HOT|COOL NO. 2/2019 - "Smart Heating System Integration"


Limiting grid capacity: In case of no or insufficient grid capacity nearby. Solution: Mapping areas with sufficient capacity, and incentivising grid companies to expand access.

OWNERSHIP Different types of ownership can make DE systems subject to various regulatory requirements. Tax- and ownership regulation disincentivising grid supply: E.g. in US, where tax-exempt universities become subject to taxation if their DE systems supply electricity to the grid. Solution: Adjust regulation to accommodate DE systems – e.g. below a certain size, or by systematically issuing waivers. DE TECHNOLOGY Framework conditions related to DE technology and the technologies themselves can impact the ability to offer flexible operation. Limitations in adjustability, ramping and lead time: Ramping and cycling can be constrained for heat pumps and CHP to avoid wear or due to design limitations. Solutions: Volatile market prices – as it happened in Danish plants – may incentivise retrofits and technological improvement for increased flexibility. High technological cost: E.g. for heat pumps, where Danish Energy Agency argues that they are commercially mature – but that a lot of innovation towards cost reductions still remain. Solution: Support innovation by large-scale procurement schemes, e.g. induced by public regulation. Low supply chain maturity: Places with limited deployment of DE systems may be constrained by an absent supply chain. Solution: Chicken-and-egg problem addressable by creating a regulatory push (e.g. long-term policies) for DE, while creating a market pull for flexible DE (e.g. by rewarding pilot projects). Limitations in control and visibility: If standards and physical IT infrastructure for communication are missing. Solution: Implementation of standards, technology and trust, facilitated by system operators. Inflexible steam-based systems: Water as a medium is easier to store. Solution: A welcome opportunity to transition to liquid water- based systems is when steam-based systems reach end-of-life. GRID ACCESS Integration with the grid depends on the physical and regulatory access. High grid-connection cost: Especially relevant for smaller entrants with low financial capacity. Solution: Non-discriminatory connection, e.g. by socialised connection charge. Limiting grid codes: Especially relevant for smaller entrants with administrative capacity. Solution: Standardised and streamlined connection agreements.

PHYSICAL ENVIRONMENT CONSTRAINTS Practical limitations induced by physical environment.

Limited access to energy sources: E.g. heat pumps may need heat sources other than ambient air to be competitive. Solution: Environment can be difficult to change for existing plants, but new plants can be placed according to a mapping of resources. Land availability: Adding new capacity in a constrained (e.g. urban) environment. Solution: New DE capacity can be included in renovation or new-build of infrastructure (e.g. parking houses). BOUNDED RATIONALITY The academic term for “making decisions based on the information that you have”. Limitations from stakeholder bounded rationality: Conditions that affect the ability to make informed decisions. This can be anything from a plant manager simply not knowing about the benefits of system integration, to issues with trust in new technologies. Solution: Clear, trustworthy and applicable information can be distributed through campaigns or support for pre-feasibility studies. COMMITMENT Even if well-informed about benefits, other priorities may reduce commitment to flexible integration of DE. Limitations from stakeholder commitment: E.g. down- prioritisation of system integration if DE is not the core business of the plant owner (industries or university campuses). Solution: Information on benefits on cost and energy performance. Regulatory incentives. Limitations from incumbent commitment: Incumbent commitment deserves special mention, since this element often comes up in literature and dialogue. Barriers include lacking incentive to allow new DE entrants (in vertically integrated utility areas), resulting in e.g. limited access to infrastructure and obstruction during the permitting process. Solution: Align incumbents’ economic incentives to allow for new entrants. Revise regulation to level the playing-field for incumbents and new entrants alike.


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