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This paper investigates to which extent heat should be saved rather than produced and to which extent district heating infrastructures, rather than individual heating solutions, should be used in future sustainable smart energy systems. Based on a concrete proposal to implement the Danish governmental 2050 fossil-free vision, this paper identifies marginal heat production costs and compares these to marginal heat savings costs for two different levels of district heating. A suitable least-cost heating strategy seems to be to invest in an approximately 50% decrease in net heat demands in new buildings and buildings that are being renovated anyway, while the implementation of heat savings in buildings that are not being renovated hardly pays. Moreover, the analysis points in the direction that a least-cost strategy will be to provide approximately 2/3 of the heat demand from district heating and the rest from individual heat pumps.
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