Energy 181 (2019) 1023e1035

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Energy
journal homepage: www.elsevier.com/locate/energy

Solar power in district heating. P2H flexibility concept

Armands Gravelsins, Ieva Pakere*, Anrijs Tukulis, Dagnija Blumberga
Riga Technical University, Institute of Energy Systems and Environment, Azenes street 12/1, Riga, Latvia

a r t i c l e i n f o a b s t r a c t

Article history: District heating (DH) systems present a great opportunity to increase the proportion of renewable energy
Received 6 January 2019 used in both heating and cooling. Renewable energy can be integrated into DH to account for heat load
Received in revised form and also for power production, which in cogeneration systems is used for both heat generation and
22 May 2019
transmission.
Accepted 30 May 2019
The main aim of this research is to determine whether (and also how) to integrate solar PV panels into
Available online 3 June 2019
DH systems to achieve an economically feasible, flexible energy production solution by using a power-to-
heat concept. To reach greater depth in this research, the system dynamics (SD) approach was used.
Keywords:
District heating system
The results show that it is not profitable to install larger PV panels than are needed to provide for
Power-to-heat summer electricity use. However, use of the power-to-heat concept can expand the flexibility of a solar
Solar power power system and increase the overall efficiency or economic feasibility when the power generated
System dynamics modelling exceeds consumption. When integrating a larger PV area, the surplus power can either be transferred
back to the grid or used for heat production via a heat pump. On average, about 47% of excess power is
converted into heat and 53% is sent to the grid. Results show that policies both in the form of subsidies
for PV panels and increases in the price of heat can significantly influence the results.
© 2019 Elsevier Ltd. All rights reserved.

1. Introduction
Globally, nearly 80% of produced energy comes from fossil fuels,
which promotes climate change, water and air pollution, and nat-
ural resource depletion. Renewable energy sources (RES) play an
increasingly important role in the energy sectors in most European
countries, particularly in those wishing both to improve the overall
quality of the environment and to decrease their dependency on
imported fossil fuels.
Due to the rapid development of technologies, solar energy is
becoming increasingly widespread in various countries, but
particularly in Europe. The price of solar power panels has
decreased by around 85% between 2009 and 2018, which has
resulted in a sharp increase of installed solar power capacity.
Around 140 million Euros have been invested in PV technologies,
which is the largest share from all investments in RES [1]. Solar
power is an important element in 100% cost effective renewable
power systems. However, generated solar power is dependent on
the available solar radiation and not on actual power consumption,
which indicates the necessity redesign the operation of energy
* Corresponding author.
E-mail address: ieva.pakere@rtu.lv (I. Pakere).
systems.
The flexibility of energy systems that use integrated intermit-
tent energy sources is crucial [2]. As the installed capacity of solar
energy production technologies has grown, the alignment of en-
ergy production and consumption has lately become a much-
discussed topic [3]. There are several ways of increasing the capa-
bility of systems to adjust production to consumption: accumulate
the power for periods when the demand increases, apply demand
side management to align power consumption with power pro-
duction and/or convert the power to different types of energy [3].
The main technology for direct power accumulation is the battery.
Power can be stored in a variety of ways such as compressed air
energy storage, flywheels, superconducting magnetic energy stor-
age, etc. [4]. However, most of these technologies are not yet fully
adapted for commercial use and are often not cost effective.
1.1. Development of power-to-heat concept
There is another solution for utilizing the power from RES when
the power consumption is lower than the production rate. This
amount of generated solar power can be defined as surplus power,
which due to legislative or economic reasons cannot be fed into the
grid. When this occurs, one possibility is to convert power to heat
(power-to-heat (P2H) concept) via electric boilers or heat pumps

https://doi.org/10.1016/j.energy.2019.05.224
0360-5442/© 2019 Elsevier Ltd. All rights reserved.
1024 A. Gravelsins et al. / Energy 181 (2019) 1023e1035

Nomenclature i order of delay function

IR investment rate, EUR/yr
B1eB3 balancing loops LHP heat pump load, %
CA avoided costs for grid power, EUR/hr OCPV PV operating costs, EUR/hr
CAPP2H power-to-heat capacity, kW PPV PV price, EUR/m2
CCDR capital cost discard rate, EUR/yr/yr PRA accumulated profit, EUR
CCIR capital cost increment rate, EUR/yr/yr P2H power-to-heat
CCPV PV capital costs, EUR/yr PUC public utilities commission
CHP combined heat and power R1-R3 reinforcing loops
COP heat pumps coefficient of performance RBTG revenue from selling power back-to-grid, EUR/hr
CRHP heat pump capacity requirement, kW/m2 RES renewable energy sources
CS system costs, EUR/hr RP2H revenue from selling P2H heat, EUR/hr
DH district heating RS system revenue, EUR/hr
DR discount rate, % SB Subsidies in PV technologies, %
EBTG surplus power back to the grid, kWh/hr SCOM PV commissioning, m2/yr
ED power demand for self-consumption, kWh/hr SD system dynamics
EG power from grid, kWh/hr SDE PV decommissioning, m2/yr
EHD heat demand, kWh/hr SHPR profit share in new PV, %
EHP power-to-heat production, kWh/hr SI solar irradiation, kWh/m2/hr
EMAX maximum power demand possible for P2H, kWh/hr SO ordering of PV area, m2/yr
EP2H surplus power for P2H, kWh/hr SOPV ordered PV area, m2
EPV PV power production, kWh/hr SPV PV area, m2
ES PV power surplus, kWh/hr TGP grid power price, EUR/MWh
ESC PV power for self-consumption, kWh/hr TMC commissioning time, yr
FLHPV PV full load hours, hr/yr TME economic lifetime of investment, yr
FOCPV PV fixed operating costs, EUR/MW/yr TMPV PV service life, yr
HP heat pump TSP power sales price, EUR/MWhe
HTC comparable heat tariff, EUR/MWhe VOCPV variable operating costs of PV, EUR/MWh
HTH company's heat tariff, EUR/MWhth hPV PV efficiency, %
HTP2H indicated P2H tariff, EUR/MWhth

