A techno-economic assessment framework for district-scale thermal source networks serving existing buildings

Abstract

Thermal Source Network (TSN)s are ultra-low-temperature district heating systems that use decentralised heat pumps, offering significant potential for urban heating decarbonization. While previous research has extensively examined the application of TSNs in newly constructed, energy-efficient buildings, studies on their feasibility in older, inefficient building stocks remain limited and less systematically explored. This study introduces a techno-economic framework to evaluate the feasibility of connecting districts with older, low-rated buildings to TSNs. The framework provides a systematic approach to assess economic viability, using Levelised Cost of Heat (LCOH) as a financial metric, and environmental performance. By integrating GIS-based Energy Performance Certificates (EPC) data and building archetype models, it estimates district heat demand, calculates the necessary network and equipment capacities, and evaluates the economic and environmental impacts of TSNs at different building-level temperatures. The study also reviews strategies for reducing Space Heating Water Temperature (SHWT) at the building level, including their costs and potential to achieve lower SHWT targets. The analysis compares TSNs with other heat electrification scenarios, including centralised district heating with Ground-Source Heat Pump (GSHP) and Air-Source Heat Pump (ASHP), and individual ASHPs. The results indicate that TSNs are the most economically attractive solution when substations are owned by the district heating company, mainly due to the lower electricity prices for businesses in the studied case. In contrast, centralised district heating becomes the most viable option when substations are owned by households, which incur higher electricity prices. TSNs also provide significant environmental advantages, with lower operational carbon footprints compared to other alternatives. For TSNs, every 1 ${}^{\circ }$C reduction in building SHWT reduces the LCOH with environmental externalities by 1.99 to 2.24 €/MWh_heat, depending on the system configuration. This study evaluates ownership and pricing policies, demonstrating how centralised ownership and business electricity tariffs enhance the economic feasibility of TSNs. By addressing an important gap in the literature, this study offers a structured approach for policymakers to enhance the feasibility of TSNs in older areas through targeted retrofitting and heating system optimization, supporting their adoption as a scalable and sustainable solution for urban heating systems, particularly in districts with ageing building stocks.