1.4. Problem Formulation and Report Structure Despite different national traditions and different technology mixes, the Nordic electricity market is today integrated and regulated by the same EU-defined rules. The situation is completely different for DH. DH is still a local phenomenon applying different technology mixes and regulated differently by a combination of national and local rules. The financial framework conditions are complex and vary largely between the countries subject to this study. Some policy regulations that the DH producers are facing appear to focus on reducing greenhouse gas emissions or fiscal concerns, while it may at the same time counteract flexibility rather than promote it. While technical potentials for flexibility from CHP and P2H with heat storage might be high, realised deployment and operation might be low due to market and regulatory barriers. This study addresses the framework conditions for flexibility from CHP and P2H in the DH-electricity interface of the Nordic and Baltic countries in the timeframe down to hourly level. It does so by identification of framework conditions which act as drivers or barriers for flexible operation and investment, and furthermore by analysing the current state of each framework condition in the respective countries. The present study intends to respond to the following questions: Which framework conditions in the district heating-electricity interface of the Nordic and Baltic countries are drivers or barriers for operation of - and investment in - CHP and P2H? How are the identified framework conditions affecting flexible operation of - and investment in - CHP and P2H in the respective countries? How can the barriers for flexible operation of - and investment in - CHP and P2H, be addressed? The motivation of this study is to provide insight for regulators, enabling an alignment between energy policy and regulation, regarding increased integration between DH and electricity. The report starts by providing a brief introduction to DH in the Nordic and Baltic countries, followed by Section 2 that provides an overview of existing studies on the subject of flexibility and regulation in the DH-electricity interface. Section 3 presents the methodology used for analysing the framework conditions affecting flexibility, and Section 4 provides details on these framework conditions. Section 5 describes the results of evaluating framework conditions for specific countries. This leads to the comparative analysis in Section 6 and the conclusion in Section 7. 7
WP2 DH report
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