(HP) [5] and use it in either the local [6] or the large-scale heating
systems [7]. Fig. 1 shows the interaction between heat production
costs and electricity prices for different heat generation technolo-
gies. This demonstrates that P2H is feasible when the electricity
price is lower than the heat production costs incurred when using
other heat generation technologies [8].
In the past few years, a number of authors have developed the
smart grid concept [9] where power, heating and cooling networks
are combined and analysed as an integrated system. Consumption
Heat production
load management and grid-interconnectivity are the key factors in
developing more flexible renewable energy system solutions [10].
The potential of P2H systems in different European countries
have been analysed by Yilmaz et al. [11]. Authors have calculated
the P2H potential for Germany, Denmark, France, Austria, the
Netherlands and Italy by analysing changes in hourly power and
heat load. Other authors have applied a similar methodology for
estimating the potential of P2H technology for Sweden [12] and
other Nordic countries [13]. Sandberg et al. [14] have lately dis-
cussed P2H as a solution using different power tariff structures and
conclude that, while this could increase the share of wind power in
DH, it would also decrease the share of energy through
cogeneration.

The P2H concept has been analysed in a microeconomic

costs

perspective by Ehrlich et al. [15]. The authors conclude that,

without additional government support, the financial benefits of
P2H systems at the household level are negligible. Therefore, it is
reasonable to analyse such systems at the district or regional level,
but until now, there has been little research on large-scale P2H
integration in district heating systems [8]. Hypothetically, DH
would be a suitable application for P2H because electricity can be
Heat only boilers
directly used for heat generation and transmission in a boiler
house, while the surplus power can be converted to heat and fed
into the heat supply system.

