**1.1. Heat supply**

Heat sources that cannot be used for separate houses can in a district-heating system be complemented by technologies that also are applicable at smaller scale, for example, fossil fuels, solar energy and electric heat pumps upgrading low-temperature heat. A small dis‐ trict-heating system can have one or two heating units, whereas a large system can host many different heat sources where, for example, a CHP plant fed with low-cost waste covers the base load throughout the year, a wood-fired heat-only boiler supplies most of the spaceheating demand in winter and a boiler using expensive oil covers the peak load during the coldest days.

Base-load plants typically have a low heat production cost but require large investments. The low operation cost makes them suitable for being used during many hours a year. Bene‐ fitting from a lower heat cost than from other units pays back the heavy investment. Com‐ mon base-load supply comes from CHP plants, waste incineration and industrial surplus heat. Oil-fired boilers, on the other hand, have low capacity costs but high operation costs, which make them suitable for covering short periods of peak heat demand.

Figure 1 shows how heat production can take place in a Swedish district heating system during a year. In summer, heat demand and production are low because there is primarily need for heating of domestic hot tap water only but in winter heat production is much larg‐ er due to high space heating demand. The base load is covered by industrial surplus heat throughout the year because it has the lowest cost. The higher load in winter is mainly cov‐ ered by wood used in CHP plants and boilers but fossil CHP production and heat pumps are also used. Some oil is used in heat-only boilers when it is very cold. The units used at high demand have higher heat production costs and are generally more polluting than the plants used at lower demand. Therefore, the marginal cost for district heating production varies in a similar way as the heat demand during the year.

**Figure 1.** District heating production in a Swedish system (GWh)

The fossil-fuel-fired CHP plant and the heat pumps in the system in Fig. 1 were once built as plants covering the base load but later the wood-fired CHP plant was built, which could produce heat at lower cost and the annual utilisation times for the older plants were de‐ creased. The introduction of industrial surplus heat reduced the use of all other plants to their present levels. District heating demand and production are often shown with a dura‐ tion curve, which represents heat demand in descending order from the coldest winter days to the warmest summer nights (see e.g., [2]).
