Cost efficiency of renewable district heating systems: the case of Austria

Mahlberg, Bernhard and Frank-Stocker, Andrea and Koller, Wolfgang and Ramerstorfer, Christian (2023): Cost efficiency of renewable district heating systems: the case of Austria.

Abstract

Heat generation based on conventional fossil fuels is considered to be the cause of a significant proportion of greenhouse gas emissions. Achieving the climate protection goals therefore requires a transition to renewable energy sources such as biomass. Establishing renewable district heating (DH) systems is considered as an important cornerstone of a decarbonized energy system. This study estimates the cost efficiency of biomass-based DH systems. It expands the benchmarking currently used in Austria which relies on simple key performance indicators by a new type of multi-variate approach based on efficiency estimates from Data Envelopment Analysis (DEA). The performance indicator calculated in this way considers all essential factors of production simultaneously and estimates the cost saving potentials of each individual system examined. By decomposing cost efficiency into a technical and allocative component, the causes of inefficiency are revealed. A subsequent regression analysis examines how system-specific technical, structural features and the regional environmental conditions of the respective systems influence their performance. Finally, the results of the regression analysis are used to calculate the managerial inefficiency purged of the influence of structural peculiarities and operating environment. This part of the overall inefficiency is caused by the operator's decisions and can therefore be reduced by changing the operator's behaviour. The applicability of the approach developed here is shown empirically using a sample of biomass-based DH systems from Austria.

• Item Type: MPRA Paper
• Language: English
• Keywords: sustainable heat generation; energy transition; biomass; climate protection; Data Envelopment Analysis
• Subjects: D - Microeconomics > D2 - Production and Organizations > D24 - Production ; Cost ; Capital ; Capital, Total Factor, and Multifactor Productivity ; Capacity; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q41 - Demand and Supply ; Prices; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q42 - Alternative Energy Sources

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