P2H potential 1.2. Solar power and P2H concept in baltic countries

Electricity price
Fig. 1. Heat production cost and electricity price interact for different heat generation
technologies (CHP-combined heat and power) [8].
The use of solar and wind energy in Baltic countries is not yet
widespread for energy production [16,17]. Solar panels are mainly
used in household applications and there have been several
research papers analysing the operation of solar power systems in
 A. Gravelsins et al. / Energy 181 (2019) 1023e1035
Latvia [18,19]. The authors of these papers identify the main pa-
rameters affecting solar system feasibility including the efficiency
rate and price of solar panels, the level of government support and
the structure of electricity tariffs.
In order to initiate the installation of RES, there should be well-
planned regulatory framework and national support for carbon-
free technologies [20]. Best & Burk [21] present the roles of pol-
icies and preferences in the national adoption of solar and wind
energy technologies. These authors have found that carbon pricing
is an important factor in the early adoption of solar energy. Similar
support schemes should be analysed for Baltic countries in order to
achieve a higher share for solar and wind energy in the energy
market.
Moller et al. [8] analysed the possible increase in system flexi-
bility by implementing policy incentives for DH in Baltic countries.
The authors compare the levelized costs of heat for several sce-
narios combining biomass CHP, electric boilers, heat storage and oil
boilers for covering the peak load. The results showed that inte-
gration of different energy storage systems results in the lower
levelized costs of heat. However, the current policies in the Baltic
countries do not support increased system flexibility from coupling
DH and power generation.
Taking into account the significant decrease of PV prices, the
development of the smart grid and P2H, the goal of this research is
to determine whether the integration of solar PV panels into DH
systems is economically feasible. The authors evaluate if it is
reasonable to integrate the PV system for on-site power con-
sumption (that is, the energy used to produce power) and convert
the surplus solar power to heat. The P2H concept is a possible so-
lution to increase the flexibility of solar power systems.
2. Methodology
For more in-depth research of the PV technology integration
into DH, the authors have used the system dynamics (SD) approach.
SD solves complex problems such as the development of renewable
energy systems that use several dynamic variables [22]. SD
modelling is useful for evaluating the relationship between dy-
namic factors (dependency, energy demand, cost changes, etc. [23])
and the effect of different policies on RES [24].
SD theory is based on the study of the relationship between
system behaviour and the underlying structure of the system. This
means that an analysis of the system's structure may lead to a
deeper understanding of the causes which lead to certain behav-
iour which, in turn, allows any problematic behaviour existing in
the system [25] to be further addressed.
For the purposes of this research, the SD model was developed
to analyse the complexity of the DH company's energy balance and
tariffs for different energy types. It also include forecasts for energy
and changes in the price of PV technology. This model is based on
solar power integration, which is used to cover power used to
produce heat for a DH company.
2.1. System dynamic behaviour
The aim of this research is to evaluate whether it is reasonable to
integrate a PV system into a DH company's system in order to cover
part of the company's power self-consumption and convert the
surplus solar energy into heat. In addition, the model makes it
possible to compare different technologies that can be used to
produce heat energy from surplus energy.
To identify the main driving forces of the system, the causal loop
diagram was constructed. The causal loop diagram describes
mutual connections among the elements of the system.
The system (see Fig. 2.) consists of three reinforcing loops (R1 e
1025
R3), which promote the development of the system. However, two
balancing loops (B1 and B2) hinder the development of the system.
The main measurement of the system is profitability. A higher
profitability level leads to a higher interest on the part of the
Company to invest in additional PV capacity. This, in turn, leads to
more solar energy being produced, which further leads to more
surplus power when the PV is producing close to maximum ca-
pacity. If there is a significant amount of surplus energy, there is the
option to use it for heat generation. Thus, with more surplus energy,
more heat can be generated. This results in higher income levels,
which make the system more profitable. This is the first reinforcing
loop (R1).
The 2nd reinforcing loop (R2) is similar. If there is more surplus
energy, more power can be sold back to the grid (BTG). This in-
creases the income from the PV system making it more profitable.
The 3rd reinforcing loop (R3) shows that by increasing the PV
energy production rate, the company is able to cover a greater share
of power self-consumption. This allows it to avoid the costs that
would result from purchasing power from the grid. This also helps
to make the system more profitable.
Although the reinforcing loops promote the development of the
system, there are also two balancing loops trying to hinder the
development of the system. Balancing Loop 1 (B1) is related to the
PV costs. The installation of more PV panels results in higher capital
and operating costs, making the system less profitable. Balancing
Loop 2 (B2) works by the same principle, but it takes into account
the P2H technology costs and their impact on the system.
The system is profitable when the reinforcing loops are stronger
than the balancing loops, meaning that revenues need to be higher
than costs. Therefore, it is necessary to determine the capacity at
which maximum revenue is generated at a minimal cost.
Based on literature, it is assumed that technology costs for PV
and P2H technologies will decrease [1]. The hourly data of a DH
company's heat demand, power consumption and solar irradiation
is used in the model.
The dynamic hypothesis is that, by integrating solar energy and
P2H technologies, it is possible to improve the economic indicators
of the DH company.
2.2. Model structure
The SD model consists of five connected sub-models. Stocks and
flows are the main elements of every sub-model. The stocks accu-
mulate the particular value over time, while flows increase or
decrease this accumulated value.
2.2.1. Installed PV area sub-model
The installed PV area sub-model describes the total installed PV
area. Fig. 3 shows the model structure. In cases where the PV sys-
tem operation is profitable, more PV is installed to cover a larger
area. If not, then the PV area slowly decreases due to decom-
missioning of the existing PV panels.
Two flows regulate the PV area stocke PV commissioning and
decommissioning. This structure shows the extent of PV area at any
given moment. Stock value is calculated according to (1) below:
ðt
SPV ðtÞ ¼ ½SCOM  SDE dt þ SPV ðt0 Þ (1)
t0
where SPV e PV area, m2; SCOM e PV commissioning, m2/yr; SDE e
PV decommissioning, m2/yr.
Other stocks of the system are calculated using the same
principle.
1026 A. Gravelsins et al. / Energy 181 (2019) 1023e1035

Income from BTG

+
R2
Income from P2H
+
System income + +

P2H CAPEX BTG

R1 +
+ +
+
+ P2H costs P2H
Other P2H costs Other PV costs Power sales price
+ +
+ +
System costs + PV costs B2
+
System - +
PV energy surplus
Profitability B1 Heat tariff +
+ + PV CAPEX
+
PV capacity
PV efficiency
+ + PV energy share in
PV energy + self consumption
-
R3 +
Avoided costs from Solar irradiation
Grid power + grid power + Power demand for
purchase price self consumption

Fig. 2. Causal loop diagram for PV panel integration in a DH company.

Profit share Commissioning time PV service life

in new PV

Ordered PV
PV area area
Ordering of PV PV
PV area commissioning decommissioning
Accumulated
profit

PV price
PV price reduction Reduction rate %
rate per year

Fig. 3. Installed PV area sub-model.

