Decarbonising the Residential Space Heating Sector of the Netherlands in 2050 through Three Decarbonisation Pathways

Abstract

Residential space heating demand in the Netherlands is met by natural gas boilers in 93% of Dutch households. In order to combat global climate change and limit the increase in global average temperatures to below 1.5°C by the year 2050, the Netherlands will have to cut down its emissions across all sectors of human activity to nearly zero. The residential space heating sector accounts for majority of the emissions of the built environment, decarbonising this sector is key to eliminating greenhouse gas emissions and combating global climate change. Decarbonisation of the residential heating sector can be achieved through multiple pathways. The aim of this thesis is to investigate which pathway would have the least cost to the end user in the year 2050. Three pathways have been selected, the all-electric pathway based on using heat pumps to meet space heating demand, the core hydrogen pathway based on meeting heating demand with end-use hydrogen boilers, and the hybrid pathway based on meeting heat demand with hybrid heat pumps. Electricity supply in all three pathways will come mainly from solar photovoltaic energy and wind turbines and hydrogen will be produced by electrolysis of water, from renewable electricity. Hydrogen is assumed to be transported directly to end-user households using the existing natural gas transport infrastructure of the Netherlands, with adequate safety modifications, after being produced by dedicated offshore wind turbine capacity. Hydrogen is not produced at all in the electric pathway. First, the heat demand per household (space heat + domestic hot water) is determined for each of the five types of dwellings in the Netherlands. Annual energy cost per household is then determined from projected future electricity and hydrogen retail prices. The installation of heat pumps will also involve renovations to the home to improve insulation levels in order to maximise the coefficient of performance, at additional cost to the end-user. The total annual cost per household of each pathway is then determined as the sum of the annual energy cost per household, the investment and installation cost of each device per household, and the annual maintenance cost. Total annual cost per decarbonisation pathway is the sum of the total annual cost per household for all houses in the Netherlands in 2050. The annual cost per household varies widely depending on the values of electricity and hydrogen tariffs in 2050, the capital investment cost of each device, the level of household renovations required to improve household insulation levels, and the cost of investment in devices such as low temperature radiators. Annual costs vary among different types of dwellings, the smaller the dwelling, the smaller the required area to be heated. The annual cost per pathway was found to mainly have uncertainties regarding the device capital investment cost and electricity and hydrogen tariffs in 2050. To reduce uncertainties in results, a scenario study was performed. The scenarios were constructed to account for the variations in device capital investment cost found in literature for electric and hybrid heat pumps, and the variations in energy tariff (electricity and hydrogen tariff) estimates for 2050. In five out of six analysed scenarios, the hydrogen boiler pathway was found to have the least annual costs in 2050, with electric heat pumps being the most expensive pathway in these scenarios.