The Heating Sector: A CO₂ Headache or a Hidden Treasure?

The combination of combined heat and power plants with thermal energy storage and industrial heat pumps provides a sustainable and efficient heating sector option.

In recent years there has been a growing awareness that the heating sector is the elephant in the room because it consumes more energy than the electricity and transport sectors combined, and most of that energy is also derived from fossil fuels. Two main technology options can be identified as efficient ways to decarbonize the heating sector: combined heat and power (CHP), and electrification (largely via heat pumps).

Many argue for electrification as the first choice, with the implication that CHP should even be phased out. The challenge, however, is not to choose one of these technologies, but rather to find how they can be combined optimally. These two options either consume or supply electric power, and since we will have a variable supply of renewable energy, we will see fluctuations between oversupply and undersupply. If you have both a CHP and an electrical means of supplying heat, then you will be able to adapt flexibly.

Electrification of the heat supply raises several issues. First, it requires a supply of renewable energy that will only be available part of the time. Second, it adds to the required residual load at times when renewable energy is scarce, and finally it adds to the issues of congested transmission capacity. Ideally, we should favor an electrified solution that can be modulated or stopped to adapt to supply situations. However, if you are stuck in a “must supply” situation because of the heat demand, then something needs to be done to allow for decoupling, either through the introduction of heat storage or by switching to a different heating solution.

If you choose CHP to supply heat when the electrified solutions must stop, you are also supporting the grid with the residual load that is needed at the same time. The need for residual load will also grow significantly with the expected dramatic increase in electricity demand. In these cases, a combination of capacity payment and energy price will be required to compensate for the provision of electricity.

Since other alternatives for providing residual power will be expensive in a fossil-free society, the market price for these services will be high, and CHP will have the lowest production cost because the heat provided has a value. It can also be argued that the heat supply has a higher-than-average value at these times due to higher alternative production costs when renewable power is not available. Even with very limited dispatch hours of CHP, this will always be a favorable business case because the alternatives are costlier for society. If the dispatch of the residual load were very low, then the capacity payment would have to be high enough to compensate entirely, and this would be the same for all assets, whether electricity only or CHP. This means that there should always be a business argument in favor of CHP.

How Downstream Thermal Heat Storage Can Help

Electricity storage for most technologies is limited to a full-load capacity of a few hours, maximum one day for both economic and environmental reasons. Long-duration storage is also on the agenda, but then the storage media must have either a high energy density or a very low cost. This means that except in cases when pumped hydro is possible, you can store energy as synthetic fuel or high-temperature heat. Remember that re-electrification from fuel or high-temperature heat means a conventional thermal power plant (or fuel cells), and that brings us back to the CHP plant as the most efficient means for re-electrification.

Focus on Heat Supply Misleading. Many who discuss the decarbonization of the heating sector make the mistake of focusing too much on that sector and looking only at the electricity sector as a source of renewable energy. From this perspective, it would be easy to argue that heat should be drawn from heat storage during periods of insufficient wind and solar generation. The German language has a term that describes this period when wind and solar generation is very low: “Dunkelflaute,” meaning “dark doldrums,” and it typically lasts anywhere from a few days to a few weeks.

If you focus first on the electricity sector and how to provide power during a dark doldrum, you may find that you need to operate thermal power plants and that waste heat recovery from such plants then also solves the heat supply issue. Given the very high power demand and the limited demand for heat, you would then have to store the heat and distribute it later. This implies that you would fill the heat storage instead of discharging it during a dark doldrum. That is the opposite of what would be suggested if only the heating sector was taken into consideration.

Tapping into a Huge New Potential for CHP Capacity. By using thermal storage, you can significantly increase the installed CHP capacity for the same heat demand. For example, if you operate only 25% of the time, then you can have CHP that is four times as large as if you were feeding the heat directly. During operation, 75% of the heat output is buffered in storage for later dispatch.

When considering conventional baseload operation, many district heating systems are too small to be the basis for a CHP plant, but this changes significantly when considering on/off operation instead. With the help of thermal storage, it is possible to build a much larger plant for a better cost-to-scale ratio, while at the same time taking better advantage of the volatile electricity price pattern and possible capacity payments. This new approach to using thermal storage can unlock a very large CHP potential, because there are many small- and medium-sized district heating networks that are not yet utilized for CHP at all.

