Previous Studies on Framework Conditions for Flexibility 2. Previous Studies on Framework Conditions for Flexibility To identify other studies on the subject, this section presents a literature review on framework conditions for flexibility. This is done to explore the current research context of flexibility in the DHelectricity 8 interface, and to compare and supplement the findings of the survey, presented in Section 5. There are many technical studies conducted on flexibility in electricity systems with an increasing share of variable renewables. Some of them are reviewed in Appendix 0. In contrast, only a few studies address framework conditions affecting flexibility. A large part of the existing literature focuses on documenting the impact of various policy instruments on their target, which often are the impact on CO2 emissions. Such policy instruments will only partially affect the DH sector’s ability to provide flexibility to the electricity market, and indirectly through the effect on fuel composition and technology mix. 2.1. Framework Conditions for Combined Heat and Power Sovacool (2013) argues that the CO2-tax on fossil fuels has been positive for the development of CHP in Denmark, due to the DH industry’s adaptability. Jacobsson (2008) gives green certificates and the EU quota system credit for the growth in large CHP plants in Sweden. Gustavsson & Truong (2011) prove that a carbon tax increases the competitiveness of biomass-based CHP in Sweden and demonstrates that flexible cogeneration plants with a high electricity to heat ratio are less sensitive to changes in energy taxation. An increasing share of renewables, however, generally lowers electricity prices and thus reduces the profitability of electricity production in CHP plants. 2.1.1. Shifting Conditions for Combined Heat and Power Plants Studies from Linköping in Sweden conclude that fluctuating electricity prices and high winter prices will promote CHP above HO, while stable low electricity prices, also during winter, may increase the share of heat pumps in the Swedish DH (Åberg et al. 2012). Jacobsson (2008) mentions three obstacles for biomass-based electricity generation to evolve further in Sweden. 1. Uncertainty of the future green certificate price affects investments in CHP production based on biomass 2. Large windfall profits are a problem for the green certificate scheme as a whole and threatens its legitimacy 3. Natural gas is also making its way into cogeneration, thus competing with biomass It leads to a decreased share of biomass-based CHP, but is positive in an energy flexibility perspective since natural gas fired cogeneration plants are more flexible than CHP plants based on biomass. Biogas plants are flexible, but a gas storage is essential and there is a need for an investment subsidy to cover the investment costs (Grim et al. 2015). In Denmark, the high penetration of wind energy has caused an important drop of classical power plants load factor as well as decreased operating hours for distributed DH plants with CHP. Sorknæs et al. (2015) show that the viability of CHP plants can increase through increasing their task in balancing the electricity system (Sorknæs et al. 2015). Lund (2007) finds that by inducing a better coexistence between cogeneration and wind power, Denmark can reduce the budget on increasing transmission capacity. A coupling of the thermal and electricity sector has proved to be cost efficient (Lund & Clark 2002). Sorknæs et al. (2015), however, point out that increasing the balancing tasks
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