In a national electricity system there often exists a great potential for increasing the cost-efficiency of the electricity use. However, if the economic incentives for improving the use of the system are too weak, it is most likely that this potential will not be utilised. If electricity tariffs reflect real electricity costs, over the year and the day, cost-effective incentives will arise for introducing energy system measures that will reduce the energy system cost considerably. This paper presents two energy system analyses of an existing Swedish municipal energy system. The analyses are carried out with a simulation model for electricity use in industrial energy systems, and an optimisation model that is based on linear programming.<>

This paper will describe an energy system analysis of an existing Swedish municipality of 90 000 inhabitants. The analysis, which is performed by using an optimization model will show what energy system measures that should be introduced to minimize the total energy system cost. In the existing municipality a local utility distributes heat, for the district heating system, and electricity. The heat is generated by the utility and the electricity is purchased from a large power producer.

Shadow prices for heat generation are used to study the impact of changes in heat demand on the total system cost of an existing district-heating system in Sweden. The energy system may be considered to be both dynamic, because there is energy storage, and time-dependent since the electricity tariff is time-differentiated and the heat demand varies over the year and day. The energy system has been analysed with and without energy storage. The analysis shows that despite a reduction in system cost, the use of energy storage can result in higher shadow prices for heat generation in some time periods.

In the Swedish electricity system there is a great potential for increasing the cost efficiency of electricity use. Today economic incentives, offered for instance by existing electricity tariffs, are too weak to improve the use of the system. On the Swedish electricity market, there are at least three different participants, the power producer, the distributor and the customer. Today these participants act separately owing to low awareness of the costs for electricity over the year and the day. If the participants are aware of the real electricity costs, cost-effective incentives for cooperation will arise. When participants cooperate, the introduction of end-use measures will reduce system costs for those participants that are involved in cooperation. We present a system analysis for cooperation between distributor and customers. We also present results from a project, where behaviours of an existing distributor and existing customers have been analysed. The results show that there exist cost-effective incentives for cooperation when end-use measures are introduced.

If actors on the electricity market cooperate when end-use measures are introduced the energy-system, cost will be reduced considerably. The marginal cost for electricity for the energy system of the actors will show cost effective incentives for introducing end-use measures. We present a system analysis for cooperation between distributors and customers. We also present results from a project where an existing distributor and eleven existing customers within a municipal energy system have been analysed. The customers are various industries, a hospital, an ice hockey arena, a harbour, a water-works, a warehouse, and a radio tower. The results show that the customers have in different end-use measures a power reduction capacity of maximum 8642 kW. With electricity costs of 1994 this corresponds to a reduction in the energy system cost of 2,852,000 SEK for one year. The results also show that for the distributor`s load curve of 1994, the full power reduction capacity can not be used since the peak loads of the five winter months are not so large and distinct. In that case the energy system cost can be reduced by 1,909,000 SEK, which is 67% of the maximum cost reduction. The end-use measures that are cost effective in this municipal energy system are load management and electricity generation in reserve power plants. We have also studied the profitability for introducing bivalent heating systems based on oil and electricity for heat loads that originally are based on oil. However, with existing electricity and oil costs there are no incentives for increasing the electricity use during non-peak load periods with bivalent heating systems.