The decision about additional PV panel area installation is based

on economic considerations such as total revenue and costs of SOPV
SCOM ¼ (3)
installed PV system. If the operation is profitable, it is assumed that TMC
part of the profit will be redirected towards installation of new PV
panels. The amount of installed area is calculated by dividing the where SOPV e ordered PV area, m2; TMC e commissioning time, yr.
available funds with the PV price. The ordering of new PV panels is PV decommissioning describes the amount of PV panels
determined by the following “if” function: decommissioned after the end of their service life:

SO ¼ if ðPRA > 0; PRA , SHPR =PPV ; 0Þ (2) SPV

SDE ¼ (4)
TMPV
2
where SO e ordering of PV area, m /yr; PRA e accumulated profit,
EUR; SHPR e profit share in new PV, %; PPV e PV price, EUR/m2. where TMPV e PV service life, yr.
There is a time delay before PV panels are delivered, installed The PV panel price is assumed to decrease in the future [1]. The
and become fully functional. Therefore, there are two stocks e or- decrease is modelled by building one stock with one outflow. Fig. 4
dered PV area and PV area. These stocks are regulated by the flow e shows the modelled PV panel price decrease during a 10 year
PV commissioning. After the commissioning time (a time necessary period (see Fig. 5).
to deliver and install the equipment) passes, the ordered PV panels The main input parameters (profit share in new PV, commis-
move to the PV area stock: sioning time, PV service life, PV price, etc.) are shown in Table 1.
 A. Gravelsins et al. / Energy 181 (2019) 1023e1035 1027

200

PV price, EUR/m2
150

100

50

0
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Fig. 4. Simulated PV price decrease.

PV efficiency
Solar irradiation

PV PV power
area production PV power for self
consumption
Indicated
Surplus power P2H tariff
BTG Heat demand

Power from
P2H Power Max power Comparable
grid COP
capacity sales price demand heat tariff
for P2H
Power demand for
self consumption
PV power surplus Surplus power for
P2H Companie s
heat tariff
Heat tariff
Heat tariff increase increase rate

Fig. 5. PV power production and consumption sub-model.

2.2.2. Power production and consumption sub-model The generated PV power is calculated as:
The power production and consumption sub-model reveals the
following flows: EPV ¼ SPV ,hPV ,SI (5)

 how much power is produced with the installed PV area; where EPV e PV power production, kWh/hr; hPV e PV efficiency, %;
 how much of the produced power is used for self-consumption; SI e solar irradiation.
 how much of the produced power remains as surplus power, The PV panel efficiency is based on previous research [26,27],
which can be either BTG, or used in heat generation via HP. but the hourly solar irradiation data are obtained from the

Table 1
Input data for baseline scenario.

Input parameter Unit Value Source

2
Starting price for PV panels EUR/m 180 [27]
PV panel price reduction %/year 5 [27,28]
PV commissioning time years 1 [29]
Service life of PV years 25 [29]
PV panel efficiency % 16 [30]
Profit share in new PV % 25 [28]
Solar irradiation kWh/m2/hr Hourly data Meteorological database [31]
Electricity consumption kWh Hourly data Data from DH company
Electricity needed for heat demand kWh Hourly data Data from DH company
Heat tariff increase % 2 Data from DH company
Heat tariff for end users EUR/MWh 50 Data from DH company
HP COP e 3 [32,33]
Electricity price EUR/MWh Hourly data Data from electricity market
HP price EUR/kW 800 [32,33]
Service life of HP equipment years 20 [32]
HP capacity requirement kWh/m2 0.2 [32]
Full electricity price EUR/MWh Hourly data Average mark-up
1028 A. Gravelsins et al. / Energy 181 (2019) 1023e1035

meteorological database [31].

To calculate how much of a DH company's power demand can be
covered by generated PV energy, it is necessary to take into account
how much power is needed from the grid, as well as how much
surplus solar power is still left after self-consumption is covered
(6e8).
ESC ¼ if ðEPV  ED ; ED ; EPV Þ
EG ¼ if ðED > EPV ; ED  EPV ; 0Þ
ES ¼ if ðEPV > ED ; EPV  ED ; 0Þ
where ESC e PV power for self-consumption, kWh/hr; EG e power
from grid, kWh/hr; ES e PV.
Surplus power, kWh/hr; ED e power demand for self-
consumption, kWh/hr.
The hourly power consumption data of the particular DH com-
pany studied is used in the modelling process.
The surplus energy (PV power production minus the DH com-
pany's self-consumption) is transformed into heat or fed into the
grid. The decision on whether to feed surplus power BTG or to use it
in heat generation is based on economic considerations. The po-
tential income from both options is compared, and the more
profitable option is selected. If the heat tariff is higher, the surplus
PV power is converted to heat taking into account the restrictions of
heat demand and installed P2H technological capacity. The decision
uses the following functions:
HTC ¼ if ðHTH  HTPtH ; HTH , COP; 0Þ (11)
where HTH e company's heat tariff, EUR/MWhth; HTP2H e indicated
P2H tariff, EUR/MWhth; COP e HP coefficient of performance.
The variable, called maximum power demand possible for P2H,
was introduced into the model in order to prevent a situation
(6) whereby more surplus energy would be transformed into heat than
required by the heat demand.
(7) EHD
EMAX ¼ (12)
COP
(8)
where EHD eheat demand, kWh/hr.
It is assumed that the DH Company's regular tariff will increase
over time. The tariff increase is modelled the same way as the PV
price decrease in section 2.2.1.
2.2.3. P2H capacity sub-model
The HP is used as P2H technology to convert PV surplus energy
into heat. Fig. 6 shows the end-to-end relationships in the P2H
capacity sub-model. To understand how much capacity is necessary
for P2H technologies, a HP capacity factor is introduced. This vari-
able describes the HP capacity requirement per one square meter of
installed PV area that is necessary to cover the full load when PV is
working at peak capacity. As PV panels are working at full capacity
only a few hours per year, it is impractical and expensive to install
HP capacity to cover the full power load. Thus, the HP capacity
factor describes how much of the full HP capacity requirement is
installed (e.g. if HP capacity requirement is 0.2 kW/m2 and HP load

