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Abstract: Biofuel production through polygeneration with heat as one of the by-products implies a possibility for cooperation between transport and district heating sectors by introducing large-scale biofuel production into district heating systems. The cooperation may have effects on both the biofuel production costs and the district heating production costs. This paper is the second part of the study that investigates those effects. The biofuel production costs evaluation, considering heat and electricity as by-products, was performed in the first part of the study. In this second part of the study, an evaluation of how such cooperation would influence the district heating production costs using Stockholm's district heating system as a case study was performed. The plants introduced in the district heating system were chosen depending on the future development of the transport sector. In order to perform sensitivity analyses of different energy market conditions, two energy market scenarios were applied. Despite the higher revenues from the sale of by-products, due to the capital intense investments required, the introduction of large-scale biofuel production into the district heating system does not guarantee economic benefits. Profitability is highly dependent on the types of biofuel production plants and energy market scenarios. The results show that large-scale biogas and ethanol production may lead to a significant reduction in the district heating production costs in both energy market scenarios, especially if support for transportation fuel produced from renewable energy sources is included. If the total biomass capacity of the biofuel production plants introduced into the district heating system is 900 MW, the district heating production costs would be negative and the whole public transport sector and more than 50% of the private cars in the region could be run on the ethanol and biogas produced. The profitability is shown to be lower if the raw biogas that is by-produced in the biofuel production plants is used for combined and power production instead of being sold as transportation fuel; however, this strategy may still result in profitability if the support for transportation fuel produced from renewable energy sources is included. Investments in Fischer–Tropsch diesel and dimethyl ether production are competitive to the investments in combined and power production only if high support for transportation fuel produced from renewable energy sources is included. [Copyright &y& Elsevier]

Abstract: Ethanol can be produced with little impact on the environment through the use of polygeneration technology. This paper evaluates the potential of integrating a lignocellulosic ethanol plant into a district heating system by case study; the plant has an ethanol capacity of 95MW with biogas, electricity and heat as by-products. Stockholm’s district heating system is used as the case study, but the results may be relevant also for other urban areas. The system has been studied using MODEST – an optimisation model framework. The results show that introducing the plant would lead to a significant reduction in the cost of heat production. The income from the biofuels and electricity produced would be about €76million and €130million annually, respectively, which is an increase of 70% compared to the income from the electricity produced in the system today. Assuming that the electricity produced will replace marginal electricity on the European electricity market and that the biofuel produced will replace gasoline in the transport sector, the introduction of the polygeneration plant in the district heating system would lead to a reduction of global CO2 emissions of about 0.7million tonnes annually. [Copyright &y& Elsevier]