Investing in meshed offshore grids in the Baltic Sea: catching up with the regulatory gap

The connection of cables from offshore wind parks to interconnection lines is receiving growing attention in Europe as a way to minimise the costs of laying down future offshore transmission grids in a wind-heavy system. Although important technical breakthroughs are enabling transmission system operators to engage in such hybrid forms of architecture, substantial regulatory challenges and uncertainties over the legal definition of the new architecture are preventing progress. Anchored in current European legal frameworks and targets, this paper critically reviews the national framework conditions that treat the development of transmission grids as regulated assets, focusing on the distribution of connection costs, the access grid tariff and the investment incentives faced by transmission system operators (TSOs) in recovering costs. The paper develops an ideal regulatory framework and compares it to the current regulations in countries around the Baltic Sea in order to assess their suitability for supporting Meshed Offshore Grids (MOGs). The results of this paper highlight the heterogeneity of national regulatory frameworks and the deviations from our recommendations. It is found that Germany lives up to the recommendations best, followed by Denmark, which suggests they have the regulatory potential to pioneer a MOG project in the Baltic Sea region. This is followed by consideration of two clusters of countries defined by their proximity to the ideal framework, assuming a three-step development of MOGs, and following ever more progressive regulatory adjustments. The results of the paper will provide policy-makers with indications for how to take action in order to facilitate offshore hybrid grid investments and improve the inclusion of the regulatory challenges in technical-economic assessments

Demand during peak hours versus peak-driving demand: Revisiting one size fits all dynamic grid tariffs

Electricity grid tariffs should reflect network costs in order to provide efficient incentives for timing electricity use and investment in new technologies. We compare tariff designs that deal with existing and expected future grid congestion. Although common volumetric tariff designs such as Time-Of-Use are partly cost-reflective, their designs have fundamental drawbacks in terms of the principles of cost allocations and potentially may lead to social disparities. In a case study of 1.56 million Danish households divided into 90 socio-techno-economic categories, we compare three alternative grid tariffs and investigate their impact on annual electricity bills. This study shows that penalizing consumption above a certain threshold leads to higher costs for owners of electric vehicles regardless of the timing of their consumption. In contrast, penalizing consumption during system peaks mainly affects the electricity bills of heat pump owners. The results of our design simultaneously applying a time-dependent threshold and a system peak tariff show (a) a range of different allocations that distribute the burden of additional grid costs across both technologies and (b) strong positive outcomes, including reduced expenses for lower-income groups and smaller households. Our study offers policymakers a menu that assigns grid costs to demand technologies, thereby giving them valuable input.Comment: 30 pages, 18 figures, journal articl

Variability in electricity consumption by category of consumer: the impact on electricity load profiles

Residential electrification of transport and heat is changing consumption and its characteristics significantly. Previous studies have demonstrated the impact of socio-techno-economic determinants on residential consumption. However, they fail to capture the distributional characteristics of such consumer groups, which impact network planning and flexibility assessment. Using actual residential electricity consumption profile data for 720,000 households in Denmark, we demonstrate that heat pumps are more likely to influence aggregated peak consumption than electric vehicles. At the same time, other socio-economic factors, such as occupancy, dwelling area and income, show little impact. Comparing the extrapolation of a comprehensive rollout of heat pumps or electric vehicles indicates that the most common consumer category deploying heat pumps has 14% more maximum consumption during peak load hours, 46% more average consumption and twice the higher median compared to households owning an electric vehicle. Electric vehicle show already flexibility with coincidence factors that ranges between 5-15% with a maximum of 17% whereas heat pumps are mostly baseload. The detailed and holistic outcomes of this study support flexibility assessment and grid planning in future studies but also the operation of flexible technologies.Comment: 37 pages, 18 figures, journal articl

Investing in meshed offshore grids in the Baltic Sea: catching up with the regulatory gap

