Waste-heat recovery utilisation for district heating systems under diverse pricing schemes: A bi-level modelling approach

Waste-heat recovery (WHR) holds significant potential for decarbonising district heating (DH) systems. Yet, its valorisation remains a challenge for a broader adoption. Contracts often establish schemes dictating pricing schedules and calculation methodology. However, DH utilities might leverage their informational advantage about internal operations to determine prices that maximise their own benefits. Such strategic pricing, along with the choice of particular schemes, substantially influences the extent and distribution of WHR benefits. This study explores the effects of various waste-heat pricing schemes and their temporal granularity on two data centre (DC) cases under DH utility's strategic pricing. We propose a bilevel optimisation problem representing the DH-DC interaction, where the DH utility determines its optimal waste-heat price level considering the DC's response. Scenarios include the schemes: operational cost, free (hourly), electricity-cost indexed (daily), and uniform (annual) pricing. Our findings reveal that pricing schemes affect waste-heat utilisation, displacement of specific DH generators, and economic benefits allocation. Granular schemes are the most cost-effective, whereas infrequent schemes boost summer WHR, benefiting DC operators. Notably, the electricity-cost indexed scheme demonstrates divergent outcomes for smaller and larger DCs, offering prices that maximise WHR for smaller facilities and restricting it for the larger ones to periods of low electricity prices.