Tax in 2015 Tax in 2020 €/MWh €/MWh €/MWh coal 7.12 22.2 29.17 light fuel oil 6.26 22.9 27.53 heavy fuel oil 5.94 23.7 24.52 natural gas 2.1 15.36 20.65 biodiesel – 48 electricity 16.9 22.4 22.53

5.2.4 Electricity price

CHPs in a DH system could make profits by exporting the electricity production to the electricity market. The electricity price fluctuates every day due to the variation of the electricity supply and demand and the bidding mechanism of the day-ahead market. The price is collected from Nord Pool day-ahead market, Finland. Figure 16 shows a yearly average price in Finland from 2010 to 2020. Since the peak point of electricity price in 2010, the general trend is decreasing. The average price almost doubled compared with the year 2015 and 2020, which is 56.85 €/MWh, while the average electricity price was 29.66 €/MWh in 2015 and 28.02 €/MWh in 2020[115].

Figure 20 Day-ahead electricity yearly price in Finland from 2010 to 2020[115] According to the hourly price, it has several surges in 2020, which is not as stable as it was in 2015[115].. However, in 2010 Since the oldest hourly historic data that could be collected was in the year 2013, for the model simulation in 2010, the hourly data would be scaled based on the year 2013 trend.

5.2.5 Electricity distribution fees

The electricity distribution fee contains the electricity distribution costs and network maintenance costs (including repairs, updates, constructions and so on). It has a slight change in different cities in the Helsinki metropolitan area.

Industrial consumers that use a large amount of electricity in the medium-voltage network would benefit from the medium-voltage network delivery devices. A big industrial will be an example of a traditional location.

Large industrial facilities including HPs in the DH system simulation are included in the medium-voltage power distribution, which refers to the voltage delivery range between 10 kV and 20 kV. In this research, the distribution price of HPs is collected based on the general distribution tariff. In Espoo, the general cost of electricity distribution is collected from Caruna Espoo Oy, which is 31.4 €/MWh in 2018[16], which is also considered to be price in 2020. While in Helsinki city, the electricity is distributed by Helen Oy and is 32.8 €/MWh for in 2020[112]. In 2015, the distribution fee in Helsinki was considered as 28,1 €/MWh, while for Espoo was 26.1 €/MWh[116]. In 2010, electricity distribution prices are assumed as 21 €/MWh[18].

Electricity in Vantaa is distributed by Vantaa Energy Electricity Networks Ltd. Since Vantaa doesn’t have HP implemented in DH system currently, the electricity distribution fee wasn’t considered for the simulation from 2010 to 2020.

5.2.6 CO2 allowances

In Finland, CO2 tax for heating fuel is involved in the fuel tax. Under the EU-ETS system, CO2 allowance depending on the fuel types and CO2 price also should be considered.

Power and heat generation plants covered into the trading system with a limit amount of CO2 could be emitted. CO2 allowance could be traded in the system to ensure the total amount of CO2 within the cap (see section 2.5.1). It provides companies’ right to emit CO2 in a specific amount. The Finnish Energy Authority authorizes the allowances to the company, at the same time, companies could address its monitoring system on its pollution, providing emission reports on an annual basis, which includes procedures for observing greenhouse gas emissions. Biomass is excluded of the CO2 allowance since it absorbs the CO2 during its growth and is considered a carbon natural fuel. The waste power plant in Vantaa is operated with NG as backup, it should involve emission allowance.

Under the EU ETS, CO2 price fluctuates during the years, see Figure 21. The CO2 price de- scended to the bottom in 2013, which was less than 5 Euro/tonCO2. During 2013 and 2017, carbon prices had a moderate change. After 2018, the price has a sharp increase and the average price in 2020 was about 24 Euro/tonCO2. As a growing trend, it even reached 44 Euro/tonCO2 today.

In this simulation, the average daily CO2 price will be utilized for each simulation year. 14.41 Euro/tonCO2 in 2010, a relatively low price (7.69 Euro/tonCO2) in 2015, the highest in the simulation year 2020 about 24.8 Euro/tonCO2[117].

Figure 21 CO2 price development since 2010 [117]

CO2 allowance (€/MWh) as one of the inputs for each type of technology equals the CO2 price (Euro/tonCO2) times the CO2 emission factor for different fuels (kg CO2/MWh).

5.3 Environmental data 5.3.1 CO2 emission factor

This study will also assess the trend in CO2 emissions during the DH system operation. By simulating the improvement of the DH system, the result of the CO2 emitting from the fuel consumption will be compared to indicate the impact of the decarbonization goal.

CO2 is the only emission considered in the DH system simulation, while the other potential emissions such as NOx and SO2 are ignored. Since CO2 emissions provide a necessary indicator for the achievement of the decarbonization goal. In this research, biofuels such as wood pellets and forest chips are considered zero-emission during combustion.

Table 15 CO2 Emission factors for fuel uses in DH system[118] Fuel CO₂ Emissions Factor (kg CO2/MWh) Coal 300.0 Heavy fuel oil 220.0 Light fuel oil 201.9 Natural gas 153.9 Biogas 151.7 Bio oil 200.0 Municipal waste /mixed waste 111.1 Waste pellets 125.0

Instead of simulating the emission from each energy conversion unit during the heat-generating process, this research turns to fuel consumption aspects. In another word, it focuses on the CO2 from fuel consumption of different energy resources when DH system operation. CO2 emission factor (see Table 15) as the data input could calculate the total emission of the system, see Equation 6. = Equation 6

𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓 Where, 𝐸𝐸 𝐸𝐸𝐸𝐸 ∗ 𝐹𝐹𝐹𝐹 = Amount of CO2 emissions emitted by fuels (ton CO2)

𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓= CO2 emission factor (kg CO2/MWh). As one of the properties for the fuel, CO2 emission factor𝐸𝐸 keeps the same during the simulation years. 𝐸𝐸𝐸𝐸= Fuel Consumption (t)

𝐹𝐹𝐹𝐹 5.3.2 Temperature

The air temperature data in 3 cities separately is collected from different meteorological observation points[119]. For Helsinki city, the temperature data was collected from Helsinki Harmaja (60.11N 24.98E) observation station, while Espoo Nuuksio station, located at 60.29N 24.57E is where the data originated from. Vantaan lentoasema observation station (60.33N 24.96E) provides the Vantaa air temperature for the simulation year.

5.4 Other data 5.4.1 Heat demand

The DH system operates throughout the year. In winter, it provides space heating and domestic hot water at the same time. In summer, it is only used for domestic hot water. Central heating systems in cities and towns in the northern country provide heating for buildings in winter, and are generally not used for heating domestic water.

The DH system heat demand is divided into dependent demand (for space heating) and independent demand (for domestic hot water)[88]. The space heating demand has a strong correlation with the external conditions: the lower outdoor temperature is, the more heat is needed to warm up the buildings. Hence, the dependent heat demand could be calculated from the temperature changes during the year. When the outdoor temperature is higher than 17°C, the space heating will be ceased and heat will only be supplied for domestic hot water, regards as constant[100].

