Heat supply systems using natural gas in the residential sector: The case of the agglomeration of Seoul

Combined heat and power (CHP) and district heating (DH) promotion policies are based on the assumption of high energy efficiencies. In the last two decades, however, there has been a big increase in energy efficiencies of combined-cycle gas power plants (CCs) including CHPs and gas-condensing boilers. This study tries to verify the validity of the assumption of high energy efficiency of DH. The experience in the agglomeration of Seoul shows that DH in combination with large modern CHPs is not more energy efficient but substantially more expensive compared to individual gas heating by efficient condensing boilers in combination with CCs. We argue that the Korean government should review its CHP/DH support programs and abandon the so-called heat supply monopoly for DH operators in newly developed residential areas. Such a policy intervention only distorts the space heating market and wastes valuable financial resources. Furthermore, the public should be properly informed on energy efficiency as well as energy- and system-related costs of various heat supply systems. In the light of the present improvements in the performance of gas-condensing boilers and CCs, the validity of the assumption of high energy efficiency of CHP/DH in other countries has to be reviewed.