Advanced: Heat infrastructure costs

Below you can find more information about the heat infrastructure cost calculation in the Energy Transition Model. The methodology and data behind this calculation is based on Vesta MAIS, an energy model developed by the Dutch Environmental Assessment Agency (PBL).

Households and buildings costs

The ETM distinguishes between five types of heat infrastructure costs for households and buildings:

These costs are annualised by taking into account:

Indoor costs

Households

For apartment blocks the ETM takes into account costs for indoor pipelines to distribute heat to the separate apartment units. We make a distinction between apartment blocks that currently already have a collective block heating system and apartment blocks that do not. The latter require higher investments as no indoor infrastructure is currently available.

DescriptionValueSource
Apartments with block heating2022 euro per apartmentVesta MAIS 4.0, average of lower and upper bound
Apartments without block heating5984 euro per apartmentVesta MAIS 4.0, average of lower and upper bound
Share of apartments with block heating15%Vesta MAIS 4.0, average of lower and upper bound
note

The costs and number of apartments with and without block heating can be set per region in the ETM. The numbers above are default values.

For other housing types (e.g. terraced houses or detached houses), no indoor costs are taken into account. We assume that heat is supplied at high enough temperatures to be used directly (>70 °C).

Buildings

For non-residential buildings, we take into account two types of indoor costs:

  • Indoor pipelines
  • Heat meters

Indoor pipeline costs are based on peak heat demand of buildings. We assume a fixed investment per kW. Peak demand is calculated dynamically by the ETM and depends on hourly demand profiles, insulation levels etc. See heat network documentation for more information about the hourly heat calculation.

DescriptionValueSource
Indoor pipelines151 euro per kW peak demandVesta MAIS 4.0, average of lower and upper bound
Peak demandVariesETM, calculated dynamically
note

Indoor pipeline costs can be set per region in the ETM. The numbers above are default values.

In addition, we take into account costs for heat meters that connect indoor and outdoor distribution pipelines. Heat meters have a fixed cost component per connection and a variable cost component that depends on peak heat capacity.

DescriptionValueSource
Heat meter (fixed part)913 euro per connectionVesta MAIS 4.0, average of lower and upper bound
Heat meter (variable part)1.35 euro per kW peak demandVesta MAIS 4.0, average of lower and upper bound
Peak demandVariesETM, calculated dynamically
note

Heat meter costs can be set per region in the ETM. The numbers above are default values.

(Secondary) distribution pipelines

Distribution pipelines deliver heat to residences and buildings throughout a neighbourhood. We distinguish between two types of pipelines:

  • Main distribution pipelines
  • Connection pipelines: pipelines from street level to front door, connecting a residence

Distribution network

note

The above image shows main distribution pipelines in blue, and connection pipelines in orange.

Distribution pipelines are shared by both residences and non-residential buildings. Connection pipelines costs are only taken into account for residences. For other buildings it is assumed that heat distribution sub stations are placed directly in or near the building, eliminating the need for connection pipelines. See Exchanger stations below for more info.

DescriptionValueSource
Pipelines per meter1200 euro per meterVesta MAIS 4.0, average of lower and upper bound assuming an average pipeline capacity of 7 MW
Peak demandVariesETM, calculated dynamically
note

Pipeline costs can be set per region in the ETM. The numbers above are default values.

The required length of pipelines (for both distribution and connection pipelines) varies per region. Rural areas typically require longer distribution pipeline networks than urban areas to connect the same amount of residences. In addition, average pipeline length per connection can vary within the same region as well: densely populated areas typically require less pipeline length per connected building than less densely populated areas.

To account for this, the ETM distinguishes between five 'length' brackets: A different average pipeline length per connection (and hence different pipeline costs per connection) is assumed depending on how many residences and buildings are connected to the network. I.e.:

  • Bracket 1 specifies the average required pipeline length per residence/building if up top 20% of residences/buildings are connected to a district heating network. For each residence/building connected up to 20% of the total housing/building stock, the same average required pipeline length is assumed.
  • Bracket 2 specifies the average if up to 40% of residences/buildings are connected.
  • Etc.

Depending on the (weighted) average share of residences and buildings connected to district heating networks, the ETM uses a different average length per connected residence/building to determine the required pipeline length of the distribution and connection pipelines.

These pipeline length brackets can be specified per region in the ETM. In this way we can distinguish between a city, with lower average pipeline networks per connection, and a rural region, with higher average pipeline lengths. For regions with both urban and rural parts (e.g. a country), the ETM can simulate that pipeline lengths (and thus costs) rise when the share of buildings connected to district heating networks increases: the 'low hanging fruit' (urban areas) is picked first, the more expensive, less densely populated areas follow later.

For all Dutch regions in the ETM, the average pipeline length per connection (both for distribution pipelines and connection pipelines) has been calculated based on an analysis by Greenvis that is used by Vesta MAIS. For each neighbourhood in The Netherlands the required district heating pipeline length has been estimated based on OpenStreetMap data. We have aggregated this data per region in the ETM and calculated 5 length brackets per region: the neighbourhoods with the lowest length per connection are in bracket 1 etc.

