Smart Integrated Decentralised Energy (SIDE) Systems

In partnership with Spectral

Table of Contents

Smart Integrated Decentralised Energy (SIDE) Systems

New strategies
Rural houses with solar panels. Each house and community could be its own micro-grid.

Executive summary

Transitioning our linear, carbon-based economy into a circular, renewable energy-based economy is without a doubt the single biggest challenge of our time. The energy sector plays a crucial role in tackling this challenge. For this reason, the Dutch government has decided to quintuple renewable power generation by 2030. It is a daunting task that requires radical new ways of thinking about our energy system architecture.

Thanks to recent developments in renewable energy technologies such as batteries, heat pumps and solar panels, it is now possible to produce, convert and store energy locally. As a result, a promising new concept has emerged in which energy flows can be balanced at the distribution system level in so-called microgrids. These microgrids have the potential to significantly contribute to the resilience and flexibility of our energy system, as they can facilitate the large-scale rollout of intermittent renewable energy technologies without requiring expensive infrastructure upgrades.

As part of the system integration studies programme of the Topsector Energie of the Netherlands Enterprise Agency, the goal of this report is to find out what the potential is for Smart Integrated Decentralised Energy (SIDE) systems, a highly sustainable and resilient subset of microgrids, to contribute to the renewable energy transition by increasing the flexibility of the energy system from the bottom-up.

This was done by looking at, and improving on, the techno-economic performance of four different cases that currently represent the state-of-the-art of decentralised renewable energy systems: the Aardehuizen, De Ceuvel, Schoonschip and Republica Papaverweg. Using both real-world data from the Aardehuizen and De Ceuvel, and detailed design criteria for Schoonschip and Republica Papaverweg, a detailed overview of their performance could be attained.

Central to their performance assessment are four key performance indicators: local renewable energy production, self-consumption, capital investment and payback period. In order to find their respective values, an elaborate Energy System Model was developed, that is able to simulate the energy flows of the four cases considered all the way down to the house level on an hourly basis. This made it possible to gain insight into all the different system interactions and to combine them into a holistic overview.

The obtained results are promising, although they vary widely for each scenario. The resulting techno-economic performances of 9 different scenarios do not show a single optimal configuration. Rather, a number of best practices have become clear that can be used for the future development of the next generation of SIDE systems. In the most optimal case (Aardehuizen scenario 3), combining these best practices results in a techno-economically 05feasible system that is nearly completely (89%) self-sufficient – a major increase from its already good baseline performance (32%).

Although there are still plenty of technical, economic and legal barriers to overcome, the rapidly declining costs of decentralised renewable energy technologies combined with an increasingly favourable political climate will lay the foundation for the development of the next generation of SIDE systems.

Ultimately, SIDE systems represent a decentralised design philosophy that has the potential to radically alter the shape of our energy system system architecture. The local integration of heat and power systems not only allows for high efficiencies, resilience, and flexibility, it also requires new models of ownership and ways of thinking about urban planning and governance. This type of disruptive thinking might be just what is needed in the race to transform our energy system and meet our climate targets.

“We cannot solve our problems with the same thinking we used when we created them.”

Albert Einstein
The community of Aardehuizen has tried to be self-sufficient in terms of energy, creating a decentralised energy grid.

Introduction

The energy transition

The Dutch government has set ambitious goals to transform the national energy system. By 2030, it aims to have achieved a 20% share of renewable energy sources (RES) and a share of 51% (of which 46% solar PV and wind) of electrical renewable energy sources (RES-E).

Achieving these targets is no small feat. In 2017, the share of wind energy of Total Primary Energy Supply (TPES) is 1,66%, and the share of solar power of TPES is 0,37%.2 With electricity supply making up 19% of TPES, this results in a RES-E share of wind and solar PV of 10,7%. Therefore, reaching a 46% share by 2030 requires a growth rate of at least 13% per year if electricity demand were to remain stable (which it will not).

Sustaining such a growth rate is a daunting task, as the widespread implementation of wind and solar PV poses serious challenges to the stable operation of the grid. The intermittent electricity generation inherent to solar PV and wind leads to more variability, steeper ramping requirements, and less room for baseload.

