Individual versus system-oriented optimal phase-out of natural gas in decentralized space heating: an Austrian case study by 2040

Abstract

By 2040, Austria aims to decarbonize its heating sector completely, which means phasing out fossil fuels such as natural gas and transitioning to renewable energy-based heating systems. In urban areas, district heating is a promising option to achieve this green transformation and to supply a large number of consumers with sustainable heat simultaneously. However, convincing consumers to connect to the district heating system remains one of the biggest challenges, as there is no obligation to do so. In Vienna, where 50% of the buildings are heated with gas boilers and a well-developed district heating system already exists, this is a significant issue. The objective of this thesis is to contribute to this topic with a techno-economic analysis, focusing on comparing the optimal decision of how to heat buildings from an individual (consumer) and a system-oriented planned (district heating operator) perspective. The study also examines the influence of different political frameworks. For this purpose, the study developed a linear optimization model that minimizes the total costs, including heating and construction costs incurred by 2040. The results show that when the district heating price is lower than the gas price, almost 50% of the thermal demand can be met by district heating under the current government framework. Government intervention, such as prohibiting the use of gas boilers, can further increase the adoption rate of district heating systems. At a threshold of 200€/t CO2 reached in 2040, a significant increase in district heating systems is notable. When fully transitioning to district heating systems, a specific investment cost of 325€/kW will occur compared to 132 €/kW when continuing to use gas boilers. Comparing both perspectives, a decline of up to 50% in the DH system can be noted in the system-oriented exit due to the high upfront expansion costs of the existing DH grid. In order to promote district heating in urban areas, a combination of different energy policy instruments, such as subsidies, CO2 price, and eventually government interventions, seem to be promising to achieve the goal of climate neutrality by 2040.