The Dutch average can be found below. For non-Dutch regions this average is used, unless local data is available.

BracketsAverage distribution pipeline length
Bracket 1 (up to 20% of housing/building stock connected)3.2 meter per house/building
Bracket 2 (up to 40% of housing/building stock connected)4.6 meter per house/building
Bracket 3 (up to 60% of housing/building stock connected)5.8 meter per house/building
Bracket 4 (up to 80% of housing/building stock connected)7.0 meter per house/building
Bracket 5 (up to 100% of housing/building stock connected)10.0 meter per house/building
note

For residences the ETM also takes into account additional connection pipelines on top of the lengths specified above.

Example: Suppose 52% of residences are connected to a district heating network. The ETM uses the average pipeline length specified by the 'third' bracket (5.8 meter per house/building, up to 60% connected) to determine pipeline costs.

Distribution network

Exchanger stations

The ETM distinguishes between heat exchanger stations and sub stations:

  • Exchanger stations are the starting points of the secondary distribution network and are typically located close to the primary heat sources. They include dispatchable/back-up heaters that can be switched on when the primary heat supply is insufficient.
  • Heat sub stations are distribution points within the network and may be equipped with pumping systems and heat exchangers.

The required station capacity (and associated costs) are calculated based on the combined demand peak of households and buildings connected to the heat network. The following defaults are used:

DescriptionValueSource
Exchanger station (excluding costs of dispatchable heaters)80 euro per kWVesta MAIS 4.0, average of lower and upper bound
Sub station135 euro per kWVesta MAIS 4.0, average of lower and upper bound
Combined household and building peak demandVariesETM, calculated dynamically
note

Station costs can be set per region in the ETM. The numbers above are default values.

The costs of the primary heat sources and dispatchable/back-up heat sources are not part of the heat exchanger costs. These costs are calculated separately, in a similar fashion as (e.g.) power plants.

Primary pipelines

For large-scale heat sources, additional primary pipeline costs are taken into account as these sources are typically not located close to the area of demand. Large-scale heat sources include:

  • Residual heat from industry and power plants
  • Waste incinerators
  • Heat from outside the modelled region ('heat import')

The following costs are taken into account:

DescriptionValueSource
Primary pipelines200 euro per kWVesta MAIS 4.0, average of lower and upper bound, assuming an average distance of 1.5 km and 10 MW pipeline capacity
Supply peak of large-scale sourcesVariesETM, calculated dynamically
note

Primary pipeline costs can be set per region in the ETM. The numbers above are default values.

Storage costs

The ETM does not make a distinction between investment and O&M costs for storage, but instead "charges" a fixed cost per MWh of heat drawn from storage. How much heat is drawn from storage is calculated dynamically per scenario and depends, among other things, on the available heat sources and on the shape of the demand curves.

DescriptionValueSource
Heat storage20 euro per MWhResearch Quintel. See ETDataset.
Heat drawn from storageVariesETM, calculated dynamically

Note that these costs are costs for storing heat only. Cost for producing the stored heat are calculated separately.

Operation and maintenance costs

The following operation and maintenance costs are taken into account:

DescriptionValueSource
Indoor infrastructure O&M2.5% of total investment costs per yearVesta MAIS 4.0
Outdoor infrastructure costs3% of total investment costs per yearVesta MAIS 4.0
note

O&M costs can be set per region in the ETM. The numbers above are default values.

Indoor infrastructure includes indoor pipelines for apartments and non-residential buildings; heat meters. Outdoor infrastructure includes distribution and connection pipelines; exchanger stations and sub stations; primary pipelines.

Annualised costs

The yearly infrastructure costs per year are the sum of:

  • Capital costs of indoor (pipelines, heat meters) and outdoor (distribution, connection and primary pipelines, exchanger stations) investments
  • Depreciation costs of indoor and outdoor investments
  • O&M costs of indoor and outdoor infrastructure
  • Storage costs

Yearly capital costs depend on the assumed weighted average cost of capital rate (WACC). By default, a real WACC of 4% is assumed and depreciation is assumed to be linear ('straight line'). This means that the cost of capital per year equal (total investment costs / 2) * WACC. See the WACC section of the cost documentation for more information.

Yearly depreciation costs are calculated by dividing total investment costs by the technical lifetime of the infrastructure. This is assumed to be 30 years (source: Vesta MAIS)

Agriculture and industry

The ETM currently does not take into account heat infrastructure costs for collective heat used in the agriculture and industry sectors. The reason for this is that there is insufficient information available to make a reasonable estimate of these costs. There is a large variation in infrastructure costs in these sectors depending on factors that are currently insufficiently modelled in the ETM, such as whether companies are clustered or not; what heat temperatures are used etc.