The Danish district heating sector constitutes a large potential for power-to-heat technology utilization and thereby increasing the flexibility potential between the heat- and electricity sectors.
In this master’s thesis it is investigated how a redesign of the current flat rate electricity grid tariffs influences the business-economic incentive for flexible power-to-heat operation in a district heating area. The simulation tool energyPRO is used to investigate the influence of three redesigned tariff schemes; a flat rate tariff reduction, a fixed time-of-use tariff scheme and a dynamic tariff scheme. Related barriers to such changes, which are perceived by key-stakeholders, are identified through interviews.
It is concluded that the redesigned tariff schemes show potential for improving business-economic viability of flexible power-to-heat operation. However, measures and careful planning must be undertaken in the design of tariff schemes to ensure that the necessary income for grid operators remains in place.
From the barrier assessment, the most prevalent issue for flexible operation appear to be the current lack of business- and socio-economic incentives. Furthermore, for the implementation of redesigned tariff schemes the increased complexity for both grid operators and consumers hinders immediate implementation.