Electricity grid tariffs as a tool for flexible energy systems: A Danish case study

Claire Bergaentzlé*, Ida Græsted Jensen, Klaus Skytte, Ole Jess Olsen

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

Electricity grid tariffs are a lever for reinforcing the coupling of district heating systems to the electricity system and for activating flexibility from power-to-heat (P2H) technologies and storage capacities. This study assesses three tariffs that permit a flexible use of electric boilers in a representative district heating system in Denmark. A mixed integer programming model is developed to evaluate the impact of each tariff on district heating flexibility quantitatively. The tariffs are then discussed in the light of the regulatory requirements that network tariffs must comply with. We show that alternative tariffs enhance the business case for P2H technologies to run flexibly, support the replacement of fossil fuels by green electricity and lower the overall cost of supplying heat. The attributes of each tariff create significant trade-offs between simplicity of implementation, cost efficiency at the distribution-grid level and cost-recovery for distribution system operators. Ultimately, new tariffs should be designed based on the characteristics of their respective groups of users in acknowledging features such as flexibility potential, substitutability between energy sources and captivity.
Original languageEnglish
JournalEnergy Policy
Volume126
Pages (from-to)12-21
ISSN0301-4215
DOIs
Publication statusPublished - 2019

Keywords

  • Flexibility
  • Dynamic grid tarif
  • District heating
  • Regulatory principles
  • Electrification

Cite this

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title = "Electricity grid tariffs as a tool for flexible energy systems: A Danish case study",
abstract = "Electricity grid tariffs are a lever for reinforcing the coupling of district heating systems to the electricity system and for activating flexibility from power-to-heat (P2H) technologies and storage capacities. This study assesses three tariffs that permit a flexible use of electric boilers in a representative district heating system in Denmark. A mixed integer programming model is developed to evaluate the impact of each tariff on district heating flexibility quantitatively. The tariffs are then discussed in the light of the regulatory requirements that network tariffs must comply with. We show that alternative tariffs enhance the business case for P2H technologies to run flexibly, support the replacement of fossil fuels by green electricity and lower the overall cost of supplying heat. The attributes of each tariff create significant trade-offs between simplicity of implementation, cost efficiency at the distribution-grid level and cost-recovery for distribution system operators. Ultimately, new tariffs should be designed based on the characteristics of their respective groups of users in acknowledging features such as flexibility potential, substitutability between energy sources and captivity.",
keywords = "Flexibility, Dynamic grid tarif, District heating, Regulatory principles, Electrification",
author = "Claire Bergaentzl{\'e} and Jensen, {Ida Gr{\ae}sted} and Klaus Skytte and Olsen, {Ole Jess}",
year = "2019",
doi = "10.1016/j.enpol.2018.11.021",
language = "English",
volume = "126",
pages = "12--21",
journal = "Energy Policy",
issn = "0301-4215",
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Electricity grid tariffs as a tool for flexible energy systems: A Danish case study. / Bergaentzlé, Claire; Jensen, Ida Græsted; Skytte, Klaus; Olsen, Ole Jess.

In: Energy Policy, Vol. 126, 2019, p. 12-21.

Research output: Contribution to journalJournal articleResearchpeer-review

TY - JOUR

T1 - Electricity grid tariffs as a tool for flexible energy systems: A Danish case study

AU - Bergaentzlé, Claire

AU - Jensen, Ida Græsted

AU - Skytte, Klaus

AU - Olsen, Ole Jess

PY - 2019

Y1 - 2019

N2 - Electricity grid tariffs are a lever for reinforcing the coupling of district heating systems to the electricity system and for activating flexibility from power-to-heat (P2H) technologies and storage capacities. This study assesses three tariffs that permit a flexible use of electric boilers in a representative district heating system in Denmark. A mixed integer programming model is developed to evaluate the impact of each tariff on district heating flexibility quantitatively. The tariffs are then discussed in the light of the regulatory requirements that network tariffs must comply with. We show that alternative tariffs enhance the business case for P2H technologies to run flexibly, support the replacement of fossil fuels by green electricity and lower the overall cost of supplying heat. The attributes of each tariff create significant trade-offs between simplicity of implementation, cost efficiency at the distribution-grid level and cost-recovery for distribution system operators. Ultimately, new tariffs should be designed based on the characteristics of their respective groups of users in acknowledging features such as flexibility potential, substitutability between energy sources and captivity.

AB - Electricity grid tariffs are a lever for reinforcing the coupling of district heating systems to the electricity system and for activating flexibility from power-to-heat (P2H) technologies and storage capacities. This study assesses three tariffs that permit a flexible use of electric boilers in a representative district heating system in Denmark. A mixed integer programming model is developed to evaluate the impact of each tariff on district heating flexibility quantitatively. The tariffs are then discussed in the light of the regulatory requirements that network tariffs must comply with. We show that alternative tariffs enhance the business case for P2H technologies to run flexibly, support the replacement of fossil fuels by green electricity and lower the overall cost of supplying heat. The attributes of each tariff create significant trade-offs between simplicity of implementation, cost efficiency at the distribution-grid level and cost-recovery for distribution system operators. Ultimately, new tariffs should be designed based on the characteristics of their respective groups of users in acknowledging features such as flexibility potential, substitutability between energy sources and captivity.

KW - Flexibility

KW - Dynamic grid tarif

KW - District heating

KW - Regulatory principles

KW - Electrification

U2 - 10.1016/j.enpol.2018.11.021

DO - 10.1016/j.enpol.2018.11.021

M3 - Journal article

VL - 126

SP - 12

EP - 21

JO - Energy Policy

JF - Energy Policy

SN - 0301-4215

ER -