Interconnection vs. Energy system coupling: a socio-economic analysis of flexibility benefits

With expected future penetration of Variable Renewable Energies (VREs) arises the question of how to maximise the utilisation of large shares of cheap energy resources. The traditional way to address this is to export energy surpluses, thereby using interconnectors as flexibility solution. This study explores the benefits for Denmark of engaging into an electrification strategy of its District Heating (DH) system to unlock and expand thermal storage capacities. Energy system coupling activates low cost flexibility capable of complementing other flexibility echnologies at the power sector, while contributing to decarbonise the heat sector. We address the following research questions: What is the socio-economic value of the smart electrification of the heat sector in Denmark and what are the distribution effects generated by the integration of both sectors as compared to “traditional” flexibility strategy, embodied by flexible generation capacities, interconnections and possibly curtailment?