= + Equation 7 Where, 𝑡𝑡 0 1 𝑡𝑡 = DH demand hourly (MW) 𝑦𝑦 𝑎𝑎 𝑎𝑎 𝑥𝑥 = baseload of heat/independent demand which doesn’t affect by external environment 𝑡𝑡 tem𝑦𝑦 perature (MW) 0 𝑎𝑎 = dependent fraction, usually as 60%[100]. = the outdoor temperature (°C) 1 𝑎𝑎 𝑡𝑡 H𝑥𝑥 elen Oy published the open data of district heating power from 2015 to 2020, which is hourly DH consumption in Helsinki city[89]. The total heat demand for Espoo and Vantaa will be collected from District heating Finland report, but only available till 2019. Lower HDD in 2020 than 2019, lower heat demand will be estimated based on that. Particularly, Espoo heat demand consists of DH delivery to Fortum Power and Heat Oy, Kauniainen and Kirkkorumi. Hence for the simulation year 2015 and 2020, this study will use the time series of heat demand for Helsinki city. For Espoo and Vantaa heat demands will still be calculated by the outdoor temperatures and Equation 7.

5.4.2 Heat transmission

Apart from each company generates their own heat productions, some purchases and sales occur in DH system in order to balance the demand and supply, see Figure 22. Helen Oy would buy and sale the energy from Vantaan Energia. Table 16 With the expansion of the waste-based CHP plant, Vantaan Energia will increase the heat supply to Helsinki to compensate for the coal decommission. Fortum would buy the heat production from Helen, but the total heat purchase may decrease during the year since a geothermal HP will be implemented. Outside the tradition of three main companies in Helsinki metropolitan area, Van- taan Energia also has a bi-purchase connection with Keravan Energia Oy in 2015 and For- tum Power and Heat Oy, Järvenpää in 2019[13].

For the combination of three DH systems, the transmission capacity between Espoo and Helsinki is assumed to be 80 MW, and between Vantaa and Helsinki is 130 MW[88]. It shows an increase in transmission capacity between Espoo and Helsinki to 120MW in 2018[23]. The capacity could be transmitted in both directions.

Figure 22 heat production transition structure in 3 cities

Table 16 Heat transmission within the Helsinki DH system[13, 85, 120] Buyer Purchased from Heat(GWh) 2010 2015 2019 Helen Oy Vantaan Energia Oy 16.7 36.9 43 Fortum-Espoo Helen Oy 14.3 39.3 28.3 Vantaan Energia Oy Helen Oy 3.1 0.3 5.3

5.5 Future DH model assumptions

Fuel price. Table 17 shows fuel and CO2 prices that will be used in the DH modeling. The assumption of fuel price in 2030 is collected from [121]. With a general growing trend of fuel prices, 2025 would be estimated by interpolation. Waste and bio-oil price is considered the same for the future year[18]. For HFO and LFO, the estimations are based on the price spread.

Table 17 Assumed fuel prices(€/MWh) from 2020 to 2030 for simulation[121]

Coal NG Wood Heavy Light Wood waste Bio Average CO2 chips fuel fuel oil pellet oil electricity price oil [116] [11] 2020 8.38 23.20 22.24 54 76.24 46.77 -7.95 67 28.02 24.8 2025 9.16 27.31 22.88 54.5 76.99 48.12 -7.95 67 40 2030 9.94 31.43 23.53 55 77.74 49.52 -7.95 67 40

CO2 emission price. Since the CO2 price under EU-ETS already raised over 44 €/tCO2 [117], this research would consider CO2 price as 40€/tCO2 in both year 2025 and 2030.

Average electricity price. According to EU Energy, transport and GHG emissions Trends to 2050[122], in the current policy scenario the electricity prices are slightly higher (1% in 2030 and 4% in 2050). With the penetration of nuclear power and wind power in Finland electricity market [116], this research will consider the same electricity price for 2025 and 2030 models as the year 2020 day ahead market.

Fuel taxes. The fuel taxations will be considered to be the same amount as the 2021 situation. For CHPs, the fuel still be taxed less compared with HOBs by multiplying the coefficient 0.9 on the heat released for consumption before 2020. After 2020, the fixed reduction tax on fuel will be 7.63 €/MWh instead of the total energy content tax for CHPs (see section 5.2.3). In addition, the 0.9 coefficient will not exist when considering the fuel tax on CHP after 2020[101].

Electricity tax. According to the Finnish government program of Prime Minister Rinne, there is a plan to decrease the electricity tax of heat pumps from category I to category II when it was utilized in district heating systems[23]. Hence, for the future year 2025 and 2030 scenario, the electricity tax for HP will use 6.9 €/MWh as constant.

Electricity distribution fee. It has different electricity distribution fee for Espoo and Helsinki, see section 5.2.5. For the future year simulations, it considered the same price as year 2020, in detail, 31.4 €/MWh in Espoo and 32.8 €/MWh for Helsinki.

Geothermal cost. For geothermal heat production, the purchase price is calculated based on the area's long-term monthly outdoor temperatures, the higher the outdoor temperature is, the lower the purchase price will be. According to Fortum[123], Espoo area geothermal purchase price shows in Table 18. In the simulation, it will set as time series based on 2020 temperature and will be used for the whole Helsinki area future year simulation. Since Ota- niemi geothermal power plant in Espoo is owned by ST1, Fortum could buy the heat from it. Such a power plant will only consider the buy-in price and ignore the O&M costs.

Table 18 Indicative geothermal heat buy-in price based on average monthly temperature[123] Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average -4 -5 1 4 10 15 18 16 12 7 2 -2 temperature(°C) Phurchase 45 45 38 30 20 20 16 20 20 24 30 40 price(€/MWh)

Vantaa will complete Varisto geothermal HP in 2021 with 1400 MWh heat production per year, the capacity is only 0.16 MW by calculating and doesn’t affect the DH operation, thus ignoring such a power plant.

Cost of heat recovery from DC. Espoo will recover the heat from DC and be used for DH system since 2021. The cost of such technology is considered the same way as geothermal cost, only the buy-in price will be involved. The purchased price of hear recovery from DC is in accordance with the outdoor temperature (see Table 18).

Heat demand. The heat demand in Helsinki metropolitan area will be estimated based on the year 2020.

Temperature. Heat demand is correlated with outside temperatures, the 2025 and 2030 year simulation will choose the same temperature condition as year 2020.

Waste restrictions. For Vantaa waste-burning power plant, the feedstock has the limited usage each year. The waste consumption was 1030 GWh in 2015 and 1138 GWh in 2020[124]. Since Vantaa will increase the capacity of waste combustion technology, a 80MW HOB will be implemented in the future year without exporting the commercial waste abroad[99]. Therefore, 1500 GWh waste restriction will be added to the CHP_waste in year 2025 and 2030 and 500 GWh restriction to HOB_waste.

