Flexbuild final report. The value of end-use flexibility in the future Norwegian energy system

Abstract

The Flexbuild project aimed to understand how end-use flexibility could impact the future energy system in Norway. This initiative brought together industrial partners, public organizations, universities, and research institutions to investigate various aspects of energy flexibility. To achieve its objectives, the project employed a combination of models and explored four different energy transition scenarios, or storylines, named as Energy Nation, Petroleum Nation, Nature Nation, and Climate panic. The models developed and used in the project included BUILDopt for building energy use, IFE-TIMES-Norway for the Norwegian energy system, EMPIRE for the European power market, and EMPS for the Norwegian hydropower system. These models were interconnected through a soft linking approach, allowing them to influence each other's input and results, until some predefined convergency criteria are met. The project's input data and calibration involved regionally dividing the Norwegian building stock, defining potential for district heating expansion, and calibrating models against statistical data. Capacity Expansion of the European Power System EMPIRE is a long-term investment model designed to optimize technology portfolios within the European power system while considering factors like carbon dioxide (CO2) emissions targets, supply-demand balance, and technical constraints. The model represented thirty-one European countries connected through interconnectors, excluding Norway, which was divided into five market areas. EMPIRE was expanded to incorporate demand response from residential appliances, allowing it to consider residential electric load flexibility. This expansion indicated potential cost reductions of about 1% from 2020 to 2055. Activation of End-Use Flexibility in Buildings BUILDopt was developed to model end-use flexibility in buildings. It optimizes both operational and investment costs for a single building's energy system, considering factors like grid tariffs, spot prices, and flexible load profiles. The model incorporated flexibility sources such as indoor temperature control, thermal storage, and electric vehicle (EV) charging. BUILDopt's simulations revealed the potential for significant peak load reduction and cost savings through flexibility activation. The choice of grid tariff was a critical factor, with tariffs including a power fee component offering more cost-effective peak load reduction. The model also explored investment optimization in heating technologies, solar PV, and batteries. The results showed that activating existing flexibility sources could eliminate the need for investing in battery systems while it would accelerate the adoption of solar PV in buildings, particularly in houses. Energy System in Norway IFE-TIMES-Norway was linked with both EMPIRE and BUILDopt to understand interactions within the Norwegian and European power systems and the building sector, respectively. This linkage facilitates a holistic view of the energy transition. The results of this model emphasize the value of end-use flexibility in reducing energy transition costs. These flexibility options help align local energy production, especially from PV, with demand, reducing the need for grid expansion. They also increase profits from international electricity trade. End-use flexibility's impact on peak demand reduction varies by region and storyline. Importantly, it plays a role in lowering the need for hydrogen and thermal storage. Hydropower System in Norway The EMPS model focused on assessing how flexible end-use of electricity demand would affect Norway's hydropower-dominated power system. The study found that end-use flexibility had minimal effects on the power system, leading to slight reductions in energy demand and higher energy surplus in Norway. Power prices saw small decreases, especially in 2050, while hydropower production remained relatively stable, with minor changes in average power production and water reservoir usage. However, it also led to reduced income for both hydropower and wind power producers, particularly in 2030. The main objective of the project was to provide knowledge on how end-use flexibility available in the building stock will impact the development of the overall energy system. The main takeaways of Flexbuild are here summarized with respect to the project’s objectives. Objective 1: Develop a robust and novel stochastic modelling framework of the Norwegian energy system capable of evaluating the impacts of end-use flexibility in the energy system. The project created the BUILDopt model to assess end-use flexibility in buildings. It also expanded the IFE-TIMES-Norway model with stochastic elements to account for uncertainty in energy storage investments. Additionally, the project developed a methodology for linking these models. The results from the linking show that buildings remain fundamentally price-takers, and even if energy demand becomes flexible in the entire building stock, this has only a marginal impact on the energy price formation. Objective 2: Assess cost-optimal investment and operation of the energy system vs. private building owner and address possible mismatch between the two. End-use flexibility was seen as a techno-economic investment that improved the match between local PV production and demand, reducing the need for grid expansion. The cost-optimal choice for heating technologies often favoured heat pumps over district heating, highlighting a mismatch between individual building choices and the energy system perspective. Solar PV installation was found to be cost-optimal when combined with end-use flexibility, significantly reducing the need for batteries. Objective 3: Assess the impacts of different power tariffs on both end-user and the energy system. The type of power tariff had a significant impact. A tariff with a power fee component, in addition to an energy fee, enabled more cost-effective peak load management by setting caps on peak demand. Objective 4: Asses the value of end-use flexibility for easing the power grid reinforcement. End-use flexibility had the potential to reduce peak loads at the single building level by 20-50%, with smaller effects at the aggregate level, around 16-20% at market area level. The high level of solar PV installations raised questions about grid challenges in areas dominated by single-family houses. Objective 5: Investigate how end-use flexibility may change the role of Norwegian hydropower and investment in wind and solar in the national and European power system. End-use flexibility was shown to accelerate solar PV adoption in Norway, increasing total capacity and electricity production. While hydropower production remained relatively stable, there were slight reductions in power prices. Future work should include modelling distribution grids and ancillary markets, with an emphasis on stochastic demand profiles rather than archetype buildings for more robust representations. In summary, Flexbuild generated knowledge on end-use flexibility, its modelling and its potential impacts on the Norwegian energy system. It emphasized the importance of grid tariffs, the cost-effectiveness of end-use flexibility, and its role in promoting solar PV adoption while reducing the need for grid expansion.