The transition of energy systems requires policy frameworks and instruments to make both energy suppliers and consumers contribute to the common goal of emission reductions and to fairly allocate costs and benefits among market actors and the government. Assuming that market actors – suppliers and consumers adhering to their economic interests – would benefit from cooperating to mitigate emissions, this study applies a game theory-based approach to investigate the interaction between a local electricity supplier and a group of heating consumers not connected to district heating. Selected policy instruments are tested, and their consequences are analyzed in the context of a representative Nordic municipality. The results show that the auction-based Contract for Difference policy instrument is the most suitable one in the studied Nordic context to achieve significant levels of CO2 emissions reduction. It creates a higher level of strategic interaction between the actors, that would be lacking otherwise, under the form of transfer payments from consumers to supplier, and avoids costs to the general taxpayer. While this is sufficient to promote the investments in renewables by the supplier, additional subsidy policies are required to enable the heating consumers to invest in more capital-intensive energy efficiency measures or biomass heating.

A common approach to energy system optimization is to minimize overall costs at system level, regardless of the actors actually bearing those costs. This paper presents an approach inspired by Nash game theory concepts, in which the actors involved in an energy system determine their optimal strategies according to their own economic interests (profit functions) in a non-cooperative or in a cooperative way. A simple case study, considering an electric utility and individual heating consumers in the municipal energy system of a small town in northern Sweden, shows the differences between the two approaches. The game theory approach is able to represent more realistic interactions among the actors of an energy system, fair in fulfilling their conflicting economic interests, and, therefore, a more suitable tool for decision makers evaluating the impacts of policy instruments.

Municipal energy systems in Nordic environments face multiple challenges: the cold climate, large-scale industries, a high share of electric heating and long distances drive energy consumption. While actions on the demand side minimize energy use, decarbonization efforts in mining, industries, the heating and the transport sector can increase the consumption of electricity and biofuels. Continued growth of intermittent wind and solar power increases supply, but the planned phase out of Swedish nuclear power will pose challenges to the reliability of the electricity system in the Nordic countries. Bottlenecks in the transmission and distribution grids may restrict a potential growth of electricity use in urban areas, limit new intermittent supply, peak electricity import and export. Environmental concerns may limit growth of biomass use. Local authorities are committed in contributing to national goals on mitigating climate change, while considering their own objectives for economic development, increased energy self-sufficiency and affordable energy costs.

Given these circumstances, this thesis investigates existing technical and economic potentials of renewable energy (RE) resources in the Nordic countries with a focus on the northern counties of Finland, Norway and Sweden. The research further aims to provide sets of optimal solutions for sustainable Nordic municipal energy systems, where the interaction between major energy sectors are studied, considering multiple objectives of minimizing annual energy system costs and reducing carbon emissions as well as analyzing impacts on peak electricity import and export.

This research formulates an integrated municipal energy system as a multi-objective optimization problem (MOOP), which is solved by interfacing the energy system simulation tool EnergyPLAN with a multi-objective evolutionary algorithm (MOEA) implemented in Matlab. In a first step, the integration or coupling of electricity and heating sectors is studied, and in a second step, the study inquires the impacts of an increasingly decarbonized transport sector on the energy system. Sensitivity analysis on key economic parameters and on different grid emission factors is performed. Piteå (Norrbotten County, Sweden) is a typical Nordic municipality, which serves as a case study for this research.

The research concludes that significant techno-economic potentials exist for the investigated resources. Optimization results show that CO₂ emissions of a Nordic municipal energy system can be reduced by about 60% without a considerable increase in total energy system costs and that peak electricity import can be reduced by up to 38%. The outlook onto 2030 shows that the transport sector could be composed of high electrification shares and biofuels. Technology choices for optimal solutions are highly sensitive to electricity prices, discount rates and grid emission factors.

The inquiries of this research provide important insights about carbon mitigation strategies for integrated energy sectors within a perspective on Nordic municipalities. Future work will refine the transport model, develop and apply a framework for multi-criteria decision analysis (MCDA) enabling local decision makers to determine a technically and economically sound pathway based on the optimal alternatives provided, and analyze the existing policy framework affecting energy planning of local authorities.

Kommunala energisystem i nordiska miljöer möter flera utmaningar: det kalla klimatet, storskaliga industrier, en stor andel elvärme och långa distanser driver energiförbrukningen. Medan åtgärder vidtas på efterfrågesidan för att minimera energianvändningen, kan utsläppsminskande åtgärder inom gruvdrift, industrier, uppvärmningen och transportsektorn öka förbrukningen av el och biobränslen. Fortsatt tillväxt av intermittent vind- och solkraft ökar elproduktion, men den planerade avvecklingen av svensk kärnkraft kommer att utmana tillförlitligheten i elsystemet i de nordiska länderna. Flaskhalsar i överförings- och distributionsnäten kan begränsa en potentiell tillväxt av elanvändningen i stadsområden, begränsa ny intermittent utbud, och påverka elutbyte mellan länderna. Miljöhänsyn kan begränsa ökad användning av biomassa. Lokala myndigheter är engagerade i att bidra till nationella klimatmål, samtidigt som de följer sina egna mål för ekonomisk utveckling, ökad självförsörjning av energi och överkomliga energikostnader.