EBTG ¼ if ðTSP > HTC ; ES ; if ðES > EMAX ; if ðEMAX > CAPPtH ; ES  CAPPtH ; ES  EMAX Þ;
(9)
if ðES > CAPPtH ; ES  CAPPtH ; 0ÞÞÞ

is 10%, only 0.02 kW/m2 will be installed). The HP load is one of the
variables the impact of which is analysed in different scenarios.
The initial P2H capacity is calculated as follows:
EPtH ¼ if ðTSP >HTC ;0;if ðES >EMAX ;if ðEMAX >CAPPtH ;CAPPtH ;EMAX Þ;
if ðES >CAPPtH ;CAPPtH ;ES ÞÞÞ CAPPtH ¼ CRHP ,SPV ,LHP (13)
(10)
where CRHP eHP capacity requirement, kW/m2; LHP e HP load, %.
where EBTG e surplus power B, kWh/hr; EP2H e surplus power for The P2H technology capacity is modelled as a stock with one
P2H, kWh/hr; TSP e price of power for sale, EUR/MWhe; HTC e inflow and one outflow. The inflow P2H commissioning is calcu-
comparable heat tariff, EUR/MWhe; EMAX e maximum power de- lated the same as initial capacity (13) except that the additional P2H
mand possible for P2H, kWh/hr; CAPP2H e P2H capacity, kW.
The hourly electricity price is determined using historical data
from the power market with future price forecasts.
To compare which of the options are more profitable, it was
necessary to compare the power tariff with the heat tariff. Since the
heat tariff is expressed per heat energy produced, in order to Heat pump PV
compare it with the power tariff, the coefficient of performance capacity area P2H
(COP) for HP, which would be used to transform surplus power into requirement service life
heat, was introduced. In addition, two different heat tariffs were
compared e the DH company's regular tariff (approved by the
public utilities commission (PUC)) and the calculated P2H tariff. In P2H
cases when the P2H tariff is higher than the one approved by the capacity
P2H P2H
PUC, it is disadvantageous to transform surplus PV power to heat.
commissioning decommissioning
However, if the P2H tariff is lower than the tariff approved by PUC
Ordering of
and when it is more profitable than selling power BTG, surplus PV PV area
energy is transformed into heat by using P2H technologies. The Heat pump load
heat produced by the P2H technology is sold at the PUC approved
tariff. Fig. 6. P2H capacity sub-model.
 A. Gravelsins et al. / Energy 181 (2019) 1023e1035 1029

the different scenarios when PV panels are subsidized (same is

done in the P2H technology capital cost sub-model).
The capital cost increment rate and discard rate is calculated in
Economic the following manner:
lifetime
Discount PV
rate area IR,DR
CCIR ¼  (15)
1  1=ðð1 þ DRÞTME
PV
capital
Capital cost Capital cost
costs
increment rate discard rate
CCDR ¼ DELAYMTRðCCIR ; TME ; i; CCPV =TME Þ (16)
Ordering of
PV area PV price where CCIR e capital cost increment rate, EUR/yr/yr; CCDR e capital
Subsidies PV cost discard rate, EUR/yr/yr; IR e investment rate, EUR/yr; i e order
of delay function (i ¼ 6).
Cummulative The investment rate calculates the necessary capital investment
investment for new capacities in later steps of the simulation (17).
Investment rate

Fig. 7. PV capital cost sub-model. IR ¼ PPV ,SO ,ð1  SBÞ (17)

In this example, the capital cost calculation is displayed only for
PV panels, because the calculation for the HP is similar.
capacity is installed for the new PV area, not the initial one. The P2H
decommissioning is calculated similar to formula (4).

