Author(s)

Fabian Levihn & Cali Nuur

Abstract

Energy utility companies face trade-offs in navigating through today’s environmental challenges. On the one hand, they face intense political, social and environmental pressures to move toward adopt- ing energy systems that incorporate the use of renewable energy resources. By making this transition, they would contribute to carbon reduction and mitigate climate change. On the other hand, they need to coordinate their resources and become efficient when investing in new plants or upgrading existing production systems. This paper seeks to address the gains that utility companies can make when replacing older fossil-fuel-based plants with efficient combined heat and power (CHP) plants. We discuss the system effects from the changes in production of other units when new plants are constructed. Using one of the largest energy utility companies in Sweden, Fortum, as empirical point of departure, we analyzed the company’s transition from using coal and hydrocarbons to an increased use of renewables and waste incineration CHP. Our analysis was based on comprehensive production data on CO2, SOx and NOx  emissions. Our findings suggest that primary energy consumption drops when older, less efficient fossil plants are substituted for new efficient CHP plants; this drop includes the effect on remaining production. The benefits in terms of primary energy savings might even be greater than what is achieved in meeting the goal of climate change abatement through reduced CO2 emissions; NOx and SOx emissions are decreased with new biomass CHPs. Waste incineration CHP increases NOx and SOx emissions, when there is less fossil fuel to replace after the use of biomass is extended. In both cases, economic efficiency increase as costs are reduced.

Keywords

climate change abatement, district heating, environmental impact, primary energy conservation