Investment framework for large scale underground thermal energy storage : A qualitative study of district heating companies in Sweden

Abstract: The current environmental challenges that face the world put pressure on the heating market to move towards increased share of renewable energy sources as fuel. District heating (DH) is seen as an efficient solution to achieve this in dense urban areas. Thermal energy storage (TES) is seen as a solution to handle the increased amount of intermittent energy sources in the energy system. For the Swedish DH business a large-scale underground TES (UTES) is seen as an interesting solution partly for this reason and partly to utilise more residual heat and heat from under-utilised production facilities. However, the current complexity to invest in large-scale UTES is limiting the further development of DH. The purpose of this report is therefore to fill the current knowledge gap regarding factors needed to analyse an investment in large-scale UTES. An investment framework is presented to be used as decision support mainly for decision-makers in the DH business, but which can be interesting for other stakeholders in the district heating system (DHS). The main findings of the report are that there exists necessary circumstances for an investment in a large-scale UTES and that the criteria needed to evaluate an investment in large-scale UTES are either related to economy or environment. Further, the main function of a large-scale UTES is seasonal storage because this function creates the majority of the revenue. This revenue is created through storage of cheap heat during periods of low heat demand, which replaces expensive peak production during periods of high heat demand. Depending on the size of the created revenue, the large-scale UTES can be profitable as required by the DH companies. However, it is shown in the report that other factors also must be considered for the large-scale UTES to become profitable. Further, the uncertain future of DH poses a challenge for the evaluation of an investment in large-scale TES. The recommendations for further studies therefore focus on limiting these uncertainties through additional research and development.