Assessing the techno-economic impact of district heating on electrical distribution grid reinforcements

Enhanced sector coupling across electricity, mobility, and heating sectors leads to higher efforts for distribution grid upgrades. Based on a case study, this paper evaluates the role of district heating networks in reducing electrical distribution grid reinforcements and compares their economic viability against a building-specific heat supply using heat pumps. A detailed energy system model is used to analyze two building energy renovation scenarios: a business-as-usual scenario with a 1% annual renovation rate and an ambitious scenario with a rate of 2%. Using a two-step optimization, the impact of different district heating network penetration levels on the distribution grid is evaluated, followed by an ex-post analysis to incorporate a simultaneity factor into district heating networks. Overall, district heating networks can reduce distribution grid reinforcements, but the associated savings alone do not justify their construction, particularly in the ambitious renovation scenario. In the business-as-usual scenario, a district heating network can reduce reinforcement costs by up to 71%. However, in the ambitious scenario, grid reinforcements are already reduced due to lower heat peak demand, and the maximal reinforcement cost savings only amount to 35%. Compared economically, district heating networks are cost-competitive with building-specific heating only in the business-as-usual scenario, up to a heat supply share of 70% and in the ambitious scenario, up to 40%. In both scenarios, a district heating network can be a robust solution to lower macroeconomic costs for a carbon-neutral heat supply.