Mot bakgrund av dessa omständigheter undersöker denna avhandling befintliga tekniska och ekonomiska potentialer för förnybar energi i Norden med fokus på de nordliga länen i Finland, Norge och Sverige. Forskningen syftar vidare till att utveckla optimala lösningar för hållbara nordiska kommunala energisystem, där samspelet mellan stora energisektorer studeras, med tanke på att minimera årliga energisystemkostnader och samtidigt minska koldioxidutsläppen samt analysera påverkan på elimport till och export från kommunen.

Denna forskning formulerar ett integrerad kommunalt energisystem som multimåloptimeringsproblem (multi-objective optimisation problem - MOOP), som löses genom att kombinera simuleringsverktyget EnergyPLAN med en evolutionär algoritm implementerad i Matlab. I ett första steg studeras kopplingen av el- och värmesektorerna, och i ett andra steg effekterna av en integrerad och alltmer förnybar transportsektor på energisystemet. Känslighetsanalys på viktiga ekonomiska parametrar och på olika utsläppsfaktorer utförs. Piteå (Norrbottens län, Sverige) är en typisk nordisk kommun som fungerar som en fallstudie för detta arbete.

Forskningens slutsatser innebär att det finns betydande teknisk-ekonomiska potentialer för de undersökta förnybara resurserna. Optimeringsresultaten visar att koldioxidutsläppen från ett nordiskt kommunalt energisystem kan minskas med cirka 60% utan en avsevärd ökning av de totala energisystemkostnaderna och att den högsta elimporten kan minskas med upp till 38%. Resultat för år 2030 visar att transportsektorn kan ha en mycket hög elektrifieringsgrad och samtidigt används biobränslen i tunga fordon. Optimala lösningar är mycket känsliga för elpriser, räntor och utsläppsfaktorer.

Detta arbete ger viktiga insikter om strategier för koldioxidminskning för integrerade energisektorer i ett perspektiv på nordiska kommuner. Min framtida forskning kommer att förfina transportmodellen, utveckla och tillämpa ett ramverk för beslutsanalys med flera kriterier (multi-criteria decision analysis - MCDA) som ska stödja lokala myndigheter att fastställa tekniskt och ekonomiskt hållbara lösningar i deras energiplanering.

Municipal energy systems in the northern regions of Finland, Norway, and Sweden facemultiple challenges: large-scale industries, cold climate, and a high share of electric heatingcharacterize energy consumption and cause significant peak electricity demand. Local authoritiesare committed in contributing to national goals on CO2 emission reductions by improving energyefficiency and investing in local renewable electricity generation, while considering their ownobjectives for economic development, increased energy self-sufficiency, and affordable energy costs.This paper formulates a multi-objective optimization problem about these goals that is solved byinterfacing the energy systems simulation tool EnergyPLAN with a multi-objective evolutionaryalgorithm implemented in Matlab. A sensitivity analysis on some key economic parameters is alsoperformed. In this way, optimal alternatives are identified for the integrated electricity and heatingsectors and valuable insights are offered to decision-makers in local authorities. Piteå (Norrbotten,Sweden) is used as a case study that is representative of Nordic municipalities, and results showthat CO2 emissions can be reduced by 60% without a considerable increase in total costs and thatpeak electricity import can be reduced by a maximum of 38%.

In Nordic environments the cold climate, large-scale industries, and a high share of electric heating drive energy consumption and create significant peak electricity demand in municipal energy systems. Prospects for decarbonizing the transport sector by electrification escalate these challenges, while availability and sustainability concerns limit biofuel use. Local authorities are committed to contributing to national climate goals, while considering local objectives for economic development, increased energy self-sufficiency and affordable energy costs. This research combines these goals into a multi-objective optimization problem (MOOP), and solves the MOOP by interfacing the energy systems simulation tool EnergyPLAN with a multi-objective evolutionary algorithm (MOEA) implemented in Matlab. In this way, the study generates optimal solutions for integrated electricity, heating and transport sectors and valuable insights are offered to decision makers in local authorities. Piteå (Norrbotten County, Sweden) is a typical Nordic municipality and serves as a case study for this research. Results show that CO2 emissions from the integrated system can be reduced up to 60% without a considerable increase of total annual costs, and that in the same range of emission reductions it is economically more convenient to invest in electric personal vehicles, light trucks and busses.