Biomass restriction. Since the model based on the merit-order strategy, it will first be simulated based on the cheapest fuel, it may increase the biomass consumption sharply compared with reality. The restriction of biomass especially for the chips will be set according to the real consumption from the District heating Finland report [13], the limitation will change with the capacity of biomass-fueled power plants.

6 Result and discussion

The simulation results from 2010 to 2030 are summarized in this chapter. DH system operating strategies, operation costs, emissions are compared, it aims to answer research ques- tions relating to different aspects. According to different DH clean energy plans on city level, the commissioning of carbon-free projects while decommissioning the fuel-based units, will influence the system operation from the technical, environmental, and economic perspectives. These aspects could reflect in the model results.

6.1 Model validation

The simulation results in the past year from 2010 to 2020 will be compared with the real situation to validate the model. There still exists some mismatch with the reality linked with assumptions, model limitations and other inevitable biases.

For 2020 model validation, heat generation by fuels in Helsinki city from Helen Oy, as well as the simulation result shows in Figure 23. 1% of heat is produced by fuel oil in Helsinki city for peak load while no fuel oil is considered in the model result. The model result shows a lower consumption of NG, other fuels have a higher share as the compensation. The difference is less than 10%: biomass consumption is 3% in the reality in 2020 while 7% in simulation result, the heat produced by HPs only has a 2% difference between reality and simulation. However, it has 4% higher coal consumption and 9% lower NG consumption in 2020 Helsinki city DH.

In both situations in 2020, coal was still the main fuel to generate heat in Helsinki metropolitan area. Biomass, as well as HPs produced less heat in reality than the model, which may relate to biomass and NG price varied in different cities, the simulation only considered the average price of them and kept the same in all cities. That may cause a higher biomass share in simulation than reality since Helen company has either technical or biomass price issues. In addition, biomass is assumed to be more profitable than coal by energyPRO with the lower fuel taxation and emission allowance, which could decrease the operation costs while realizing the heat demand. Hence, it shows an increase in those 2 alternative fuels instead of coal in the simulation result.

Fuel oil usage is ignored by the simulation due to a relatively high price than other fuels. The heat demand could already be met by other fuels based on merit order strategy. For HPs, the model only could simulate it performance at a fixed COP during the year. In reality, COP of HPs varied with the seasons and has a higher COP in winter (see 5.1.1). In this simulation, the winter performance parameter was used to simulate HPs during the year. That may cause a slightly larger production in the summertime and increase the share of HP in simulation results.

Figure 23 Comparison of model results and the realistic situation in Helsinki city,2020 Left: Origin of district heat from Helen Oy in 2020 [90] Right: simulation result of heat productions by fuel in Helsinki city 2020

The realistic fuel usages in Helsinki metropolitan area in 2015 and 2010 as well as the comparison with the simulation result shows in Table 19 and Table 20. It was based on the statistic of Helen Oy, Helsinki; Fortum, Espoo and Vantaan Energia, Vantaa and District heating Finland report[13].

In both simulation years, the simulation result of HPs is quite similar to the real situation in both 2010 and 2015. However, fuel oil wasn’t consumed by DH in the model of considerable fuel costs and taxes. That production capacity was added to the most economic fuel in simulation such as coal or NG. The total amount of fuel consumption in the model is less than in reality. That is due to the heat loss and other system losses are not being included in the model simulation.

Table 19 Comparison of real situation and model result about fuel consumption in DH in 2015 in Helsinki metropolitan area (GWh)

Helsinki Espoo Vantaa Helsinki metropolitan area Real Model Real Model Real Model Real Model situation result situation result situation result situation result Coal 4232 7763 2064 1500 1183 1353 7479 10616 NG 7541 3687 438 1097 310 624 8289 5408 Fuel oil 181 0 90 0 42 0 313 0

Bio 34 0 0 0 0 34 Waste 0 0 0 0 1017 1030 1017 1030 Others 0 0 6 0 0 0 6 0 HPs 422 442 227 274 0 0 649 716 Total 12409 11892 2826 2871 2552 3007 17787 17770

Table 20 Comparison of real situation and model result about fuel consumption in DH in 2010 in Helsinki metropolitan area (GWh) Helsinki Espoo Vantaa Helsinki metropolitan area

Real Model Real Model Real Model Real Model result situation result situation result situation result situation Coal 5281 7907 948 1610 1272 1508 7501 11025 NG 9253 8233 3878 2654 2142 886 15273 11773 Fuel oil 369 0 52 0 110 0 530 0 Others 0 0 21 0 7 0 28 0 HP 165 177 0 0 0 0 165 177 Total 15067 16316 4900 4264 3531 2395 23498 22974

By comparing the city-level realized fuel consumptions, NG and coal utilizations are different between the model and reality. Each city behaves in distinctly different ways. In 2010, Helsinki city consumed more NG (9252 GWh) than coal (5280 GWh), Espoo consumed 2930 GWh less coal than NG reversely. Likewise, about 871 GWh coal was used less than NG in Vantaa in 2010. In 2015, even there shows a reduction of coal in Helsinki and Vantaa, but Espoo consumed from 948 GWh in 2010 to 2064 GWh in 2015, which increases the total coal consumption in Helsinki metropolitan area. It is also because the simulation is based on the ideal situation: a least-cost of DH operation along with enough heat supply. Hence, when NG price increased sharply in 2015, the compensation was made from coal. In addition, waste was regarded as the profitable fuel and always had a higher consumption than realistic situation by energyPRO. The output result still validates through the trend of fuel contribution changes.

NG price varies in cities may lead to simulation results different compared with the real situation. It can be reflected from both realistic data, especially in 2015, Helsinki city consumed over 7000 GWh NG while Espoo and Vantaa only consumed less than 500GWh separately, which may prove that Helsinki probably has had a much cheaper price for NG than Espoo and Vantaa. Since the confidential of fuel purchased prices in companies and it cannot be publicly available. EnergyPRO would allow using different prices for different cities if prices available. Hence the simulation only applied the national-level average prices from statistic Finland. This may cause less consumption of NG than coal compared with reality. The research lower 10% NG price in 2015 to calibrate and lower the difference caused by city- level NG prices.

6.2 Optimal operation strategies

Heat production shows a seasonal regularity. District heating time lasts from 1st September to next year 31st May. During this period, DH provides both domestic hot water and space heating. Therefore, more power plants are in the operation in cold winter to ensure the daily heat demand. Instead, between 31st May and 1st September, DH only provides hot water heat demand, and mainly generated by CHPs and HPs. With a fast ramp-up time, HOBs mainly reserve for peak hours, large capacity CHPs produce the baseload. Since the three cities have connections between the overall DH system, it makes the combination of the system more flexible and could save energy consumption, especially during the summer.