In addition, the electrification of the heat and transport sectors – an essential requirement for a successful renewable energy transition – will lead to a very significant increase in both peak demand and total electricity demand.

Furthermore, wind and solar generation is often spread out over many small power plants (e.g. rooftop solar), instead of a single large scale plant. The decentralised deployment of renewable technologies requires a shift in the power system architecture from the traditional centralised model towards a decentralised model.

All these developments put tremendous stress on the energy suppliers and system operators that are responsible for balancing supply and demand. As such, they require massive and costly adaptations to the energy infrastructure, while the utilisation of assets (e.g. transmission lines and existing power plants) is expected to reduce from 55% to 35% by 2035.3 The transition also brings along the need for complex new control, market and ownership models, as well as the need for new regulations to facilitate these models.

In order to meet the Dutch climate targets for 2050 (80-95% reduction of CO₂ levels compared to 1990), “pretty much all available reduction options and potentials will have to be deployed.”

Local energy communities

One of these reduction options is the decision of the European Union to help facilitate the creation of local energy communities. By bringing citizens together in local energy cooperatives, they can help drive the energy transition by improving competition, providing local investment and increasing renewable energy production. By 2050, almost half of all EU households will be producing renewable energy, of which more than a third is participating in a local energy community.

Despite the recent gesture of the EU to support local energy communities, these communities still face significant market and regulatory barriers that are not well understood, or acknowledged by national energy regulators. Hence, there is a large gap between the current situation and the desired implementation and enforcement of EU rules that will allow these energy communities to engage in market participation. In order for local energy communities to thrive, there needs to be a level playing field and active monitoring and enforcement of EU rules so that prosumer rights are protected and discrimination is prevented.

EU Clean Energy Package

Article 16: Local energy communities

1. Member States shall ensure that local energy communities:

  1. are entitled to own, establish, or lease community networks and to autonomously manage them;
  2. can access all organised markets either directly or through aggregators or suppliers in a non-discriminatory manner;
  3. benefit from a non-discriminatory treatment with regard to their activities, rights and obligations as final customers, generators, distribution system operators or aggregators;
  4. are subject to fair, proportionate and transparent procedures and cost reflective charges.

Microgrids

Recent technological developments have put forward several interesting opportunities that can enable us to overcome some of the challenges of the renewable energy transition. Along with wind and solar PV, a promising new set of decentralised technologies has emerged. Examples of these technologies include – but are not limited to – heat pumps, batteries, district heating, micro CHP’s and fuel cells. Combining these technologies into local, integrated heat and power networks opens up many possibilities for exploiting technical and economical synergies, while increasing the resilience and sustainability of our energy system from the bottom up.

Hence, a solution to many of the renewable energy transition challenges is the development of microgrids: decentralised energy grids that can balance supply and demand locally through the utilisation of distributed energy resources. A microgrid is created by transforming a local distribution grid from a passive to an active network. This means that power is flowing both in and out of the system, and that it is controlled locally, which is what distinguishes a microgrid from distribution grids with local generation.

A microgrid provides benefits to multiple stakeholders. For the end users, it ensures a stable energy supply with higher power quality, and potentially a lower price. The utility companies benefit from added flexibility, congestion relief and increased power quality, as well as providing network support in times of stress by aiding restoration after faults. The owner of the microgrid (which can be the end consumers, utility company, or a third party) can reap the economic benefits of selling energy. Finally, there is the system-level benefit of increased energy efficiency as a result of reduced transmission and distribution losses.

For these reasons, ‘’Microgrids have been identified as a key component of the renewable energy transition for improving power reliability and quality, and increasing system energy efficiency.’’

For all their potential benefits, the challenges facing microgrids are immense. From a technical perspective, the system integration of many components requires advanced design, operation and control architecture. Equally important are the economic challenges; current market conditions prevent the implementation of microgrids through a lack of liquidity in the power market. Moreover, there are various laws and regulations that prevent the implementation of solutions that make sense from a technical perspective.

“Microgrids have been identified as a key component of the renewable energy transition.”

Overcoming these challenges will require close cooperation between end users, utility companies, lawmakers and energy companies. The first step towards the widespread implementation of microgrids is to recognise their potential to play a key role in the energy transition.

