An economic study of combined heat and power plants in district heat production

Combined heat and power plants are playing an essential role in Finland to reduce carbon dioxide emissions in district heat production. Some of the existing district heat producers need to adopt renewable energy sources to eliminate the use of fossil fuels. The northern countries face a challenge to tackle significant fluctuations of district heat consumption between summer and winter seasons concerning the production cost and the environmental impact of heat production. The municipality of Sodankylä is reorganising the district heat production to reduce emissions by constructing new wood-fuelled CHP plants. These plants will contribute to the existing district heating network. The profitability of CHP plants and the environmental impact in the region need evaluation. Results reveal that the profitable investment for the construction of CHP plants requires 16% subsidy with the predicted cost of heat production at 3.36 €/MWh. CO2 emissions from fossil fuels can potentially eliminated by adapting renewable fuel in the existing plant. CH4 and N2O emissions from district heat production reduced by 78% and 53%