The hourly heat production by units from January to June in a year shows in Figure 24. This period lasts from winter to summer and includes all heat generation situations. The combined DH operation baseload is met by the cheapest heat generators in each city. The utilization factor is the indicator for measuring energy conversion units operation, which equals to total full load hour divided by whole year time 8760h. Overall, the hourly heat operation by different types of units reflects a clear increase in the biomass (in green color) and reduction in coal (in grey color). Before 2015, CHP_coal played a role in baseload heat production, while HOB_gas (in blue color) were generated for peak load when heat demand was higher. Biomass CHP power plants will also share more in baseload heat supply especially after 2020. HPs (in orange and yellow color) will replace the coal- burning CHPs and reserve from the peak hour to base hour since 2015.

In 2010, the baseload was almost covered by coal incineration power plants. Salmisaari CHPs (with 92.4% operation time in a year) and Hanasaari (with 67.1% operation time in a year) operated almost the whole year. Martinlaakso2 coal plant in Vantaa also had a high utilization factor, with over 6506h full load time during the year. Espoo heat demand was mainly met by the Suomenoja2 CHP power plant. With less ramp-up time, gas turbine CHP had lower operation time during the year. Such as 70.5% operation time for VuosaariA in Helsinki city, 84% for VuosaariB with higher efficiency and larger capacity. HP only involved in Helsinki city in 2010, it served in peak load production in the winter while also operated in the summer to cover the rest of heat demand when coal-fired CHP was not enough. HFO fueled HOB generated a less amount due to the high cost of fuel and tax.

In 2015, NG prices had a sharp increase, making it less competitive with other fuels. Since energyPRO simulates by matching the demand and supply with a least-cost, coal was dominant in the combined DH system. Also, LFO and HFO with high fuel prices and taxes than coal and gas, the result show the utilization factor for those power plants are zero, based on the merit order strategy. For the high cost of operating plants, CHPs and HOBs fueled by NG decreased its annual operation hours in the DH system generation. Vantaa invested in a waste-fired CHP power plant, it could receive profits from relative agencies in the Helsinki region by processing waste to energy but also has the limitation on the waste amount, leading to a high utilization factor(4290 full load hours out of 8760h). HPs in Espoo generated almost 80% in the whole year, while HPs in Helsinki city operated at over 4900 full load hours. HPs and waste incineration plants covered basic heat demand in the summer, while CHP_coal was generated as an addition.

In 2020, more capacity of biofuel power plants and HPs were involved in the DH system. In Helsinki city, coal together with wood chips became the fuel for CHPs, reducing its utilization factor to around 50%. HPs took the priority to generate baseload production, both operated about 60% of the whole year in Helsinki city. Instead of CHPs, HOBs in Helsinki and Espoo provided the intermediate product, the utilization factor was even higher than NG- fueled HOBs. Martinlaakso1 CHP in Vantaa has been modified into wood chips combustion plant with 5808 full load time in a year and served baseload.

In the future year, biomass-fueled HOBs in Helsinki and Espoo, waste-to-energy power plants in Vantaa, geothermal power plant as well as heat recovery from DC in Espoo will be the most promising low-carbon technologies in DH systems in the Helsinki metropolitan area, with above 70% utilization factors, which will be the basic technologies for summer heat demand. In addition, HPs will also show the potential as compensation for the reduction of coal. With the higher share of wood pellet, CHPs in Helsinki city will turn into the peak load heat producer in the future. All the NG-fueled plants will also serve the peak load heat demand.

Figure 24 Simulation of hourly district heat production in Helsinki metropolitan area in 2010, 2015, 2020, 2025 and 2030 by energyPRO The same kind of color refers to the same feedstock for different energy conversion units in 3 cities, e.g. all NG-fueled units are in color blue range but a different varian

In the 2010 Helsinki metropolitan region, coal and natural gas are the main fuel in DH system for a quite cheap price that year. To be specific, coal-fired HOB in the winter will produce baseload, followed by gas-fueled HOB. Due to the high cost of the CHP when shut down and restarted, it operates all the year compared with HOB only in winter. Coal-fired CHP has 60% to 80% operation hours annually. CCGT power plant with a lower ramp-up time than CHP-coal could produce the part of the peak load demand. On the contrary, HOB utilization hour is less than those CHP.

6.3 Heat productions

The heat productions in the Helsinki metropolitan area are simulated depending on the heat demand by energyPRO. This sector will only discuss DH system heat productions regardless of heat transmission.

CHP dominates the heat production in the Helsinki metropolitan area before 2020, see Figure 25. The share of total heat produced by CHPs dropped from 78% in 2010 to 71% in 2020. Furthermore, it will decrease even steeply to only 34% in 2030. It is due to every city follows the plan to curb coal usage, which is the main fuel for CHP power plants. On the contrary, there is a dramatic increase in heat produced by HPs in the Helsinki metropolitan area, from only 307 GWh in 2010 to 2367 GWh in 2030, which accounts for 22% of total heat production in 2030. The share of total heat productions generated by HOBs decreased from 19.5% in 2010 to 16% in 2020, but increased to nearly 50% in 2025, due to the implementation of waste boilers in Vantaa and other biomass boilers in Helsinki city and Espoo, HOBs together with HPs takes the place of CHPs used to be. Apart from that, more and more capable heat storage systems are implemented in DH systems, also contributing to a decrease in total heat production.

The result reflects an increasing HPs penetration in Helsinki and Espoo, such a technology could make a compensation to the total heat demand when other fuel costs higher. It also could be the full load for the whole year (e.g., the simulation year 2015) without increasing the total DH system expenditure from consuming the electricity. Hence HPs also could decrease the heat production which is produced by CHPs and HOBs.

Figure 25 DH production by unit type in Helsinki metropolitan area by energyPRO Heat production by power plants in 3 cities separately shows in Figure 26. The heat generated by HOBs shows on the black border. In Helsinki city, the share of CHPs heat production dropped from 90.4% in 2010 to 82.9% in 2020 with the capacity expansion of HPs as well as the penetration of biomass. Heat in Vantaa is almost produced by CHPs, thanks to the waste incineration power plant (both CHPs and HOBs), it operated during the year at low expenditures and high revenues, which could not only achieve the Vantaa city heat demand but also could transmit excess productions to the neighboring city Helsinki. For Espoo, the newly implemented geothermal as well as heat recovery from DC make the heat generation profitable, without O&M fees and other costs. In the future year, biomass as feedstocks for HOBs will show’ a potential role, especially in Helsinki and Espoo since 2015, it will cause over 70% reduction of heat generated by CHPs in the future year, the rest will be covered by biomass-fueled HOBs.

Figure 26 Heat productions by power plants in 3 cities by energyPRO Different technology with the same feedstock is used in the same color. HOBs are shown in the black bold border while CHP production without border in graphic symbol.

