In this chapter, an energy system analysis tool is introduced and a three‐step energy system analysis methodology is presented which enables the identification of suitable applications of e.g. fuel cells and electrolysers in different future energy systems. The three‐step energy system analysis methodology described in this chapter is based on “Energy system analyses of fuel cells and distributed generation” and “Solid oxide fuel cells in renewable energy systems” [10;17]. This methodology builds on the methodology of designing 100 per cent renewable energy systems used in “Danish Society of Engineers' Energy Plan 2030” [11‐13].
2.1 Energy system analyses model
When conducting energy system analyses, an energy system analysis tool is needed. Such tools have been designed and used by public planning authorities, utility companies and different NGOs. Sometimes operation models originally developed to design suitable oper‐
ating strategies on a day‐to‐day basis have been used for planning purposes. They were typically designed in the context of the current energy supply system with the aim of identi‐
fying lowest‐cost electricity production strategies with several productions units. In order to be able to calculate exact operational costs and emissions, the models are typically rather comprehensive and detailed in their description of each individual power plant. In such models, the possibilities of introducing radical changes are rather limited.
In this dissertation, the energy system analysis and planning model EnergyPLAN is used [18]. The aim of a planning model is to design suitable future investment strategies or to analyse environmental impacts of different initiatives. The EnergyPLAN model is a deterministic input/output energy system analysis model, which has been developed and expanded on a continuous basis since 1999. It involves total national or regional energy systems on an aggregated basis and emphasises the evaluation of different operation strategies. The main purpose of the model is to facilitate the design of energy planning strategies. The model defines technical and economic consequences of different energy system designs or investments in new technologies. It includes interaction between CHP and fluctuating renewable energy sources in steps of one hour throughout one year as well as different regulation strategies. This integration is needed in order to be able to determine both technical and economic impacts of fuel cells and electrolysers in future energy systems. General inputs are demands, renewable energy sources, energy plant capacities, costs, and a number of optional regulation strategies emphasising import/export and excess electricity production. Outputs are energy balances and resulting annual productions, fuel consumption, CO2 emissions, import/export, and total costs including income from the international exchange of electricity.
The EnergyPLAN model enables the analysis of radical technological changes. The model describes current fossil fuel systems in aggregated technical terms, which can be changed into radically different systems, e.g. systems based on 100 per cent renewable energy sources. The model divides the input to market economic analyses into taxes and fuel costs and thereby makes it possible to analyse different institutional frameworks in the form of different taxes. Moreover, if more radical institutional structures are to be analysed, the model can provide purely technical optimisations. This makes it possible to separate the discussion of institutional frameworks, such as specific electricity market designs, from the analysis of fuel and/or CO2 emissions alternatives. Compared to many other models, the EnergyPLAN has not incorporated the institutional set‐up of the electricity market of today as the only institutional framework.
Though the EnergyPLAN model is able to analyse different energy systems, it does not pro‐
vide an overview of which power plants are built in which years. The CHP and power plants are pooled into categories according to their location in the district heating areas. This en‐
ables the integrated analyses of energy systems as well as faster data handling, but it also limits the level of details in the results for the individual types of technologies in the model.
Instead, the model enables an exploration and identification of suitable applications of technologies, such as fuel cells and electrolysers, and the design of future energy systems.
The model conducts one‐point energy system analyses; i.e. no internal bottlenecks in Den‐
mark are assumed, but it includes the possibilities of analysing different ancillary service designs.
2.2 The three‐step energy system analysis methodology
This methodology includes technical modelling with different regulation strategies to re‐
duce the fuel consumption and improve the integration of intermittent resources. It also involves the economic optimisation of the performance of electricity market exchange analyses and socio‐economic analyses.
