Modelling and optimisation of electricity, steam and district heating production for a local Swedish utility

District heating may help reduce environmental impact and energy costs, but policy instruments and waste management may influence operations. The energy system optimisation model MODEST has been used for 50 towns, regions and a nation. Investments and operation that satisfy energy demand at minimum cost are found through linear programming. This paper describes the application of MODEST to a municipal utility, which uses several fuels and cogeneration plants. The model reflects diurnal and monthly demand fluctuations. Several studies of the Linköping utility are reviewed. These indicate that the marginal heat cost is lower in summer; a new waste or wood fired cogeneration plant is more profitable than a natural-gas-fired combined cycle; material recycling of paper and hard plastics is preferable to waste incineration from an energy-efficiency viewpoint; and considering external costs enhances wood fuel use. Here, an emission limit is used to show how fossil-fuel cogeneration displaces CO2 from coal-condensing plants.