6.4 Heat transmission

The transmission lines in this simulation allow the heat production to transmit in both directions for each city. The existing transmission lines are Helsinki-Vantaa and Helsinki Espoo, there is no linkage between Espoo and Vantaa. The simulation result shows in Figure 27. Helsinki city will diminish in heat exporting and enlarge the transmission in heat importing. Contrarily, Espoo and Vantaa have completely different situations.

Figure 27 The realized transmission between 3 cities by energyPRO

Helsinki city acted as the largest heat producer and heat exporter in 3 cities in 2010, with the 2 large capacity coal-fired CHPs, it not only produced the basic heat demand in Helsinki city but also provides heat to Espoo and Vantaa especially in the summer. However, the situation changed with the commission of the Vantaa waste combustion power plant, as well as the profitable of the geothermal power plant, heat recovery from DC in Espoo. It turned both cities from heat-receiving cities into heat-exporting cities, while decreased Helsinki city heat transmission and increased the amount of received heat. To be specific, Helsinki city received heat climbed from only 395 GWh in 2010 to around 1750 GWh in 2o3o, but realized exported heat dropped about 90% from 2010 (1090 GWh) to less than 100 GWh in 2030. Especially after the decommission of Hanasaari CHP_coal in Helsinki city in 2024, more heat is imported from Vantaa and Espoo.

Apart from the waste combustion power plant in Vantaa, DH system in Espoo will also expand the capacity of HPs and heat recovery from DCs in 2025. In addition, the geothermal power plants will put into action, Fortum Oy only purchases the heat generated by it without considering the maintains fees and taxes, which saves costs by using such a power plant. Those are the alternatives when terminated coal-fired power plants, and the reasons why Espoo could transmit about 844 GWh heat to Helsinki in 2025, while the city only receives 29 GWh heat from Helsinki to cover the heat demand. This situation also decreases the heat transfer from Vantaa to Helsinki.

In the year 2030, with more biomass penetrated in the DH and higher estimated price, Van- taa waste-to-energy again shows the profitable and makes the realized transmission heat to Helsinki about 1050 GWh.

The maximum transmission capacity between Helsinki and Vantaa has reached up to 130 MW in the simulation year 2020, which used to be 80 MW (see section 3.5). It enables enough heat to transit between Helsinki and Vantaa city. Along with the expansion of HOB_waste in Vantaa, The result also proves the potential benefit of enlarging the capacity of the waste power plant by Vantaan Energia. Biomass especially wood chips is profitable in heat production and will be utilized most in Vantaa in 2030 on account of no limitation of the total amount, otherwise, NG will be the compensation if the heat demand cannot be met by limited biomass. 6.5 Electricity productions by CHPs

This simulation will only consider CHPs in the DH system for electricity production, see Figure 28. With ongoing decarbonization objectives in DH system in Helsinki metropolitan area, the total electricity produced by CHPs decreased with the capacity shrinking. Waste- to-energy plants as well as the biomass-fueled CHPs are the essential electricity generators in DH after 2020 along with the process of phasing out the coal.

At the beginning of the simulation year 2010, coal and gas-fueled plants shared total electricity production and over a half of electricity was produced by NG-based CHPs in the Hel- sinki metropolitan area, this figure will decline to 46% in 2030. In 2015, due to the surge of NG price, reducing the working load of CCGTs and electricity was mainly generated by waste and coal-fired power plants, which increased the share of CHP_coal to 53% in the electricity generation. The situation will be terminated in future years since CHP_coal will be ceased in 2030.

Instead, the waste incineration power plant in Vantaa expanded from only 5% of total electricity in 2015 to 21% in 2030. Similarly, the share of wood chips-combusted CHP will reach over 30% of total electricity production in 2030. Vuosaari CCGT power plant has a higher power-to-heat ratio, thus generating more electricity than heat, such CCGTs are utilized to generate electricity after CHP_coal productions, as well as when the electricity price was high.

In 2020, Salmisaari and Hanasaari CHPs are combusted with mixed fuel (coal and pellets), it somehow accounts for less coal consumption. As the larger contribution of pellets in fuel blend and higher pellets price, the further reduction of coal will be achieved.

Figure 28 Electricity produced by CHPs from energyPRO

6.6 Fuel usages

Under the decarbonization objectives in the Helsinki metropolitan area during the simulation year, it shows a clear decrease in coal consumption and an increase in the diversity of fuel types. The share of fuel usage shows in Figure 29. Since HFO and LFO are expensive and only used for peak load based on the merit order strategy of energyPRO, they could be ignored in the simulation results with less contribution, the heat demand could already be met by the rest of the fuels.

Coal consumption in the total fuel decreased to 48% in 2020, then only 9% in 2025, and will completely be avoided by 2030. Biofuels start to show potential in 2020 (7%), it will dominant in Helsinki metropolitan area in the future year, about 60% of total fuel consumption in 2030. In 2015, the share of natural gas in total fuel consumption decrease, it was because the NG price was almost 4 times higher than coal price that year. Even the taxation of NG was a half of the coal for CHP, it still not as profitable as coal. Hence in the simulation year 2015, the majority of DH baseload was provided by coal or waste-fired power plants in Hel- sinki metropolitan area, NG was only used in HOBs for peak load in lower operating costs. It dramatically increased the share of coal usages to over 80% in the Helsinki metropolitan region. But the total amount of coal consumption was less in 2015 than in 2010 with heat demand decreasing. Hence, even coal contribution was the highest in the year 2015, total emission from DH was still going down.

Geothermal is brand-new energy used in the DH system in Helsinki metropolitan area after 2020. Together with biomass, it will payoff for the reduction of fossil fuels to achieve the decarbonization objectives. Apart from biomass, waste is another promising fuel in DH and become the second-largest part of total fuel consumption in the future year.

Figure 29 Fuel consumption in DH system in Helsinki metropolitan area by energyPRO

Fuel consumption in each city in Helsinki metropolitan area from 2010 to 2030 shows in Figure 29. Thanks to the waste-to-energy power plant in Vantaa, it decreased coal from 63% of total Vantaa DH fuel consumption to 30% in 2020. For Espoo, the coal reduction is pri- marily related to the implementation of biomass-fired power plants, thus reducing about 33% coal in the total fuel mix in Espoo by 2025. The implementation of the geothermal power plant in Espoo also shares 10% in fuel usages in 2025 and up to 14% in 2030. Increasing biomass contributions is also the main reason for Helsinki city coal reductions, the 2 main coal-fired CHPs in Helsinki city are blended with wood pellets, 48% of coal consumed in Helsinki city DH in 2010 dropped to 7% in 2025. More biomass HOB will be implemented in Helsinki DH to achieve the zero-coal in DH. The total fuel consumption decreases from 2020 to 2030 even DH is simulated with the same heat demand, it may be related to the capacity increase of heat storage systems.

