We start from the demand side, evaluating the demand for heating services. The basic notion is to identify geographic areas (clusters) where the heat demand is large enough to justify installing a local small-size heat and power production. But how to identify those clusters with different residential, commercial, industrial and public buildings, and how to estimate their heat demand?

When looking for the potential demand, we need to differentiate between theo­retical and practical potential. The theoretical potential is the overall estimate of the demand for heat in a given area. It is based on the estimates for each individual building in the area. The theoretical potential includes all buildings and thus even those where it is not currently technically or economically feasible to use small-scale district heating. The theoretical potential is an important reference because technical and economic conditions change over time and move the border for feasible appli­cations. The theoretical potential also gives the individual, nonaggregated data for estimating the practical potential (Bernotat, 2002).

The practical potential in an area is defined as the total heat demand of buildings, which are technically and economically feasible to connect to a small-scale district heating and CHP. The practical potential is found by merging the theoretical potential of single buildings to larger units until a suitable size is found. Figure 8.1 illustrates the relation between the theoretical and practical potential over time.

Theoretical potential

Practical potential Year x + 10

Figure 8.1. Theoretical potential and practical potential over time. Source: Bernotat, 2002.

Figure 8.2 shows how this translates into the reality of suitable clusters when they are visualized with the support of the GIS tools applied in this study.

The actual estimation of the potential is done in two steps. First, the heat con­sumption of every single building is estimated using data from the land survey register on building type, year of construction, floor space and the precise location. The survey data on the average heat demand per square meter for buildings of different types, age and location are then added. Second, the estimated heat demand of the individual buildings in the focused geographic cluster is aggregated with the help of Geographical Information System (GIS) tools. The shape and size of the clusters within an area can be varied, as also the minimum heat demand required for the clusters in order to match preferences and predefined economies of scale1. [9]

One crucial question that remains always is what minimum heat demand is required to justify the infrastructure investment. In the clusters with more than 2 GWh heat demand, we are close to the point where, already today, it is not only technically but also commercially feasible to produce heat and power. At around 1 GWh heat demand, it is commercially feasible to produce heat if the district­heating grid is small enough. A crucial question is when power production equip­ment for such small and even smaller CHPs will be commercially available. These figures serve as an indication for the purpose of this analysis but need to be further investigated in each case, not least in relation to the grid size and the availability of biomass to fuel a CHP, as we have in mind.