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Perspectives and strategies that prioritize territorial development have regained prominence in international discussions and policies aimed at implementing the 2030 Agenda for Sustainable Development. This renewed focus stems from several reasons: enhancing the effectiveness of sectoral approaches, localizing sustainable development, addressing the numerous and complex challenges facing global communities, and promoting inclusive and equitable development.
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Digital platform as a business model for energy utilities of the future: The insight
In recent years climate change has emerged as a global issue directly related to quality of life. In this context, one of the key goals in the next few decades will be to transition the global economy to a sustainable system. The nature of the energy planning process dictates the application of complex models. There is no universal solution to the energy planning problem. Each territory requires a bespoke strategy aimed at utilising its specific potential.
Three key factors are crucial while defining the optimal sustainable development model:
Affordability
1.
Self-reliance
2.
Sustainability
3.
During the past few decades, a number of long-held tenets regarding the energy sector have been rewritten. Climate change emerged as a global issue directly related to the quality of life. The realisation of the negative environmental impact of power generation has been causing a stir among energy companies and policymakers worldwide. Apart from the well-known issue of global warming, the utilisation of energy sources is raising concerns related to issues such as water depletion, deforestation, biodiversity loss, etc. During the next few decades, one of the key goals will be to transition the global economy to a sustainable system. In this context, sustainability is directly linked to reducing the use of fossil fuels and decreasing CO2 emissions. The deployment of renewable energy sources (RES) is seen by many as a crucial solution to the energy and environmental problems that the world is facing. As a result, there has been a proliferation of new technological solutions, business innovations, and policies aimed at decarbonising the power sector. Governments worldwide set ambitious emission reduction goals and instated policies aimed at incentivising the implementation of RES.
Another important point of research interest is learning how to combine different technological options and policy instruments to overcome barriers towards reaching a zero-carbon energy system of the future. The emergence of new technologies, distributed energy sources (DER), prosumers, and digitally-enabled solutions complicates the delicate balance of the energy ecosystem. Complexities of modern power systems call for the application of multidisciplinary approaches in solving the energy equation. Modern energy strategies have to consider a whole string of disparate factors when assessing optimal development pathways. A multi-disciplinary approach is now a prerequisite in forming energy-related action plans. The nature of the energy planning process dictates the application of complex models. There is no universal solution to the energy planning problem. Each territory requires a bespoke strategy aimed at utilising its specific potential. Observing literature available on 100% renewable energy systems, there are a few gaps that this paper tries to cover. First, while there are a number of papers that explore reaching zero-carbon systems, only a portion of them focus on the city/municipal levels. Second, there is no established step-by-step method that can be applied to different local settings during the process of building a zero-carbon system. Third, there is no established method that evaluates different decarbonisation pathways. In addition to contributing to these three issues, the paper explores key aspects and barriers of deploying sustainable energy solutions in reaching the ultimate goal of having a zero-carbon energy system of the future. The approach applied in the paper focuses on a city-level strategy in line with the goal of satisfying demand through local energy sources.
In line with the EU’s energy policy, the UN’s Sustainable Energy Goals, and numerous research papers, this paper explores the feasibility of building a zero-carbon energy system by implementing distributed energy sources. It is worth noting that, while decentralisation of energy sources is key to decarbonisation, not every urban area needs to be 100% energy sustainable. The research presented in this paper aims to establish a bottom-up approach to the urban energy planning process. In addition, we build upon previously published research and present a bespoke, multi-criteria decision support system (DSS) that evaluates decarbonisation pathways. However, a number of cities will not be able to reach a completely sustainable and self-reliant energy system. The aim of the presented DSS is, therefore, to determine what would be the optimal mix with regard to local constraints and in line with selected parameters.
Deployment of RES has to consider factors beyond techno-economic ones to ensure their successful implementation. Sustainable development has three key aspects: social, ecological, and economic, while three key energy sector requirements are sustainability (environmental impact), reliability (self-reliance), and affordability. Any successful transition will look to be compatible with these conditions. Sustainability is closely linked to carbon emissions. In other words, to reach sustainability in the energy sector, it is imperative to reduce carbon emissions to zero.
