Investment Optimization and Risk Assessment for District Heating Decarbonization Pathways for a Case Study

To achieve the goal of climate neutrality by 2050, actions must be taken across all sectors of energy supply. A central component is the decarbonization of the heating and cooling sector. The use of fossil fuels for heat generation must be reduced and replaced by renewable energy sources such as biomass, geothermal energy, or waste heat from industrial processes. Investing in the decarbonization of district heating networks in the following years is essential to achieve climate goals. However, there are risks associated with implementing renewable technologies, particularly due to uncertainties arising from climate developments and future fluctuations in energy prices. The aim of this thesis is to develop an optimal investment plan for a selected district heating network and assess its resilience under various uncertainty scenarios. The following research questions are answered in this thesis: Which technologies should be implemented in an existing district heating network to achieve climate neutrality by 2050? What is the optimal timing for investments in these technologies to ensure an efficient and resilient transition? How do uncertainties impact investment decisions? Since thermal storage plays an important role, special emphasis is given to their impact on the economic performance and resilience of the DH network. Within this thesis, the supply side of the district heating network of the case study was modeled including existing and potential future heat sources, such as heat pumps, waste heat and biomass boilers. The model incorporates future supply and storage options. Different scenarios were selected to analyze the impact of different strategies, including e.g. the implementation of heat storage or the reduction of network temperature. Uncertainties in future fuel prices were reviewed and their associated probability were determined for a risk assessment. An investment pathway up to 2050 was optimized for each scenario based on the EU energy efficiency directive. A quantitative risk analysis using Monte Carlo simulation was performed to analyze the robustness of these pathways. Finally, the economic performance of each pathway and their quantified risk was evaluated. Results indicate that investment in heat storage is a no-regret decision, improving operational flexibility, while long-term storage enables shifting heat production from periods of high renewable availability to peak demand, supporting full electrification but increasing sensitivity to electricity prices. Early investments in heat pumps are robust and sustainable investments, especially in combination with heat storage and reduced network temperatures, whereas gas CHPs require careful planning to avoid stranded assets. Biomass is viable under current assumptions, but regional and regulatory constraints must be monitored. Network temperature reduction improves efficiency and enables a more efficient ambient heat integration. The Monte Carlo simulations show rising cost uncertainty with full electrification. Fossil-dominated configurations offer early stability, but risk lock-in effects under full decarbonization in later years.