Combining CHP, Heat Pumps, and Storage

The two options of CHP or heat pumps (Figure 1) may seem to be competing alternatives, but there is a third avenue in between. For example, if you go halfway with the CHP option, such as installing a CHP system with perhaps twice the district heating capacity requirement, then you can also install heat pumps to cover the rest. Each system then has half the capacity of either of the more extreme first two options, so the investment for the combined plant itself is perhaps 10% to 20% higher than for a CHP-only or heat-pump-only system. However, the required size of the thermal storage is significantly less because you now can supply more heat directly without storage and charge the storage from both ends of the electricity price scenarios, both from the CHP operation and from the heat pump operation.

1. Industrial heat pumps are an efficient and cost-effective solution for the generation of heat and cold. They lift the temperature by absorbing thermal energy from an existing low-temperature heat source and releasing it to a warmer space. Courtesy: Siemens Energy

You could go from a capacity of two months of storage to just two days. However, storage should still be very beneficial because you can allow full load from either of the two systems when electricity prices are at either of the extremes, and you can avoid operating when prices are somewhere in the middle and neither system provides much revenue. By bridging shorter swings in electricity prices and demand, you can avoid switching too frequently between the systems; this means reduced maintenance costs due to less wear and tear from start cycles. Adding seasonal variations to the equation, a combination of CHP, heat pumps, and storage can flexibly adapt to the shifting proportions of renewable energy and residual demand situations combined with changing heat demand.

Self-supported Heat Pump Operation

If you have both CHP and heat pumps installed, you can operate both simultaneously, meaning that you supply the electricity from the CHP to run the heat pump. The efficiency (fuel to heat) in this operating mode is about 200%, far better than a conventional boiler. This operating mode could be used for a plant’s baseload, or simply when the price of electricity does not justify either selling or buying power from the grid. There is often a spread between the purchase price of electricity and the sales price due to grid tariffs and taxation, which makes this kind of self-supported operation an attractive proposition.

Many sites also face grid capacity constraints, which can make it impossible to ensure the continuous availability of grid power. Feed-in tariffs are also poor for many industrial users. The ability to become self-supported regarding electricity during periods of grid congestion could help gain approval for a new industrial plant to connect to the grid or increase electricity usage related to a decarbonization transition.

In regions where renewable energy is not available, a self-supported operating mode will cut fuel consumption in half if the installations replace a boiler. If, over time, more renewable energy becomes available, the solution can adapt to that new situation.

Location of Components

The heat pumps that interplay with CHP do not necessarily have to be located onsite with the CHP plant; it may be a better choice to locate them where the waste heat to be recovered is found. For example, a heat pump could be located at a wastewater treatment plant to recover heat from the outgoing treated wastewater or it could be located at an industrial site.

Heat pump units often feature a modular design so that a large installation is made up of a number of heat pumps. These heat pump units can be connected in parallel or cascaded to optimize the coefficient of performance depending on the operating conditions, whether the full temperature of the district heating supply needs are to be met directly or only after a downstream-situated CHP plant or storage. The thermal heat storage does not have to be located near the CHP plant or the heat pumps either; it can be located anywhere along the main lines of the district heating circulation (Figure 2).

2. Pairing a combined heat and power system with thermal energy storage and heat pumps allows much greater flexibility without a vast increase in investment. Courtesy: Siemens Energy

Policies and Regulations

There are three ways policymakers could help. First, they need to acknowledge that cogeneration plants should be combined with heat storage and be oversized in capacity compared to heat demand to ensure the energy efficient supply of residual load to the grid. Secondly, new cogeneration plants should be required to be future proof in terms of both fuel and operational flexibility. In addition, heat storage should be integrated into the supported heat distribution, allowing the cogeneration plant to operate at full load for up to at least two days without heat demand. Lastly, the expansion of district heating should be prioritized to enable the efficient use of large-scale heat pumps and the recovery of waste heat from industries and from power generation in flexible CHP plants. That’s why small-scale heat pumps should not be supported in areas that are suitable for district heating distribution and where large-scale solutions can be used.

—Anders Stuxberg is a specialist in power plant process integration with Siemens Energy.