Technical and economic feasibility of sustainable heating and cooling supply options in southern European municipalities - A case study for Matosinhos, Portugal

Energy demand for heating and cooling constitutes almost 50% of the total energy demand in Europe and strongly depends on fossil fuels. Decarbonising this sector and providing a sustainable supply should be a main goal of climate policy. The technical and economic feasibility of supply options depends strongly on local conditions. The focus of this research is to assess the cost-effectiveness of sustainable heat and cold supply solutions under southern European conditions. We use the city of Matosinhos (Portugal) as an example. The methodology includes estimation of thermal demands and hourly simulation of alternative supply scenarios. The results show that, from a socio-economic perspective, the use of excess heat from a refinery via a DHC network might be the economically most competitive option. In addition, the heat pump system combined with photovoltaics is cost-effective from a socio-economic perspective compared to the status quo if the capital costs of the status quo are also accounted for. This justifies support policies to also make it cost-competitive from a private economic perspective, which it currently is not. Sensitivity analyses were conducted for the most influential factors like capital investment costs, interest rate, and fuel prices.