2.2.5. Cost, revenue and profit sub-model

2.2.4. Capital cost sub-model
For PV and P2H technology implementation, one of the main
barriers is high capital costs which cannot be overlooked. The
capital cost sub-model (see Figs. 7 and 8) shows calculations of the
capital costs for existing and new capacities.
The capital costs is a stock with two flows e inflow, which in-
creases the capital costs when a new PV area is installed, and
outflow, which decreases the capital costs, when those are refun-
ded (see Fig. 7). The initial capital costs for the initial PV area are
calculated according to (14):
SPV ,PPV ,ð100  SBÞ,DR
CCPV ¼  (14)
1  1=ðð1 þ DRÞTME
where CCPV e PV capital costs, EUR/yr; SB e subsidies in PV tech-
nologies, %; DR e discount rate, %; TME e economic lifetime of in-
vestment, yr.
The subsidies are implemented in the model to later compare
To evaluate the economic benefits, it is important to calculate
the costs and revenue of PV system integration in the DH system.
The costs of the system include PV costs and HP costs. Costs
consists of capital costs (section 2.2.4.) and operating costs e both
fixed and variable. The operating costs for the PV panels are
calculated according to (18).
OCPV ¼ EPV ,ðVOCPV þ FOCPV =FLHPV Þ (18)
where OCPV e PV operating costs, EUR/hr; VOCPV e variable oper-
ating costs PV, EUR/MWh; FOCPV e fixed operating costs PV, EUR/
MW/yr; FLHPV e PV full load hours, hr/yr.
The same approach is used when calculating HP operating costs.
Total revenue consist of two elements: revenue from electricity
sold BTG and revenue from HP heat energy sold to consumers.
RBTG ¼ EBTG ,TSP (19)

Variable Surplus power

Fixed operating Companies
PV operating BTG
operating costs PV heat tariff
costs PV costs P2H heat
Power production
sales price
Revenue from Revenue from
PV full selling power BTG selling P2H heat
load hours PV power PV PV power for self
production capital consumption
PV costs
costs

P2H System System Avoided costs for

P2H heat capital costs revenue grid power
P2H full production costs
load hours P2H costs

Grid power
Accumulated
Fixed Variable price
profit
operating P2H operating operating Profit
costs P2H costs costs P2H

Fig. 8. Cost, revenue and profit sub-model.

1030 A. Gravelsins et al. / Energy 181 (2019) 1023e1035

production via HP without covering self-consumption.

RPtH ¼ EHP ,HTH
where RBTG e revenue from selling power BTG, EUR/hr; RP2H e
revenue from selling P2H heat, EUR/hr; EHP e P2H heat production,
kWh/hr.
There is an additional category called “avoided costs”. Since the
company is producing its own power with PV, the amount of power
generated is the same amount they do not have to buy from the
grid. Avoided costs are calculated as follows:
CA ¼ ESC ,TGP
where CA e avoided costs for grid power, EUR/hr; TGP e grid power
price, EUR/MWh.
Profit is calculated, by taking into account costs, revenue and
avoided costs:
PR ¼ RS  CS þ CA
where RS e system revenue, EUR/hr; CS e system costs, EUR/hr.
The revenue growth is only observed at times when the PV
system is producing power, while fixed costs are the same
throughout the year. To compare revenue and costs, it is necessary
to compare the annual values. Each year based on the annual profit,
the investment decision is made whether to invest in additional PV
panels or not. Therefore, the revenue and costs are reset.
2.3. Assumptions and input data
Table 1 shows the main input data for the baseline scenario and
also includes the unit, the exact value and the source for each input
parameter.
(20) Scenarios 8 to 12 describe the situation with additional support
for renewable technologies in the form of subsidies for investment
in PV panels and HP. Scenarios 13 to 16 show the impact of in-
creases in power and/or heat tariff as they directly impact the
economic benefits of power conversion to heat.
2.5. Model validation outlier
The extreme conditions test was done to see how the model
(21) responds to extreme values. This test showed that by radically
changing the main input data, the model behaviour is normal and
the balancing loops limit the outlying results. Fig. 9 shows the
changes in installed PV capacity by putting extreme values (10
times larger e 10 000 m2) for the initial PV area.
Fig. 9 shows that by installing too great a PV capacity from the
initial launch of the system, the system cannot be economically
(22) justified and the total accumulated profit is negative. That is to say,
there is a loss. This shows that the balancing loops (costs) are
stronger than reinforcing loops (profit). In cases where the extreme
condition test was done for all input parameters, the model showed
that it can balance itself and deliver reliable results even for
extremely low and high input values.
3. Results
This section presents the results for different solar power system
configurations and the impact of applied policies and increases in
energy tariffs. The simulation is conducted for a 10 year period to
show the long term dynamic of the obtained results.
3.1. Baseline scenario

2.4. Analysed scenarios The baseline scenario represents the configuration of a

The developed SD model evaluates different solar power system
configurations and policy instruments for renewable energy sup-
port. Table 2 summarizes the analysed scenarios.
Scenarios 1, 2 and 5 represent the situation with different PV
areas and without integrated HP for P2H concept. Solar power is
only used for self-consumption coverage or sent BTG.
Scenarios 3,4, 6 and 7 show the impact of different installed HP
capacities for PV areas of 1000 m2 and 500 m2. The used values
describe the part of the PV load that could be directly used for heat
1000 m2 PV area and the HP with a starting capacity of 20 kW. The
solar power production is modelled on an hourly basis according to
the available solar radiation. It is further aligned with the hourly
power consumption and the market price of electricity.
Fig. 10 shows the results of solar power production and uti-
lisation of surplus solar power. The solar fraction reaches around
20% of total power consumption in the first year and drops to 13% in
10th year. Around 81% of produced solar power is used directly for
self-consumption; therefore, the remaining part is surplus power,
which can be either transmitted BTG or converted to heat via HP

Table 2
Overview of analysed scenarios.