SIDE-system definition

A SIDE System is defined as a highly self-sufficient and sustainable microgrid, characterised by a high degree of integration between heat and power technologies, resulting in a flexible and resilient energy system at the local level.

  • Smart: managed intelligently through a local energy management system.
  • Integrated: maximising synergies between all components.
  • Decentralised: the system operates at the local level and has a clear system boundary.
  • Energy: heat and power systems powered by sustainable technologies
Note: a SIDE system is not necessarily an off-grid energy system. It can still be connected to the main grid. In fact, only 1 out of 9 scenarios considered in this report has no grid-connection.

Side systems

As part of the Topsector Energie Systeemintegratie Programme, the focus of this report’s analysis is to see how the flexibility of the national energy system can be increased so that a larger share of renewable energy production can be achieved. The flexibility challenge posed by the large-scale deployment of intermittent renewable energy sources is extremely complex and multifaceted. It should therefore be addressed from both the top-down and the bottom-up. In this report, however, we will purely focus on the local level.

This report will build on the knowledge obtained from several state-of-the-art microgrid pilot projects that focus on sustainability, self-sufficiency and smart energy management. To distinguish this special category of microgrids, they will be defined from now on as a Smart Integrated Decentralised Energy system, or SIDE system.

A SIDE system is characterised by a high degree of system integration of various renewable energy technologies. Although there is no clear threshold defined that determines the minimum number of components that constitute a SIDE system, as we will come to see, a SIDE system entails more than just a few solar panels and a heat pump (the current state-of-the-art for renewable energy systems).

At the root of each SIDE system is a holistic design philosophy, aimed at exploiting as many synergies as possible between components. For instance, a solar PV/heat pump combination can be used to convert excess PV power into heat, which can then be stored in a hot water tank that provides heat during the rest of the day. Pairing solar PV with a combined heat and power (CHP) unit enables energy generation in both summer and winter. This helps alleviate the seasonal variability on the grid, especially when the heat pump can be reversed in order to provide solar-powered cooling in summer.

As a rule of thumb, the higher the number of featured technologies within a SIDE system, the greater the potential for exploiting synergies becomes. On the other hand, the higher the number of components, the more complex the integration becomes. Therefore, to fully utilize their potential, it is crucial that the perceived complexity of SIDE systems is reduced through comprehensive design guides and easily accessible information on best practices.


The goal of this report is to generate knowledge on the potential for SIDE systems to help improve the flexibility of the energy system. This is done by determining the technical, economic and legal feasibility of SIDE systems for different existing use cases. This knowledge will assist new initiatives in the development of integrated energy systems at the neighbourhood level, in order to help strengthening the energy system from the bottom up.

The four use cases are:

  • Aardehuizen:  a self-sufficient ecovillage consisting of 23 earthship-type houses
  • De Ceuvel: a former shipyard turned cleantech playground
  • Schoonschip: Europe’s most sustainable floating neighbourhood
  • Republica papaverweg: a highly circular mixed area development

For a detailed breakdown of the methodology, as well as an analysis of multiple scenarios in each use case, please refer to the PDF. An extract of the conclusions is included below.


Discussion

General results

The four cases analysed in this report each represent the state-of-the-art in sustainable building technology within their respective context. The differences in boundary conditions, design philosophies and desired outcomes have resulted in a different SIDE system configuration for each case, and each corresponding scenario. Each SIDE system is therefore unique and has to be treated as such. There is no one-size-fits-all configuration when it come to SIDE systems. As a consequence, it is difficult to reach a clear overall verdict on the four defined KPIs; production, self-sufficiency, capital investment and payback period, as the nine scenarios considered in this report vary widely in their techno-economic performance. Some have great technical performance and poor economic performance, and vice versa.

Production

The wide variability is easily demonstrated when it comes to local power production, one of the four key performance indicators of this research. It ranges from 18% for RP1 to 100% for SS2, with an average of 67%. For each first scenario of the four cases, the average renewable power production only amounts to 41%. This shows that there is still a long way to go from the current state-of-the-art in neighbourhood sustainable energy systems, towards fully renewable building energy systems.

