District heating supply optimization under positive energy district targets: A waste-heat dominated case study

Positive Energy Districts (PEDs) represent a transformative approach to reducing urban carbon emissions. Yet the role of district heating (DH) under PED constraints remains underexplored. This paper investigates how PED-specific requirements shape cost-optimal DH supply portfolios. To this end, we extend an existing DH supply model to optimize investment and dispatch under PED requirements. The enhanced model incorporates sector coupling with electricity and PED-specific constraints, including net energy positivity. In addition, the model integrates building renovation decisions by allowing improvements to the building envelope that reduce the space heating demand based on a marginal cost curve of energy savings. The resulting model is used to analyze a waste-heat dominated case study in Slovenia. Results reveal that incorporating PED constraints into the optimization changes the technology portfolios, steering investments toward renewable and electrified heating solutions while utilizing energy storage and improving operational flexibility. CO 2 emissions can be cut by more than 30% while total system cost only increases by 9.6%. By implementing more stringent PED constraints (quarterly versus yearly net zero energy balances), CO 2 emissions can be further reduced, but the levelized cost of heat increases. These findings are derived from a single case study with DH-focused system boundary; results may differ if additional end-uses (e.g., mobility or process electricity/heat) or alternative local energy resources are included. When designing incentives to make the transition from normal urban areas to PEDs possible, policymakers need to take into account the trade-off between system cost, CO 2 emissions and increased cost for the individual consumer.