On the benefit of integration of a district heating system with industrial excess heat: An economic and environmental analysis

•Utilized industrial excess heat in district heating system with CHP plant is studied.•Advantages are gained when the district heating system utilize industrial excess heat.•Fuel-based plant heat production and total system cost are substantially reduced.•Industrial steam is preferred when costs are below alternative heat production cost.•Restricted industrial hot water utilization occurs in periods of low heating demand. Energy-related cooperation using industrial excess heat (IEH) in district heating (DH) networks shows economic and environmental benefits. A rarely investigated approach is the energy cooperation which incorporates a jointly operated CHP plant also producing process steam for nearby industry. The present study aims to evaluate economic and environmental effects on the Hofors DH system with jointly operated CHP plant when the nearby steel mill extends the supply of recovered IEH. Various IEH supply opportunities with different capacities of hot water and steam were designed and compared with existing IEH utilization, plant heat and electricity production and DH system performance. The energy system model MODEST is used for cost-optimization. A parametric study is used to analyze influences of increasing IEH cost and fluctuating electricity prices. The results show advantages for the DH system to utilize IEH for deliveries of DH and process steam and the cogeneration of electricity. Economic and environmental benefits are decreased total system cost (−1.67MEUR/a), less use of fuels and electricity, and reduced CO2 emissions with a maximal reachable amount of 28,200ton/a when the use of biofuel is assumed as limited resource and the substituted marginal electricity production is based on coal-condensing power plants. The results also show that industrial steam is a preferred heat supply source as long as the steam cost is below the alternative heat production cost, irrespective of the electricity price. While the cost-effective utilization of industrial hot water for DH is more sensitive and affected by a beneficial CHP production based on higher electricity price segments, it is also shown that utilization of continuously supplied industrial hot water is limited during seasons of low DH demand.