Policy incentives for flexible district heating in the Baltic countries

This study analyzes the impacts of taxes, subsidies, and electricity transmission and distribution tariffs and heat storage on the operation and economic feasibility of district heating plants with different flexibility potentials in the Baltic countries. Under 2016 conditions, the lowest levelized cost of heat is achieved by a combination of wood chip boilers, electric boilers, and heat storage.

Heat storage enables a higher utilization of least-cost technologies, resulting in greater cost efficiency for all considered scenarios. Current taxes and subsidies are found to have limited impact on the operation of combined heat and power plants and electric boilers.