Framework Conditions 4. Framework Conditions Below is the list of the identified framework conditions that work as drivers or barriers for flexibility. As described in Section 3, the list draws on the survey results. The framework conditions are divided into the flexibility resources CHP, P2H and General resources, and are described in terms of their effect on the flexible operation of the resource, and investment in the resource. Some of the framework conditions are presented in terms of their presence, while others are presented in terms of their absence. This way of phrasing the framework condition means that a confirmation of the sentence will always be a driver for operational flexibility, and correspondingly, a disconfirmation of the sentence will be a barrier for operational flexibility. The distinction between absence and presence allows for a visual representation of how the identified framework conditions affect operational flexibility, while both operation and investment is treated in the analysis. The visual representation can be found in Section 5 under each country profile. Example: feed-in tariffs (FiT) for CHP may impede flexible operation, thus the absence of FiTs is a driver for flexible operation. The framework condition is therefore defined as Absence of feed-in tariffs. 4.1. Combined Heat and Power 14 4.1.1. Absence of Mandatory Procurement of Electricity Mandatory procurement of electricity generated from CHP can be a way to incentivise production of electricity, and to provide a secure business case for investment. Operation: Mandatory procurement reduces the incentive for flexible operation, since such schemes make it attractive to maintain production of the maximum amount of power, regardless of the system-needs. Investment: Absence of mandatory procurement can reduce certainty regarding the ability to sell electricity from a CHP, which increases risk for investors. 4.1.2. Absence of Feed-in Tariffs FiTs for electricity generated from CHP can be a way to incentivise production of electricity, and to provide a secure business case for investment. Operation: FiTs reduce system flexibility, as they make power generation profitable even when market prices are low. Hence, the power generation is not adjusted to market conditions, but instead maximized for receiving maximum support. Investment: Absence of fixed income can reduce certainty regarding the ability to sell electricity from a CHP, which increases risk for investors. 4.1.3. Absence of Feed-in Premiums Feed-in premium (FiP) for electricity generated from CHP can be a way to incentivise production of electricity, and to provide a secure business case for investment.
WP2 DH report
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