Results: Drivers and Barriers for Flexibility in the District Heating-Electricity Interface 5.2. Country Profile: Estonia 26 5.2.1. Main Drivers and Barriers Main barriers for flexibility are baseload operation of CHPs due to FiT, operational custom of generation following demand, lack of heat storages to balance daily load and limited incentives and deployment for P2H technologies due to taxation on electricity consumption when used for heating. Table 6: Framework conditions for flexibility in the DH‐electricity interface in Estonia ESTONIA 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 5.2.2. Flexibility Options in the DH System DH in Estonia accounts for approximately 44% of the total heat consumption. The heat is produced by HO boilers and CHP units with a share of 62% and 38% respectively. The main fuel types are natural gas and biomass. Estonia has the World’s largest oil-based power plants, supplying the majority of electricity produced in Estonia (Eesti Energia n.d.). 5.2.3. Framework Conditions for CHP in Estonia Current Aspects Co-generation of heat and power is politically prioritized due to efficiency. CHP installations qualify for a FiT, which means that there is no incentive for operating flexibly with respect to the power market conditions and market prices. For the same reason, CHP is used for electricity base load, which in turn reduces the incentive for investing in heat storages.
WP2 DH report
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