Figure 30 Fuel consumption in DH system by cities by enegyPRO

To sum up, the fuel resources increase in types and decrease in coal usages in each city. Firstly, the total amount of fuel consumed by DH in the Helsinki metropolitan area shows a descending trend. However, 2020 to 2030 are simulated as the same heat demand, the drop- ping of total fuel consumption by energy conversion units indicates that HPs and other heat recovery production increase in the future DH. Then, coal consumption has a clear reduction in each city during the simulation year. Before 2020, it decreased about a half in Helsinki and Espoo, coal consumption was only 29.3% in Vantaa in 2020 and is the lowest among 3 cities. It may be because of the large capacity received in Helsinki city from Vantaa and the decrease the local CHP_coal power plants workload. In addition, Vantaa is the first city in Helsinki metropolitan area which halted the coal usages totally from its DH system, the main fuel in the future would be waste and forest chips. The coal will totally out of the DH system by 2030 in Helsinki metropolitan area.

From 2010 to 2015 natural gas prices had a steep increase, then the fuel consumption in DH system shows an increase in coal contribution by simulation, especially in Espoo without considering heat losses. It is still about 55% in 2020 compared to the real 65%, but the consumption of wood pellets in simulation is the highest among 3 cities which is 12%.

6.7 Operation costs

Since DH income (revenue from selling the heat production) and annualized investment costs for different energy conversion units are not considered, this sector will analysis total expenditures as well as average heat production cost in the economic aspect.

The total DH operation expenditures are the sum of all the costs from energy conversion units, it reflects how much DH system will cost during one-year operation. Detailly, CHPs will spend on fuel purchasing, operation and maintenance, while obtaining the revenue from selling electricity (see section 5.2). Additionally, the implementation of the Jätevoimala power plant in Vantaa will gain a processing fee of about 45€/twaste from the Helsinki environmental service agency. Average heat production cost equals to all expenditures excluded revenues divided by heat demand, which indicates the cost when generating 1 MWh heat. Both the operation expenditure (579 million euro) and the revenue by electricity (493 million euro) were the highest in 2010, see Figure 31. Due to the highest average electricity price and highest heat demand in that year, it would gain more profit by selling the electricity and cost more on DH operation for a heavier working load. In 2015, lower operating costs are caused by the lowest CO2 price. By contrast, the 2020 average electricity price is halved of the price in 2010, making less income from electricity trade (206.5 million euro). The CO2 allowance increases steeply in 2020, and will be even higher in the future year based on assumptions, which affects the most on operation costs of the large capacity power plant under EU-ETS, especially causes CHPs expenditures to escalate in DH system. It may also increase the costs of CHP_waste, such a unit could still make a profit at a high utilization factor, the subsidy could cover other expenditures. Since biomass is exempted from CO2 allowance and taxes, high CO2 prices may not alter its expense. For future years, HPs capacity expansion and longer usage time will consume more electricity, but it generated heat to provide the baseload and reduce the whole year working load of CHPs, especially for the gas turbine in peak load, thus contributing to the least operation costs as well as income. In addition, the electricity tax for HPs after 2020 will decrease to 6.9 €/MWh, which increase the profitability of such a technology.

Figure 31 Average heat production costs and total DH operation costs in Helsinki metropolitan are by energyPRO

The average heat production costs (€/MWh) indicate costs when producing one MWh heat in DH system. It is calculated by the costs on heat generation (operation expenditures exclude the revenue from electricity sales) divided by total heat production. Before 2020, there was a moderate annual lift on average heat production cost along with the reduction of coal. As a fossil fuel-dominant, DH is affected severely by high CO2 prices. Then, the average heat generation cost will fall down after 2020, from 30 €/MWh to 24.4 €/MWh in 2030. Thanks to the new types of unit implementation, such as geothermal plants, the DH operation company could only consider the purchase price and ignored the O&M cost, taxes, and so on (see section 3.7), thus reducing heat production cost in the future. Another contribution is from biomass HOBs, biomass is considered as clean energy without CO2 allowance, even the fuel price is higher than coal and natural gas, it still profitable.

In the result, it shows the potential of HP and CHP_waste on decreasing the spending on operating DH for the whole year. But the total costs still rely on the fluctuations of electricity price as well as the CO2 price. The simulation only limits the waste consumption and considers unlimited of biomass supply, it may accelerate the fuel transmission from coal to biomass.

6.8 CO2 emissions

The amount of CO2 emitted from the DH system in the Helsinki metropolitan area has a clear descend tendency from 2010 to 2030, see Figure 32. Before 2020, CO2 emission dropped at an average rate of 20% in the first five-year intervals. In view of coal still dominates in the heat generation during this period, such an emission reduction was related to the fuel structure, technology implemented as well as heat demand difference: waste retains a lower emission factor while biomass is considered as a carbon-neutral fuel since the wood could absorb the CO2 during the growing period and will not increase CO2 emission during combustion. They are gradually increasing the contribution to the total fuel usage. Capacity expansion of HPs and heat storage systems will also decrease the emission. Apart from that, 2010 year has the highest heat demand in the all-simulation year due to the low temperature, which may cause a larger consumption of fuel in heat production.

From 2020 to 2025, it shows a sharp decline of CO2 emission by about 73%. In this interval, Vantaa has ceased the coal usages in DH, while most of the coal-fired power plants have been decommissioned in Espoo and Helsinki city DH. In addition, biomass will boost in the total fuel usage for DH with more biomass-based HOB implemented. Together with some further decarbonizing steps such as heat recovery from DCs, geothermal technology, DH system is on the way to achieve carbon naturality.

By 2030, the whole 3 cities will halt in coal consumption, the emission has a total reduction of 88% compared with 2010 (4.5 million tons CO2 reduction). The geothermal HP in Vantaa hasn’t been involved in the model on account of a neglectable capacity (see section 3.9), the total decrescence could be even higher than the current result. It is quite promising to achieve the national carbon neutrality goal in 2035.

The curve of the emission in one year shows a U-shape similarly as heat demand curve, it is because of the lower heat demand in summer than those in winter, and it causes less power plant generation time and less fuel consumption in the summer.

Figure 32 CO2 emission changes in simulation year by energyPRO

Under the implementation of the clean heat transition plan for each city, the DH system decarbonization operating strategies are quite effective. Firstly, coal consumption has declined rapidly, while wood pellets and other types of biofuels have increased the share in the total energy mix, making it more sustainable in the fuel supply. It is not only because of the cities decarbonization objectives to phase out the coal, but also a dramatic rise of fossil fuel prices and taxes, making them less profitable. Instead, biofuels are exempted from fuel tax and are regarded as carbon neutrality fuels, and it increases significantly in the fuel consumption in Helsinki metropolitan area. Secondly, the implementation of HPs in the DH system in the Helsinki metropolitan area is regarded to be an efficient way to decrease CO2 emissions. With the lower price of electricity and taxes, HPs show the potential in DH system and act as alternatives to coal-fired CHP, especially after 2020, all three cities have a huge capacity increase in HPs. Thirdly, the waste to heat power plant established in Vantaa could relieve energy structure depending heavily on coal and natural gas. Since mixed waste has lower emission factors than coal and gas, it causes less pollution during the process. Last but not least, increasing heat storage capacity could balance the heat demand and heat production, it could decrease the emission especially during the summer.

