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WP2 DH report

23 5.1. Country Profile: Denmark 5.1.1. Main Drivers and Barriers The future of the large capacity of CHP with heat storages, which has been able to provide flexibility in the power system, is uncertain due to low electricity prices, out-phasing of support payments and tax exemptions for biomass. At the same time, high taxes and tariffs on electricity use reduce incentives for investment in P2H technologies. For CHP plants the electricity production is exempted from taxes, while the CHP heat is subject to taxes. Table 5: Framework conditions for flexibility in the DH‐electricity interface in Denmark  DENMARK  Framework conditions for CHP  Absence of  mandatory  procurement  of electricity  Absence of  feed‐in  tariffs  Absence of  feed‐in  premiums  Presence  of market  pricing for  electricity  Presence  of power  capacity  payments  Presence of  other  subsidy to  CHP  Presence of  tax  exemptions  for fuel to  electricity  production  Presence of  energy, CO2  or other tax  reductions  Presence of  grid  connection  discounts  Absence  of tariffs  levied on  CHP for  feeding  into grid  Framework conditions for P2H  Absence of  PSO on  electricity  (when used for  heat  generation)  Absence of  Grid tariffs  on electricity  (when used  for heat  generation)  Absence of  other levies  or taxes on  electricity  (when used  for heat  generation)  Presence  of reduced  electricity  tax on  electric  boilers  Presence  of reduced  electricity  tax on heat  pumps  Absence of  regulatory  priority to  heat from  waste, RES,  biomass or  geothermal  Presence of  subsidy for  heat pumps  Presence of  subsidy for  electric  boilers      Framework conditions for general resources  Absence of  heat price  regulation ‐  price caps  Absence of  heat price  regulation ‐  flat tariff  structures  Absence of  heat price  regulation –  profit caps in  commercially  owned DH  Absence of  operational  practice of  generation  following  demand  Absence of  tax  exemption  for RES  fuels  Absence of  subsidies for  HO boilers          5.1.2. Flexibility Options in the Danish DH System CHP has since long been encouraged in Denmark by legal means. In Denmark DH covers around half of the total heat consumption of industries and households (Energistyrelsen 2015). In 2014 approximately two thirds of DH were produced by CHP units mainly based on waste incineration, coal, wood pellets, and natural gas. Electric boilers and heat pumps were the source of 0.4% of the DH. By introducing time varying electricity tariffs (and later market pricing), heat storage tanks have been installed in connection to many CHP plants. The heat storages contribute to flexibility by making the CHP plants able to postpone the delivery of heat, which allows for optimization of electricity generation according to demand. 5.1.3. Framework Conditions for CHP in Denmark Current Aspects Co-generation of heat and power in Denmark is divided into central and decentral plants. Decentral CHPs are usually locally owned back-pressure plants, while central CHPs are large extraction


WP2 DH report
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