The Benefits of Local Cross-Sector Consumer Ownership Models for the Transition to a Renewable Smart Energy System in Denmark. An Exploratory Study
Abstract
:1. Introduction
- What is the (theoretical) ability of cross-sector consumer ownership at different locations to address the organisational challenges of SESs in Denmark?
- How does the current Danish institutional incentive system encourage/discourage cross-sector consumer ownership at different locations in the power distribution system?
- Based on 1 and 2, how could the Danish institutional incentive system be improved to better address the organisational challenges of SESs?
- What issues regarding ownership and SESs can be identified for further research?
2. Theoretical Approach and Methods
2.1. SESs and their Interrelations
2.2. The Organisational Challenges of SESs, Ownership and Location
2.2.1. Reduction of Overinvestments in the Electricity Grid
2.2.2. Local Opposition to Wind Turbines
2.2.3. Attractiveness of Investments in VRE and P2H in DH Systems
2.2.4. SESs, Cross-sector Ownership and Different Location Cases
2.3. Methodology
3. Results
3.1. The (Theoretical) Ability of the Consumer Cross-sector Ownership Model in Different Location Cases to Address the Organisational Challenges of SESs
3.1.1. The Operation of the Wind Turbines and the DH System in a Co-Ownership Solution
3.1.2. The Location Cases for Cross-Sector Integration and the Reduction of Overinvestments in the Electricity Grid
- (A)
- An increase amount of hours with transmission grid congestions in DK1 and DK2. DK1 and DK2 are the two electricity market zones in Denmark. This problem occurs in moments when the electricity production in DK1 and/or DK2 exceeds the electricity demand in DK1 and/or DK2 and the transmission connections to other market zones are fully utilised. The result is the curtailment of VRE by the power market [7].
- (B)
- The creation of new congestion nodes inside DK1 and DK2. This may occur, e.g., because of congestions in the substations that connect DS1 and DS3 with the transmission voltage cables. Such an issue has already occurred for example in one of the transmission substations in Lolland municipality, where Energinet had to contact the local DSO to achieve down regulation of wind and solar power production. Currently this is only an issue for the transmission system operator (TSO), but it is expected to become a problem for the DSOs as well [46].
- (C)
- Additional electricity grid losses at the distribution level in areas with excess VRE. Grid losses are proportional to the current (i.e., the power flow) and the distance that power is transported. In a centralised fossil fuel energy system (where the electricity is transported from the central power stations to the consumer through the transmission and distribution grids), the power consumption in a given distribution grid can be seen as the cause of the power flow in that given distribution grid and, consequently, of the grid losses in the given distribution grid too. However, in a renewable energy system (where large shares of the power production may be fed directly into the distribution grid and go upstream or downstream) the power flow in a given distribution grid could be caused by power consumption elsewhere in the system. This is the case when the local VRE production exceeds the local power consumption. In this sense, one could say that local excess power production from VRE creates additional grid losses in the local distribution grids where the excess power is produced.
3.1.3. Consumer Ownership and Local Acceptance of Wind Turbines
3.1.4. The Attractiveness of VRE and P2H for DH Companies
- Coupling the wind turbines with the flexible demand of the DH system would to some extent resolve the merit-order-effect and the curtailment problems when the wind turbines and the flexible electricity demand are placed in the same congestion node [21].
- Onshore wind turbines are the cheapest source of electricity in Denmark [49]. Therefore, it would be cheaper for a flexible consumer to self-consume electricity from his wind turbines than buy electricity from a wind power producer (either via the spot market or through peer-to-peer trading). This is because, when buying electricity from a producer, the consumer would have to pay for the cost of producing the wind power and for some benefits for the wind power producer. DH companies who owned wind turbines in windy areas would have an additional advantage because the levelised cost of wind power in these areas is even lower.
- The DH system could be entitled to a reduction of electricity grid tariffs for the self-consumed electricity based on the advantages it provides for the reduction of overinvestments in the electricity grid expansion and reinforcement (see Section 3.1.2). In this sense, the co-ownership in the behind-the-meter and local cross-sector integration cases would have an economic advantage over the co-ownership in the distant cross-sector integration case.
3.1.5. Summary
3.2. The Current Institutional Incentive System for Cross-Sector Consumer Ownership in Denmark
3.2.1. The Role and Possibilities of Electricity Grid Operators
3.2.2. Electricity Grid Tariffs, and Taxes
3.2.3. The Design of the Electricity Spot Market
3.2.4. Lack of Specific Incentives for Local Cross-Sector Integration
3.2.5. Summary
3.3. Possibilities for Improving the Current Institutional Incentives
- New (TSO and DSO) grid tariffs to activate flexible demand in a given location in periods of excess electricity generation, as suggested by Ringkøbing DH [30]. “I can prove to them [to the local DSO] mathematically that they would sell more electricity to me [and] make more money and [that] I would make more DH to a lower price on the electrical boiler, if they lowered their price [the electricity distribution tariff]” said Ringkøbing DH [30]. The reconsideration of the waterfall principle for the distribution of grid costs would also be pertinent here.
- Subsidies on investments in VRE and/or P2H in targeted areas. The subsidies could be paid by the savings that would be obtained from not having to reinforce or expand the electricity grid. This could be facilitated by modifying the current legislation so that grid operators could promote the implementation of cross-sector integration technology (on the right time, size and location), when this wasestimated to be a more cost-effective solution from a socio-economic perspective.
3.4. Future Perspectives for Research on Ownership and SESs
4. Discussion
Funding
Acknowledgments
Conflicts of Interest
Abbreviations
CHP | Combined heat and power |
DH | District heating |
H&C | Heating and cooling |
HP | Heat pump |
DSO | Distribution system operator |
LCOE | Levelised cost of energy |
PPA | Power-purchase-agreement |
P2H | Power-to-heat |
SES | Smart energy system |
TSO | Transmission system operator |
VRE | Variable renewable energy |
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Stakeholder | Interviewee | Description |
---|---|---|
DH Company | Hvide Sande DH [29] | Hvide Sande DH owns wind turbines and an electric boiler in a behind-the-meter solution. |
DH Company | Ringkøbing DH [30] | Ringkøbing DH owns an electric boiler and a HP. |
Local Planning Authority | Ringkøbing-Skjern Municipality [31] | Hvide Sande DH and Ringkøbing DH are located in this municipality. Ringkøbing-Skjern is a rural municipality with high shares of VRE and ambitious municipal energy targets. |
DSO | RAH Net [32] | RAH Net is the local consumer-owned DSO. Hvide Sande DH and Ringkøbing DH are connected to RAH Net’s electricity grid. |
TSO and Market Operator | Energinet [33] | Energinet is the Danish TSO and market operator. |
DH Consultant | EMD International [34] | EMD International is an energy systems software company that provides consultancy to DH companies for the improvement of their operations’ strategy. |
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Gorroño-Albizu, L. The Benefits of Local Cross-Sector Consumer Ownership Models for the Transition to a Renewable Smart Energy System in Denmark. An Exploratory Study. Energies 2020, 13, 1508. https://doi.org/10.3390/en13061508
Gorroño-Albizu L. The Benefits of Local Cross-Sector Consumer Ownership Models for the Transition to a Renewable Smart Energy System in Denmark. An Exploratory Study. Energies. 2020; 13(6):1508. https://doi.org/10.3390/en13061508
Chicago/Turabian StyleGorroño-Albizu, Leire. 2020. "The Benefits of Local Cross-Sector Consumer Ownership Models for the Transition to a Renewable Smart Energy System in Denmark. An Exploratory Study" Energies 13, no. 6: 1508. https://doi.org/10.3390/en13061508