6.9 Sensitivity analysis

CO2 price fluctuates dramatically, it increased from about 8 €/tonCO2 in 2015 to about 40 € /tonCO2 in 2021 (see section 5.2.6). Büchele et al. [73] found that higher CO2 prices may decrease the DH competitiveness with individual HPs. In this section, the CO2 price will rise from 40 €/ tonCO2 to 60 €/ tonCO2 in the year 2025 and 2030 to identify the effect on the DH system operation in Helsinki metropolitan area.

Increasing CO2 prices will cause a rise in DH operation costs. According to energyPRO results (see Figure 33), it increases the total DH operation expenditure in Helsinki metropolitan area in 2025 by about 4.3 million euros, about 1.9 million euros in 2030. It increases 1.5 €/MWh of the average heat production cost in 2025, and 0.9 €/MWh in 2030.

Figure 33 Sensitivity analysis of operating expenditures and average heat costs by ener- gyPRO CO2 price=40 Euro/tonCO2 (left), CO2 price =60 Euro /tonCO2 (right)

Fuel consumption changes when increasing CO2 prices in 2025 shows in Figure 34. Coal will be the fuel that is affected severely by higher CO2 prices. It could decrease 30% coal consumption in the Helsinki city DH system in 2025, while 51% in Espoo. NG will also decrease in shares for higher emission price but not as much as coal. With its price raising as well as 0.9 fuel tax coefficient removed on CHP heat production, compared with future year, it will lose the competition with biomass. By contrast, biomass especially wood chips will be the main choice after increasing the emission allowance. Since it is considered as the clean energy without emission for the whole life cycle in generating heat. In Vantaa, waste in total fuel consumption in DH remains almost the same, still shares of wood chips will increase in higher CO2 prices. In 2025, coal has already been curbed in Vantaa, increasing the reduction of coal usage in Helsinki and Espoo.

Figure 34 Fuel consumption result comparison in each city when increasing CO2 price in 2025 CO2 price=40 Euro/tonCO2 (left), CO2 price =60 Euro /tonCO2 (right) From left to right: Helsinki, Espoo, Vantaa

The sensitivity result of total fuel consumption in the Helsinki metropolitan area in 2030 shows in Figure 35. Since the coal already quit in the fuel usages, biomass and waste are dominant in the total fuel consumption. NG will reduce the share in fuel usage by about 20% with a higher emission allowance. Burning biomass doesn’t produce CO2 emissions to the DH. However, when CO2 price increasing to 60 €/ton, it will increase the difference of CO2 allowance by about 2 €/MWh, which will reduce the profitability of waste a bit compared with forest chips. In 2030, with higher CO2 prices, biomass consumption will increase as compensation to NG reduction.

Figure 35 Sensitivity analysis of fuel consumption in Helsinki metropolitan area in 2030 by energyPRO CO2 price=40 Euro/tonCO2 (left), CO2 price =60 Euro/tonCO2 (right)

If the CO2 price increased from 40 €/ton CO2 to 60 €/ton CO2, total CO2 emission in Helsinki metropolitan area DH will decrease by about 220 kilotons, which is about a 22% reduction in 2025 and a 13% reduction in 2030, see Figure 36. This also proves the effectiveness of EU-ETS regulation, it could truly reduce the emissions when applied in the DH system. The emission main reduction is related to the decrease in NG usages. It emphasizes the potential of biomass in the future DH system. Since this research doesn’t consider the accessibility and transportation fees of biomass, there will be no limitation of the biomass usage in the simulation and will be the most profitable fuels in DH in the ideal case.

Figure 36 CO2 emissions changes in 2025 and 2030 when CO2 price increasing CO2 price=40 Euro/tonCO2 (left), CO2 price =60 Euro /tonCO2 (right)

Higher CO2 prices will lower the amount of received heat in both Vantaa and Helsinki city in the year 2025 and 2030. Since biofuel usages in Helsinki city are the highest, without paying for the tax and CO2 allowance, it would be more profitable compared with other fuels when CO2 prices is high. The simulation aims to minimize the whole DH operation costs, thus heat will produce more by biomass in Helsinki and Vantaa, then the excessed heat could be transferred to Espoo to decrease its operating costs.

Figure 37 Realized heat transmission comparisons in the future year with different CO2 price 6.10 Discussion

Biomass usage in the future years by simulating will be the ideal situation regarding as ac- cessible and enough for the whole region, without considering transportation cost. Biomass consumed only 8% in total fuel consumption in 2020 (see Figure 29). The real situation in 2019 those biomass shares 5% in the Helsinki metropolitan area (see Figure 8), which didn’t change much compared with what it was in the 2020 result. In addition, for the model validation in 2020 (section 6.1), Helsinki city had a quite close result in heat production by biomass, which indicates that the model without limitation of biomass in that year still valid. Hence, without limitation for biomass may cause a significant increase in the future year, since it saves fuel taxes and emits zero emissions. This model is the ideal situation of enough biomass and may be more profitable than the real situation of using such fuel. When setting the limitation for biomass in 2025 and 2030 based on the power plant capacity, the reduction of biomass usage will be replaced by NG. In this case, more CO2 will be generated as well as more expenses on operating the whole DH system.

Due to the different prices of natural gas may have in different cities. A lower 10% NG price in 2015 may reduce the coal consumption in Helsinki city DH system simulation result about 430 GWh while increasing the NG consumption about 640 GWh. This change could reduce some difference between NG and coal consumptions in real situations and simulation results, in both Helsinki city as well as the Helsinki metropolitan area. However, this change will also increase the NG usages in Espoo and Vantaa, making it more different compared with reality. Since each city has its own DH operation strategies when a combination of 3 DHs are established and averaged prices are used, the overall results are simulated based on merit order may cause the mismatch between in reality and simulations. For economic analysis, DH system income and annualized investment costs for different energy conversion units are not involved in energyPRO. By considering different cost components for different technologies, the total amount of expenditures for the whole year DH operation will be generated. Additionally, ignored operation fees for heat storage systems will also decrease the total amount of operating costs for DH. Adding annalized investment cost could be clear to show the cash flow and what the yearly operation performance (revenue or not) will be like, but in this simulation, only the trend of system operation costs could be enough for the performance indicators to reflect the trend of DH cost development under the city-level decarbonization objectives.