The connection of cables from offshore wind parks to interconnection lines is receiving growing attention in Europe as a way to minimise the costs of laying down future offshore transmission grids in a wind-heavy system. Although important technical breakthroughs are enabling transmission system operators to engage in such hybrid forms of architecture, substantial regulatory challenges and uncertainties over the legal definition of the new architecture are preventing progress. Anchored in current European legal frameworks and targets, this paper critically reviews the national framework conditions that treat the development of transmission grids as regulated assets, focusing on the distribution of connection costs, the access grid tariff and the investment incentives faced by transmission system operators (TSOs) in recovering costs. The paper develops an ideal regulatory framework and compares it to the current regulations in countries around the Baltic Sea in order to assess their suitability for supporting Meshed Offshore Grids (MOGs). The results of this paper highlight the heterogeneity of national regulatory frameworks and the deviations from our recommendations. It is found that Germany lives up to the recommendations best, followed by Denmark, which suggests they have the regulatory potential to pioneer a MOG project in the Baltic Sea region. This is followed by consideration of two clusters of countries defined by their proximity to the ideal framework, assuming a three-step development of MOGs, and following ever more progressive regulatory adjustments. The results of the paper will provide policy-makers with indications for how to take action in order to facilitate offshore hybrid grid investments and improve the inclusion of the regulatory challenges in technical-economic assessments

A decision support system for green and economical individual heating resource planning

The heat sector accounts for almost half of the world’s energy consumption, making it a crucial component in meeting decarbonization targets. One of the biggest challenges of heat energy decarbonization arises at the household level, which collectively has a substantial impact on decarbonization. Individual households commonly rely on decentralized heat sources (DHS). Different technologies can be used as a DHS, each of which leads to different overall (Capex and Opex) costs and carbon emissions. Households choose their DHS technologies freely, though typically influenced by the recommendations from their local city planners who use historical data and analyze the respective economical and environmental consequences. Therefore, developing a decision support system (DSS) that guides individuals in their DHS investment choices is a high priority for city planners as it can help evaluate the role of different policies in aligning economical and environmental concerns. This is becoming more important as both the economical and environmental concerns are increasing, respectively, due to recent energy price spikes and the growing urgency of decarbonization. However, developing such a comprehensive DSS is challenging due to the complexity of accounting for all DHS constraints and the uncertainties in demand, prices, and policies. In this study, we present a reliable and comprehensive DSS that provides a range of optimal strategies including the most cost-efficient and the most environmentally friendly ones. These strategies identify the optimal type, installed capacity, and year of investment of DHS technologies, as well as the expected yearly heat generation of each technology. Our DSS accounts for the uncertainties of heat demand, fuel prices, investment, and operation and maintenance costs. We apply our DSS to a typical household in the municipality of Lyngby-Taarbæk under different policy scenarios. We show that between the most environmentally friendly and most cost-efficient solution only a gap of 9%–15% in cost needs to be bridged. We also demonstrate that current energy taxation policies in Denmark do not provide a level playing field between different heat technologies. Under different policy scenarios, we show that heat pumps integrated with PV have the highest potential for minimizing CO2 emissions for a Danish household

Combining techno-economic modeling and spatial analysis for heat planning in rural regions:A case study of the Holbæk municipality in Denmark

This study examines the opportunities and challenges related to heat decarbonization in rural municipalities by applying a spatial analysis in combination with techno-economic modeling using TIMES. While the transition to low-carbon heating technologies is progressing in urban areas, this shift is happening more slowly in rural areas, reflecting a difference in decarbonization rate between urban and rural contexts. This study takes the Holbæk Municipality in Denmark as a case to investigate the potential for rural heating systems considering local fuels, excess heat, and investments in different energy infrastructures. The technology options investigated include both individual heating technologies, such as domestic boilers and heat pumps, and district heating. The modeling results demonstrate that use of excess heat from the municipal wastewater treatment plant and the neighboring industrial site for district heating competes with individual heating systems that have heat pumps and biogas-fueled boilers, where the mix depends on the conditions assumed for each technology and the heat demand density. The extent of district heating expansion differs between districts in the municipality, ranging from 14% to 100% depending on the heat demand density and proximity to the current district heating network. The different possibilities for the transition of the heating sector revealed in this work indicate that a successful transition will require both a clear policy for the heating sector and an explicit decarbonization strategy for the industries that can provide excess heat for district heating