DISTRICT HEAT PRICE MODEL ANALYSIS : A risk assesment of Mälarenergi's new district heat price model

Abstract: Energy efficiency measures in buildings and alternative heating methods have led to a decreased demand for district heating (DH). Furthermore, due to a recent increase in extreme weather events, it is harder for DH providers to maintain a steady production leading to increased costs. These issues have led DH companies to change their price models. This thesis investigated such a price model change, made by Mälarenergi (ME) on the 1st of August 2018. The aim was to compare the old price model (PM1) with the new price model (PM2) by investigating the choice of base and peak loads a customer can make for the upcoming year, and/or if they should let ME choose for them. A prediction method, based on predicting the hourly DH demand, was chosen after a literature study and several method comparisons were made from using weather parameters as independent variables. Consumption data from Mälarenergi for nine customers of different sizes were gathered, and eight weather parameters from 2014 to 2018 were implemented to build up the prediction model. The method comparison results from Unscrambler showed that multilinear regression was the most accurate statistical modelling method, which was later used for all predictions. These predictions from Unscrambler were then used in MATLAB to estimate the total annual cost for each customer and outcome. For PM1, the results showed that the flexible cost for the nine customers stands for 76 to 85 % of the total cost, with the remaining cost as fixed fees. For PM2, the flexible cost for the nine customers stands for 46 to 61 % of the total cost, with the remaining as fixed cost. Regarding the total cost, PM2 is on average 7.5 % cheaper than PM1 for smaller customer, 8.6 % cheaper for medium customers and 15.9 % cheaper for larger customers. By finding the lowest cost case for each customer their optimal base and peaks loads were found and with the use of a statistical inference method (Bootstrapping) a 95 % confidence interval for the base load and the total yearly cost with could be established. The conclusion regarding choices is that the customer should always choose their own base load within the recommended confidence interval, with ME’s choice seen as a recommendation. Moreover, ME should always make the peak load choice because they are willing to pay for an excess fee that the customer themselves must pay otherwise.