Techno-economic and business case assessment of low carbon technologies in distributed multi-energy systems

Increasing focus on energy affordability and environmental impact is drawing interest towards the potential value of low carbon technology (LCT) interventions in buildings and district energy systems. Relevant interventions may include improvements of the insulation levels and installation of low carbon and renewable generation technologies (e.g., combined heat and power, photovoltaics, heat pumps). These LCT interventions for both electricity and heat supply can, in principle, reduce energy costs and CO2 emissions for final energy consumers. This can be achieved by coupling, and possibly optimising, multiple energy vectors from traditionally independent systems (e.g., electricity, heat and gas). However, this transition to distributed multi-energy systems introduces complex physical and commercial interactions between the different energy vectors. Further, these interactions can be fundamentally different at different aggregation levels (e.g., premises, district, and commercial level). This makes the assessment of business cases for LCT interventions in a multi-energy context a grand challenge, and given the potentially disruptive commercial impact of many such novel technologies, such complexity might result in a barrier to their development. In light of this, this paper proposes a techno-economic framework for the assessment of business cases of LCTs, which systematically models the physical and commercial multi-energy flows at the premises, grid connection point, and commercial levels. This is particularly important given the commonly asymmetrical nature of various energy price components, which can have significant effects on the business cases of LCTs and associated actors (e.g., retailers and energy service companies). The proposed framework is demonstrated through a series of case studies that highlight the value of various LCT interventions and of aggregation, in terms of energy, emission and operational cash flow metrics. The relevance and importance of the framework to developing business cases for various energy system actors, including policy makers and regulators, is discussed, with the final aim of facilitating the uptake of low carbon multi-energy technologies. (C) 2015 Elsevier Ltd. All rights reserved.