Decentralization in the electricity system: At the household, community and city levels

Licentiate thesis, 2019

Recent years have seen a rise in the number of implementations of small-scale generation and storage technologies for electricity and heat at different levels in the energy system. This trend towards decentralization of the system is driven by rapid decrease in technology costs, as well as the intentions expressed by various stakeholders to contribute to a carbon-neutral energy system. This thesis investigates the investments and operation of generation and storage technologies at three levels within the energy system: i) residential Prosumer households, which use photovoltaic (PV)-battery systems to supply and shift their electricity demand; ii) Prosumer communities, in which prosumer households share electricity; and iii) Smart integrated cities, which make use of interconnections between the electricity, heating, and transport sectors.
Three techno-economic optimization modeling methods are utilized to study technology investment and dispatch, self-consumption of electricity and heat at different levels of decentralization, and the interactions that occur between decentralized systems and the centralized electricity system. Prosumer households are modeled by combining a household electricity cost optimization model and a northern European electricity system dispatch model. The optimization model developed to study prosumer communities directly compares the PV-battery system investments and operations in individual prosumer households and in prosumer households within a community. The city energy system optimization model is designed to analyze interconnections between the urban electricity and heat (and in future work, also transport) sectors.
It is shown that prosumer households under the current Swedish tariff system experience a strong incentive to self-consume PV-generated electricity within their households and experience a weak incentive to operate their battery systems such as to reduce operational costs within the electricity system. Being part of a prosumer community can provide the highest monetary benefit to prosumer households for the purpose of reducing the connection capacity to the centralized system. Prosumer communities exhibit different patterns of electricity trade to the centralized system than individual prosumer households, due to local balancing of electricity within the community. On the city level, the installation of local generation and storage technologies for electricity and heat can reduce the stress on the connection to the centralized electricity system. Thus, local electricity generation can help to meet increases in electricity demand and demand peaks at the city level, stemming from city growth or electrification of energy use within the city. An interaction between the electricity and heating sectors in the city energy system can in the modeling results be seen in, for example, the utilization of power-to-heat technologies, which often use electricity during low-cost hours. Storage systems for electricity and heat are utilized within the city to shift electricity and heat between different periods.