An ongoing period of low electricity market price has a negative impact on the profitability of many forms of electricity and heat production in the Nordic energy system. As the share of variable renewable energy increases and climate goals become more stringent, there is worry over how the heating and electricity sectors will adapt to new demands.
This dissertation discusses the integration of the heat and electricity sectors for additional flexibility and efficiency in both. We take a market-based view on the integration because it is realised and maintained only if the necessary investment is profitable. We discuss three aspects of sector integration: industrial demand-side management (IDSM), combined heat and power (CHP) production, and large-scale heat pumps (LHPs). The economic IDSM capacity of a case pulp and paper mill differs significantly from the technical capacity due to the costs and risks of demand response actions. Owing to these, the technical capacity may be only partially utilised. The economy of the future use of CHP and LHPs in Nordic district heating has links to the overall electricity demand and electricity production capacities. The use of these technologies improves the efficiency of the energy system when compared with current competing technologies.
Model results indicate continuous potential for the use of both past the year 2030, if electricity demand grows according to national forecasts. While we find economic potential for sector integration in all studied cases, there are limits and conditions for them, including the market price of electricity, as well as regulations and taxation. Research and policymaking aiming for increased sector integration should consider the market-based and international operation of the energy business. This will allow the holistic understanding of investment potential in sector integration beyond theoretical feasibility.
|Publication status||Published - 2019|
|MoE publication type||G5 Doctoral dissertation (article)|
- energy markets, CHP, district heating, sector integration, heat pump, demand side management, energy security