Scenario Initial PV area HP capacity factor PV subsidies HP subsidies Electricity price increase Heat price increase

m2 e % % % %

Base scenario 1000 0,1 0 0 0 0

Sc 1 100 0 0 0 0 0
Sc 2 1000 0 0 0 0 0
Sc 3 1000 0,05 0 0 0 0
Sc 4 1000 0,2 0 0 0 0
Sc 5 500 0 0 0 0 0
Sc 6 500 0,05 0 0 0 0
Sc 7 500 0,1 0 0 0 0
Sc 8 1000 0,1 20 0 0 0
Sc 9 1000 0,1 40 0 0 0
Sc 10 1000 0,1 0 20 0 0
Sc 11 1000 0,1 0 40 0 0
Sc 12 1000 0,1 40 40 0 0
Sc 13 1000 0,1 0 0 20 0
Sc 14 1000 0,1 0 0 50 0
Sc 15 1000 0,1 0 0 0 20
Sc 16 1000 0,1 0 0 0 50
 A. Gravelsins et al. / Energy 181 (2019) 1023e1035 1031

Fig. 9. Extreme condition test for initial installed PV area 10 000 m2. a-PV energy share in self-consumption and share of surplus PV power; b-changes of accumulated profit.

Fig. 10. Solar power production, surplus power utilisation and changes of PV area in the Base scenario.

when the electricity price is low.
The installed PV area within a 10-year period decreases from
1000 m2 to 630 m2, because it is assumed that not all PV panels will
last the whole lifetime predefined by manufacturer. If PV panels
would prove to be economically beneficial, the company would be
interested in investing in more PV panels, and the PV area would
increase in the case when the investment rate is larger than the
decommissioning rate.
Around 47% of surplus power is converted to heat and fed into
the DH network, and the rest is transmitted BTG. However, the use
of power for heat production is strongly limited by the HP capacity.
Part of the surplus power is sold BTG due to insufficient HP capacity.
3.2. Installed PV area and generated solar power
One of the main parameters affecting the operation of the solar
panel system is the installed PV area, which is usually chosen ac-
cording to power consumption. In this research, several scenarios
with different installed PV areas are analysed (see Table 2). If the
installed area is below a certain size, all of the generated solar
power is directly used on site for self-consumption (Scenario 1). In
order to increase the share of solar energy in the total power
consumption, it is necessary to install a larger area of solar panels.
In this case, there will be periods when the generated solar power
exceeds the actual power consumption and a surplus of power
occurs.
Fig. 11 shows the share of PV energy in self-consumption and
Fig. 12 shows the surplus solar power in different PV area scenarios.
There is no surplus power in Scenario 1 where only 100 m2 of PV
panels are installed. For the installed area of 1000 m2, the share of
surplus power reaches around 16% in total power consumption.
This amount is smaller after 10 years in 2026 as the installed PV
1032 A. Gravelsins et al. / Energy 181 (2019) 1023e1035

18%
16%

PV energy in self
consumption, %
14%
12%
10%
8%
6%
4%
2%
0%
2017 2019 2021 2023 2025
Sc 1 Sc 2 Sc 5

Fig. 11. PV power in self-consumption for different PV area scenarios.

25%
PV energy surplus, %

20%

15%

10%

5%

0%
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Sc 2 Sc 5

Fig. 12. Surplus power in different PV area scenarios.

area decreases.
The main factors that determine the use of surplus power in this
research is the hourly electricity price and the HP capacity to
convert P2H. Around 20% of solar power exceeds the consumption
and the power needs to be redirected when analysing the
1000 m2 PV panel area scenario. Fig. 13 shows the surplus power
converted to heat depending on the installed HP capacity. When
the HP capacity factor is 0.1, almost half of the surplus power is
converted to heat. In case of higher HP capacity, up to around 74% of
surplus power is used for heat production as it is more beneficial
than the BTG option. In this particular case study, all of this
generated heat can be used in DH in order to cover the summer
heat load.
In order to compare the different scenarios with and without HP
installation, the accumulated profit per m2 of PV area is used as the
main indicator. Fig. 14 and Fig. 15 show the results for different
scenarios without use of HP when all the surplus power is sent to
BTG. The highest value is obtained for Scenario 1 with an installed
solar panel area of 100 m2. The total accumulated profit after 10
year period is 18 EUR/m2. Fig. 14 shows that Scenario 2 is not
profitable during the analysed period, but PV installation of 500 m2
results in 10 EUR/m2 accumulated profit.
When comparing scenarios with the same area but different
policies for the surplus power utilisation (Scenario 2 without HP
and Base scenario with HP), the results show that it is more prof-
itable to convert part of the surplus power to heat. Scenario 2 re-
sults in 5.5 EUR/m2 accumulated profit, but Base scenario results
in a 3.7 EUR/m2 profit.

