On the value of combined heat and power (CHP) systems and heat pumps in centralised and distributed heating systems: Lessons from multi-fidelity modelling approaches

Abstract This paper presents a multi-scale framework for the design and comparison of centralised and distributed heat generation solutions. An extensive analysis of commercially available products on the UK market is conducted to gather information on the performance and cost of a range of gas-fired combined heat and power (CHP) systems, air-source heat pumps (ASHPs) and ground-source heat pumps (GSHPs). Data-driven models with associated uncertainty bounds are derived from the collected data, which capture cost and performance variations with scale (i.e., size and rating) and operating conditions. In addition, a comprehensive thermoeconomic (thermodynamic and component-costing) heat pump model, validated against manufacturer data, is developed to capture design-related performance and cost variations, thus reducing technology-related model uncertainties. The novelty of this paper lies in the use of multi-fidelity approaches for the comparison of the economic and environmental potential of important heat-generation solutions: (i) centralised gas-fired CHP systems associated with district heating network; (ii) gas-fired CHP systems or GSHPs providing heat to differentiated energy communities; and (iii) small-scale micro-CHP systems, ASHPs or GSHPs, installed at the household level. The pathways are evaluated for the case of the Isle of Dogs district in London, UK. A centralised CHP system appears as the most profitable option, achieving annual savings of £13 M compared to the use of decentralised boilers and a levelised cost of heat equal to 31 £/MWhth. However, if the carbon intensity of the electrical grid continues to reduce at current rates, CHP systems will only provide minimal carbon savings compared to boilers (