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Do liberalised electricity markets help or hinder CHP and district heating? The case of the UK

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  • Toke, David
  • Fragaki, Aikaterini

Abstract

This paper investigates whether and how Danish-style combined heat and power (CHP) and district heating (DH) can be implemented in the UK in the context of a liberalised electricity market. There is currently an absence, in the UK, of the Danish system of planning rules and also good tariffs for CHP electricity exports to the grid that led to the development of the Danish system of CHP and DH. However, there are some changes in UK planning practice that may help CHP and DH. These would need to be strengthened, but it is also the case that the way the liberalised electricity market operates in the UK effectively discriminates against small CHP plant selling their electricity to the grid. A Danish system of 'aggregating' CHP-DH plant using thermal stores could help to overcome this problem. However, an alternative strategy would be to establish feed-in tariffs for CHP units that are linked to DH modelled on the Danish 'triple tariff'. This could help the UK's long-term objective of absorbing high levels of fluctuating renewable energy sources.

Suggested Citation

  • Toke, David & Fragaki, Aikaterini, 2008. "Do liberalised electricity markets help or hinder CHP and district heating? The case of the UK," Energy Policy, Elsevier, vol. 36(4), pages 1448-1456, April.
    • Handle: RePEc:eee:enepol:v:36:y:2008:i:4:p:1448-1456
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    1. Møller Sneum, Daniel, 2021. "Barriers to flexibility in the district energy-electricity system interface – A taxonomy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 145(C).
    2. Morlet, Clémence & Keirstead, James, 2013. "A comparative analysis of urban energy governance in four European cities," Energy Policy, Elsevier, vol. 61(C), pages 852-863.
    3. Bolton, Ronan & Foxon, Timothy J., 2015. "Infrastructure transformation as a socio-technical process — Implications for the governance of energy distribution networks in the UK," Technological Forecasting and Social Change, Elsevier, vol. 90(PB), pages 538-550.
    4. Andersen, Anders N. & Østergaard, Poul Alberg, 2020. "Support schemes adapting district energy combined heat and power for the role as a flexibility provider in renewable energy systems," Energy, Elsevier, vol. 192(C).
    5. Ronan Bolton & Timothy J Foxon, 2013. "Urban Infrastructure Dynamics: Market Regulation and the Shaping of District Energy in UK Cities," Environment and Planning A, , vol. 45(9), pages 2194-2211, September.
    6. Verbruggen, Aviel & Dewallef, Pierre & Quoilin, Sylvain & Wiggin, Michael, 2013. "Unveiling the mystery of Combined Heat & Power (cogeneration)," Energy, Elsevier, vol. 61(C), pages 575-582.
    7. Wright, Daniel G. & Dey, Prasanta K. & Brammer, John, 2014. "A barrier and techno-economic analysis of small-scale bCHP (biomass combined heat and power) schemes in the UK," Energy, Elsevier, vol. 71(C), pages 332-345.
    8. Fragaki, Aikaterini & Andersen, Anders N., 2011. "Conditions for aggregation of CHP plants in the UK electricity market and exploration of plant size," Applied Energy, Elsevier, vol. 88(11), pages 3930-3940.
    9. Colmenar-Santos, Antonio & Rosales-Asensio, Enrique & Borge-Diez, David & Mur-Pérez, Francisco, 2015. "Cogeneration and district heating networks: Measures to remove institutional and financial barriers that restrict their joint use in the EU-28," Energy, Elsevier, vol. 85(C), pages 403-414.
    10. Eid, Cherrelle & Bollinger, L. Andrew & Koirala, Binod & Scholten, Daniel & Facchinetti, Emanuele & Lilliestam, Johan & Hakvoort, Rudi, 2016. "Market integration of local energy systems: Is local energy management compatible with European regulation for retail competition?," Energy, Elsevier, vol. 114(C), pages 913-922.
    11. Toke, David, 2011. "UK Electricity Market Reform—revolution or much ado about nothing?," Energy Policy, Elsevier, vol. 39(12), pages 7609-7611.
    12. Wittmann, Nadine & Yildiz, Özgür, 2013. "A microeconomic analysis of decentralized small scale biomass based CHP plants—The case of Germany," Energy Policy, Elsevier, vol. 63(C), pages 123-129.
    13. Taylor, Peter G. & Bolton, Ronan & Stone, Dave & Upham, Paul, 2013. "Developing pathways for energy storage in the UK using a coevolutionary framework," Energy Policy, Elsevier, vol. 63(C), pages 230-243.

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