100%
PV surplus power share for

80%

60%
P2H

40%

20%

0%
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

0 (Sc 2) 0,05 (Sc 3) Base scenario 0,2 (Sc 4)

Fig. 13. Surplus power used in heat production depending on the installed HP capacity factor.
 A. Gravelsins et al. / Energy 181 (2019) 1023e1035
Fig. 14. Specific accumulated profit for scenarios without HP installation.
Fig. 15. Specific accumulated profit for scenarios with HP installation.
As indicated in Fig. 15, higher accumulated profit values are
obtained for the Base scenario and Scenario 6 (PV 500 m2 combined
with HP). In addition, lower specific accumulated profit is evident
in Scenario 4 and Scenario 7 in which case higher HP capacities are
taken into account.
3.3. Support policies and tariff changes
Several authors concluded that the P2H concept could be more
beneficial with additional support policies or different tariff struc-
tures [8,12,13]. Therefore, this research include scenarios with
additional support in the form of subsidies both for the purchase
and installation of PV panels and HP.
Fig. 16 shows the accumulated profit per installed PV area for
Fig. 16. Specific accumulated profit for different scenarios with support policies.
1033
different grant policies. The obtained results are compared with the
Base scenario. The subsidies for PV panel installations (20% and
40%) show higher accumulated profit increases compared with
those that include support for HP. The highest value of 88.25 EUR/
m2 is obtained for Scenario 12 when support is considered for both
PV panels and HP. 40% subsidies for PV panel installation only
(Scenario 9) show profits reaching 78.26 EUR/m2.
The leading factor that influences profitability of the PV instal-
lation is when the costs of power are replaced by solar energy costs.
The heat tariff and electricity price also significantly impact the
benefits of power transformation to heat. Fig. 17 shows the impact
that increases in the price of heat and power have on the accu-
mulated profit of PV system. If the price of heat increases by 20%,
the accumulated profit increases by 71% in Scenario 15. However,
an increase in the power price does not result in such a steady
increase of accumulated profit.
The share of surplus power converted to heat does not increase
in cases of additional support for investment costs and higher heat
tariff. This is due to low HP capacity, which is insufficient to convert
all the power to heat.
4. Conclusions
Solar energy is widely discussed as a solution for sustainable
development of the DH and energy sectors. Many DH systems use
solar energy for heat production, which is economically justified.
The significant decrease of the price of PV panels promotes
expansion of solar power integration for different applications. In
1034 A. Gravelsins et al. / Energy 181 (2019) 1023e1035
30
Accumulated pro it,
20
10
EUR/m2
0
2017 2018 2019 2020
-10
-20
-30
Base scenario
Power price 50% (Sc 14)
Heat price 50% (Sc 16)
Fig. 17. Specific accumulated profit for different scenarios with increased power and heat tariffs.
this research, the authors evaluated the PV installation for DH
system self-consumption with additional P2H technology for sur-
plus power utilisation when it is not beneficial to transmit power
back to the grid.
The results of the Baseline scenario showed that it is not prof-
itable to install a larger PV area than needed for summer electricity
consumption. In the Baseline scenario, the total installed PV
decreased in total area by 37% in 10 years’ time, because of insuf-
ficient profit from produced power and decommissioning of PV
panels. The highest accumulated profit value was obtained for the
scenario with a smaller PV area when all the produced solar power
is directly used for self-consumption.
However, P2H can increase the flexibility of solar power systems
when there is surplus power. When integrating larger initially
installed PV area, the surplus power can be transferred BTG or used
for heat production via HP. On average, about 45% of overproduced
power is converted into heat and the rest is sent BTG. This distri-
bution depends on installed HP capacity as well on the prices of
both electricity and heat.
The analyses included scenarios with additional support in the
form of subsidies for the purchase and installation of PV panels and
HP. A 40% subsidy for PV panel installation indicates that the
accumulated profit could reach 78.26 EUR/m2 compared to 3.69
(EUR/m2) in the Baseline scenario.
The key factor which influences the profitability of the PV
installation and amount of power converted to heat is the elec-
tricity and heat tariff. The scenario with the higher heat tariff (40%
increase) shows that the accumulated profit increases 7 times.
However, the share of surplus power converted to heat does not
increase due to low HP capacity. The use of electric boilers could be
one of the options for further analysis, since boilers have a lower
initial investment cost.
The developed SD model is applicable for different DH com-
panies as well as for testing different PV integration scenarios. This
model can help to determine the optimal PV integration area and
P2H capacity for a particular DH system. The main input data for the
model use is the hourly power and heat consumption, as well as the
electricity market price and solar radiation levels. To investigate
different scenarios for PV integration, there are many parameters in
the model that can be changed.
In further research, other government support mechanisms as
well as different applications for produced power could be inte-
grated into the model. Taking a broader perspective, the district
cooling systems can lead to higher profit where a larger part of solar
energy could be used in total energy production.
2021 2022 2023 2024 2025 2026
Power price 20% (Sc 13)
Heat price 20% (Sc 15)
Acknowledgement
This research is funded by the Ministry of Economics of the
Republic of Latvia, project “Development of heat supply and cooling
systems in Latvia” (project No. VPP-EM-EE-2018/1e0002).
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