The described decarbonization pathway is subject to a number of challenges and restrictions. These challenges arise due to problem areas related to technological, environmental, social, regulatory, economic, and/or infrastructural issues.
1.
Regulatory Framework and Policy Support
The energy sector is a colossal system that is crucial to the wellbeing of society. It requires countless elements to interoperate and provide an affordable, reliable, and sustainable source of energy in real time. Due to its gravity and importance, the energy sector is considerably less agile than others. Thus, structural changes take more time and are complex to implement. The regulatory framework of the energy sector is faced with the difficult task of reconciling the need to provide a stable source of energy and the requirement to decarbonise the energy supply chain. Variable RES are putting an increasing amount of strain on the power grid. Regulation is important to ensure that power grid upgrades and new investments in reserve generation capacities or battery systems follow the requirements set by accommodating a large quantity of variable RES. In other words, when solar and wind capacities fail to meet demand, the power system needs reserve power generators or batteries to provide an interrupted source of energy. If these backup systems have low capacity factors, they will not be feasible without incentives. A successful energy policy will have to ensure the feasibility of backup systems, while the regulatory framework will determine who and by what rate pays for them.
Having a stable and concise regulatory framework has been identified as a prerequisite for ensuring the financing of an energy project. As far as the case study presented in the paper goes, there is a lack of a coherent regulatory framework regarding the heating and transport sector and a lack of supporting policies regarding power-to-heat and e-mobility solutions. Generally, there are three types of energy policies: (1) investment based (such as grants and tax exemptions), (2) operating support (such as emission caps and feed-in tariffs), and (3) consumer facing (such as net metering). Favourable energy policies are a powerful tool that governments use to facilitate the development of the energy sector in the desired direction. They are aimed at lowering financial risks and creating a supportive environment regarding the implementation of sustainable technologies. Despite all the positive aspects of renewable energy, investors need clarity, stability, and returns on their investments. Developing decarbonisation pathways is only the first step. Creating a supportive investment framework is crucial.
2.
Economic Factors
Perhaps the key issues regarding investments in the energy sector are that they are mostly capital intensive and have long lifetimes. Additionally, these projects are faced with a series of risks ranging from lengthy bureaucratic procedures, technological issues, social acceptance, macroeconomic factors, inconsistent policies, and/or changing prices. These uncertainties result in large risk margins that increase costs or cause projects to be abandoned. Power-to-heat technologies (heat pumps and electric boilers) can provide additional flexibility to the heating system, but require relatively high upfront capital investments. Individual households are often hesitant to invest in such solutions and continue to use fossil-based solutions. A similar situation is found in the transport sector where people generally prefer a lower-cost choice, disregarding the environmental concerns regarding ICEs. Lowering costs of heating pumps and EVs would facilitate a large up-take of such technologies.
Reliability of Supply
As aforementioned, variable RES have intermittent outputs that depend on environmental conditions. On the other hand, energy demand fluctuations are driven by different parameters. A renewable generation portfolio can produce the exact amount of energy that is consumed during the course of a year. However, this does not necessarily mean that the same generation portfolio can cover local consumption during each hour of the year.
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Our analyses confirmed that a power system needs a stable source of energy (in our case study that was the biomass cogeneration unit) and/or a storage system. As research indicates, conventional power plants are an essential part of the power system as synchronous generators have a direct, electro-mechanical link to the system and provide spinning mass. Without storage or energy exchanges, any energy system would require a significant amount of reserve capacity. In other words, as the surge of RES continues, the power system is in dire need of battery storage systems, since not every location is suitable for hydro storage. Storage solutions (hydro, mechanical, or electrochemical) are able to provide multiple ancillary services, such as power time shift, supply, black start, frequency regulation, and spinning reserve. In addition, ensuring a smooth transition would require the application of innovative power-to-x approaches and demand response solutions.
Only by applying bespoke solutions, diversifying the generation portfolio, and implementing storage technologies can a zero-carbon system be designed. A combination of policies and innovative solutions will help us reach the goal of having a completely sustainable energy system in the future.
EPLL's mission is to create bespoke approaches to territorial sustainable development overcoming challenges creating a synergy between academia, local community and the real sector.
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