Flexibility in the interface between district energy and the electricity system

Abstract

In the transition to increasingly environmentally and economically sustainable energy systems, the flexibility and coupling of energy sectors are well-documented measures. The thermal energy sector, with its heating and cooling, is of considerable size (for instance, it makes up half of the final energy consumption in the European Union). The potentials and benefits of integrating the district energy (local heating and cooling systems) and electricity sectors are equally well documented, especially in Europe. The question for policy makers is understanding the framework conditions for implementing such flexible integration in the interface between district energy and the electricity system. This thesis ontributes to answering this question by presenting analyses of the framework conditions for district energy and what these mean for flexibility in the district energy-electricity system interface. The primary research question, Which framework conditions hinder flexible operation in the district energy-electricity system interface, and what are their consequences?, is answered by identifying barriers found in the literature and testing these findings against real-world conditions. In six research papers (five peer-reviewed, one working paper), we identify 40 barriers, verify these among real-world stakeholders and analyse their impact through modelbased analysis. Answering the research question takes the thesis along two main paths regarding flexibility in the district energy-electricity system interface: identifying barriers through qualitative methods and evaluating the impacts of the barriers through quantitative methods. The identification of barriers is conducted through a narrative literature review and semistructured interviews. The review yields 40 barriers, divided into nine categories. While absence of flexibility signals is identified as the most important barrier, the range extends across economic, technological and behavioural categories. The interview-based study verifies the theoretical barriers against experienced barriers among US district energy systems. While conditions vary considerably between plants in the United States, common to most are some degree of optimisation behind the meter and a mostly absent incentive for flexibly buying from, and feeding into, the electricity grid. This indicates that district energy systems are an underutilised asset in the electricity grid. The impact of barriers is analysed through quantitative methods ranging from a simple spreadsheet-based model, to a single-plant model, to an energy system model. The spreadsheet model enabled the initial impact screening of selected barriers, showing that electricity grid tariffs and taxes reduced the competitiveness of power-to-heat technologies relative to other district heating technologies. This finding is nuanced, but maintained, in more advanced single plant model-based analyses of the levelised cost of heat under various electricity grid tariff structures and tax/subsidy levels. Among the findings is that time-of-use electricity grid tariffs are unproblematic as district energy plants can flexibly dispatch according to these. This underscores the interplay and potential contribution of district energy to electricity systems, including local grids. The large-scale energy system analysis shows the impact of heat source substitution between biomass and power-to-heat on flexibility and sector coupling – constraining competing heat sources may not lead to the desired results from integration between heat and electricity. This study finds a pervasive resence of barriers to flexibility, even in well-developed district energy sectors. The barrier impacts show especially reduced heat electrification. Addressing such barriers reveals potentially undesired consequences in the form of increased emissions or costs. Increasing flexibility is thus a means, not a goal, which should be analysed case by case.