An Economic Model for a Thermal Energy Network

Abstract

Thermal energy networks (TENs), also known as fifth-generation district energy systems, provide a viable method of efficiently integrating electricity into heating and cooling in residential and commercial districts. In these systems, buildings are connected to an ambient-temperature loop via heat pumps and can exchange energy with the loop for heating or cooling. TENs have not been extensively implemented in the United States and thus require further studying and modeling for future optimization. Furthermore, previous modeling work has focused on technical performance and thermodynamics, while little work has been done on the economic analysis of these systems. NREL has developed a reduced-order model simulating the technical performance of TENs, specifically using geothermal boreholes as the thermal source. Our objective through this paper is to present a partner model that simulates a techno-economic analysis of a TEN to determine thermal energy pricing for customers. This model is more general than the technical performance model and could be adapted to take other thermal sources. The model groups the following technical parameters: customer heating and cooling loads as thermal energy produced by the system, and the electricity consumed by the system as annual operational expense in a calculation of the levelized cost of ‘𝑥’ energy flow (LCO𝑥). The model takes in financial parameters including the price of electricity, target internal rate of return, tax, insurance, debt repayment, and incentives. The economic metrics the model outputs include the LCO𝑥, net present value of the technology, and thermal energy payments for customers as a function of time. This LCO𝑥 economic model will eventually be leveraged to further optimize the technical and economic performance of TENs by both scientists and industry partners.