Modeling at a fixed COP for HPs may influence its operation estimation. When comparing the result with the real situation, it shows only a 2% difference when utilized better HPs parameters in the wintertime. When trying to lower with summertime parameter, less heat will be generated by HPs, instead, increasing the mismatch for other fuels to ensure the heat supply.

7 Conclusion

This research aims to modelized the existing DH system in Helsinki metropolitan area and analysis the effect of implementing each city decarbonization objectives from 2010 to 2030 by energyPRO. The DH operation results from energyPRO are compared mainly from technic, environmental and economic dimensions.

Technic aspects-DH operation Biomass HOBs, as well as geothermal, heat recovery from DC, will provide the baseload heat demand in the Helsinki metropolitan area DH system instead of coal-fired CHPs. It reflects from the result that with the coal out of the DH system, changing the fuel to biomass makes Salmisaari CHP become peak load generator. Waste incineration CHP, as well as biomass- fueled CHP, have a longer full load time than those NG-fueled CHP in the future and could contribute to the baseload heat demand. Furthermore, HP will shift from peak load to base load producer with the DH development in Helsinki metropolitan area. Its operation hour increases from only 22% in 2010 to over around 65% in 2030.

The amount of heat produced by CHPs will not be dominant, instead, it produced more by biomass-fueled HOB and HPs in the DH system in the future year. According to the clean heat transmission plans in Helsinki metropolitan area, coal-fired CHPs will be phased out soon. In order to ensure a sufficient heat supply, biomass boilers, as well as HPs will gradually penetrate the DH system. Gas-fueled CHPs will also lose competitiveness with the increasing fuel price. This may also affect the total amount of electricity generated by CHPs. However, since more wind and nuclear will penetrate in the electricity market, decreasing CHPs based electricity production may not influence the electricity price.

Transmission heat together with heat storage systems within Helsinki metropolitan area could enhance the flexibility of the heat supply. Allowing heat to transmit in bi-direction of Helsinki-Vantaa and Helsinki-Espoo could make the most use of profitable technology from different cities. Helsinki city will shift from the most heat exported city to heat imported city in the future. Thanks to the waste incineration CHPs implemented in Vantaa, it turns Vantaa into a city with a large amount of heat exported to Helsinki city, such a power plant was considered over 70% operation time during the year in the simulation, with over 1000 GWh of heat production each year. Geothermal power plant and heat recovery from DC in Espoo will also provide profitable heat for Espoo and Helsinki heat demand.

Economic aspect-operation cost Decarbonization doesn’t mean increasing the costs. Even though coal used to be the cheapest in the whole fuel resource, along the way on banning coal uses in the DH system in Hel- sinki metropolitan area would increase the average cost on producing the heat. However, with biomass increases as well as geothermal and heat recovery plants show profitable potential, the costs of DH system operation together with average heat production cost will decrease after 2020. DH has a significant cost-saving opportunity.

NG-based technologies are sensitive to the increasing CO2 price, especially when coal is totally curbed in the DH system. It will cost more and appear less profitable compared with other low-carbon technologies. DH will reduce the usage of NG and increase other clean fuels, thus decreasing the emission. There will not be much decreased on waste combustion technology since the revenue could cover the CO2 allowance. In order to promote heat generation from waste incineration, higher revenue could be considered for such plants.

Environmental aspect-decarbonization CO2 emission from DH in Helsinki metropolitan area DH has a striking decreasing trend under the decarbonization objectives. There will be a 88% CO2 emission reduction from 2010 to 2030 and the sharpest decrease will appear in the interval 2020 to 2025. Biomass will replace coal and even NG as the main fuel in the future DH system in Helsinki metropolitan area, it is carbon-neutral in the whole life cycle without emission when combusted.

Regulations and policies could truly contribute to DH system decarbonization. Firstly, fuel taxes on fossil fuels are high and will increase the expenses on power plants fueled by it, thus decreasing its contribution to the total DH heat generations. Another is the changing of electricity tax for HPs to tax class II, it could improve the amount of heat generated by HPs in DH with lower electricity taxes. At the same time, the 0.9 coefficient taxed on CHP heat production will be removed, which means the fuel used for CHPs will be 100% taxed, this regulation may reduce the benefit of heat production from CHPs. All these tax-related re- forms will influence the DH system operation, clearly decrease the emission, and force the DH towards a more sustainable direction. It strengthens the role of HPs as well as biomass combustion technologies, instead continuously weaken the capacity of CHPs which used to be fueled by coal.

Under the EU-ETS mechanism, higher CO2 prices will further reduce the majority of consumption of natural gas and a minority of waste in heat generation. Increasing CO2 price will not affect low-carbon technologies since they are excluded from CO2 allowances, such as HPs, geothermal power plants, waste heat from DCs, as well as biomass combustion technologies. Those low-carbon technologies will indeed increase the share in Helsinki metropolitan area DH by decarbonization plan in the future year.

To sum up, it is promising for Finland to realize a carbon-neutral goal in the district heating sector before 2035. However, this model is based on several ideal assumptions and may have differences with the real situation, it still provides a possible trend of how those decarbonization objectives may be affected from the technic, economic and environmental performance of DH in the Helsinki metropolitan area.

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Appendix

Heat production plants 2010 2015 2020 heat electricity fuel heat electricity fuel heat electricity fuel capacity capacity input capacity capacity input capacity capacity input Helsinki HOB_coal 180 185 180 185 190 195 HOB_NG 694 755 934 1016 915 995.3 HOB_HFO 1441 1555 1036.7 1118.9 840 906.6 HOB_LFO 164 180 165 181 HOB_wood 92 103.4 pellet Salmisaari B 300 160 506 300 160 506 300 160 506 Hanasaari B 420 226 726 420 226 726 420 226 726 Vuosaari A 160 160 356 160 160 356 160 160 356 Vuosaari B 420 470 974 420 470 974 420 470 974 Katri Vala 90 90 90

Esplanadi 22 Espoo HOB_coal 230 256 230 256 80 89 HOB_NG 536 595.5 536 595.5 473 525.5 HOB_HFO 130 140 130 140 HOB_LFO 100 110.5 85 93.9 85 93.9 HOB_bio oil 35 41 HOB_wood 90 101.2 pellet Suomenoja 1 160 80 265 160 80 265 160 80 265 Suomenoja 2 214 234 498 214 234 498 214 234 498 Suomenoja 6 80 49 167 80 49 167 80 49 167

Suomenoja 4 45 40 Vantaa HOB_NG 425 462.8 517 563 517 563 HOB_HFO 124.1 145.7 92 108 HOB_LFO 10 11.8 102 120.36 Martinlaakso1 120 60 196 100 28 150 Martinlaakso2 135 80 230 135 80 230 135 80 230 Martinlaakso4 120 60 196 120 60 196 MartinlaaksoGt 75 58 148 75 58 148 Jätevoimala 140 76.4 240 140 76.4 240

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