2.2.1 Technical and market economic energy system analyses
The first step in the methodology is the technical or market economic energy system analysis. In this analysis, the design of large and complex energy systems at the national level and under different technical or market regulation strategies is investigated. In such energy system, the effects on fuel efficiency or the ability of different technologies to integrate intermittent renewable energy can be analysed. In the technical energy system analyses, inputs include energy demands, production capacities and efficiencies, energy sources and distributions. In the market economic optimisations, further inputs are needed in order to determine marginal production costs, such as variable operations and maintenance costs (O&M), fuel costs and CO emission costs. This modelling is based on the
taxes. Output consists of annual energy balances, fuel consumptions and CO2 emissions, fuel costs, etc.
The technical and market‐economic analyses can be conducted under different regulation strategies, i.e. in closed or open systems or with different regulations of CHP plants and critical excess electricity production as well as ancillary service designs, etc. In open energy systems, the ability to integrate excess electricity production can be investigated; while in closed energy systems, the abilities of the fuel cell and electrolysers to improve the fuel efficiency are analysed. In a closed energy system, all excess electricity production is either converted or avoided. It is not the aim to avoid electricity trade, but in order to analyse the fuel efficiency of the different energy systems and the technologies involved, it is necessary to apply these to a closed system.
Such analyses have been conducted in several of the publications which form part of this dissertation; both in the construction of future energy systems and the analyses of fuel cells and electrolysers [2‐6;9‐13;15‐17;19‐21].
2.2.2 Electricity market exchange analyses
In the next step, a market exchange analysis is conducted in which the ability of the different energy systems to trade and exchange electricity on international markets and according to prices is analysed. Such analyses can reveal the flexibility of energy systems or technologies, when large amounts of CHP and intermittent electricity are produced.
Additional inputs are different external electricity market prices as well as market price distributions and a price dependence factor, which are applied in order to determine the response of the market prices to changes in production or demand, import or export.
Hence, the ability of the system to profit from exchange can be identified [22].
These analyses are performed in an open energy system with international electricity trade and are compared to a market economic optimisation of a closed system. This enables the identification of the net earnings made on electricity trade. The results represent the socio‐
economic profits of electricity trade, excluding taxes. Different variations of such analyses have been conducted of fuel cells, electrolysers and other technologies in different energy systems. The results are presented in a selection of the publications which form part of this dissertation [5;6;10‐13;15;16;19‐21].
2.2.3 Socio‐economic feasibility studies
Finally, as the third step, the socio‐economic feasibility of the system is investigated in terms of total annual costs under different designs and regulation strategies. In this step, inputs are investment costs as well as fixed O&M costs together with plant lifetime and an interest rate. In this analysis, a market energy system analysis is conducted in which the operation is optimised economically. In the feasibility study, total socio‐economic costs
exclude taxes. The costs are divided into 1) fuel costs, 2) variable operation costs, 3) investment costs, 4) fixed operation and maintenance costs, 5) electricity exchange costs and benefits, and 6) CO2 payment costs. Such analyses can also be conducted either in open or closed systems. The socio‐economic feasibility of technologies can also be analysed on the basis of technical or market economic energy systems analyses, using modelling results and combining these with the costs etc. of these technologies. This type of analysis has been conducted of energy systems and technologies in several of the publications forming part of this thesis [3;5;6;10‐13;19;21].
A further step along this path is to use the result from the three‐step energy system analyses methodology for constructing new public regulation. This involves an analysis of the current institutional and regulatory setup in terms of taxes, levies, and access to markets, technical requirements etc., as well as recommendations on how to change these.
Such recommendations can make the business‐economic situation reflect socio‐economic cost or technically suitable technologies [6].
The outputs from the technical analyses, the electricity market exchange analyses or the socio‐economic feasibility study can also be used as input to other types of analyses, such as life cycle assessments of the energy system or a technology forming part of this system [15;16;20].
The three‐step energy system analyses methodology leads to a conclusion on the technical potentials for the integration of renewable energy sources, fuel efficiency, CO2 emissions as well as the ability of the system to trade electricity, taking into account system restraints, e.g. in relation to heat demand. Finally, it enables analyses of the total socio‐economic fea‐
sibility of a system or a technology.
3 Reference systems and the design of future renewable energy systems