Self consumption

The variability is no different when it come to self-consumption, ranging from a meager 6,2% for DC1, to a full 100% for SS2, and everything in between. There is no clear correlation between the self-consumption ratio and the total amount of production or consumption: it all depends on the particular system configuration. One thing that can be said about the self-consumption, is that it is quite low for every first scenario of each case, ranging from 6,2% for DC1 to 33,1% for SS1, with an average of 21,3%.

Although achieving a 100% self sufficiency is not necessary when connected to the main grid, the self-consumption figure does represent an important aspect of a SIDE system: namely the flexibility and resilience that is inherent within it. SIDE systems with a high self-consumption percentage are not only able to manage their local energy flows in more optimal ways, resulting in both technical and economic advantages, they can also provide flexibility services outside of the confines of their neighbourhood. Although this has not been looked at in this study, it could potentially provide an interesting direction for further research. 

Capital investment 

Similarly, the economics of the considered SIDE systems vary widely from scenario to scenario. It is without exception, however, that SIDE systems are more expensive than traditional grid/gas-based systems, with the cheapest system considered (RP1) still being more than twice as expensive. The reasons for this are obvious: the investment for a SIDE system includes investing not only in distribution infrastructure (as in the traditional case), but also the production infrastructure. Since the SIDE systems for every case (except Republica Papaverweg) was assumed to be cooperatively financed, the capital investment is made by the same people who end up using the system. The high capital investments form a barrier for the realisation of SIDE systems, which is why alternative methods of financing ought to be considered. 

Table 1: Overall grading for the nine different SIDE system scenarios. 
Table 2: Table: Self-consumption analysis for the nine different SIDE system scenarios. Unit: MWh

One example of such an alternative is given by the ESCo model of Republica Papaverweg, in which the capital investments of the energy system are outsourced to an external party responsible for the reliable delivery of energy. This model could potentially allow for a more acceptable financial proposition for project developers and cooperatives interested in realising a SIDE system. Legally, this kind of financial structure does pose a certain risk, as an end-consumer of energy is, by law, free to choose its own energy supplier. It is therefore essential that each end-consumer within the SIDE system accepts the ESCo as its preferred energy supplier. 

Payback Period 

High capital investments are an inherent property of any SIDE system, but so are low operational costs. As a result of low marginal cost of renewable energy production, the payback periods range from 5 to more than 20 years. With an average payback period of 12,5 years, most SIDE system configurations will not be an attractive proposition for investors. 

However, if the investors are, in fact, the end-consumers – as is the case with energy cooperatives – then higher payback periods could potentially pose less of a problem. After all, when buying a house, people tend to accept mortgage periods of 15 years and over. If the SIDE system can be included within the mortgage, then the additional costs on the mortgage payment are offset by the reduction in utility bills. Such a construction is cheaper on the whole, although potential homeowners may find it harder to get a larger mortgage arrangement. Perhaps a first few pilot projects can convince banks of the economic attractiveness of SIDE systems and help support energy cooperatives in their financial needs in the future. 

On to a higher building standard 

After analysing the four different scenarios, it becomes clear that the current standard of what entails a highly sustainable building energy system, the Energie Prestatie Coefficient (EPC), is not adequately equipped to facilitate the large scale rollout of intermittent renewable energy generation technologies. There is currently no consideration for the enormous additional strain that building energy technologies (e.g. heat pumps, electric vehicles and solar panels) put on the main grid. In order to prevent expensive infrastructure upgrades and to relieve the grid of increasingly volatile loads, building energy systems should aspire to address the issue of flexibility, by finding ways to intelligently reduce their imbalances. 

As exemplified by the first scenario of every case, the current best practice is essentially characterised by two components: solar panels and heat pumps. Both have a negative effect on the flexibility within the grid, as both have a strong seasonal imbalance, with solar power also having a strong daily imbalance. The combined overproduction of solar power in summer combined with the demand increase in heat pump power, results in an amplified seasonal imbalance that puts extra strain on both the grid operators and energy suppliers. Overcoming the daily and seasonal imbalances associated with solar PV and heat pump installations can therefore be identified as the main hurdle for any SIDE system. 

Performance aspects

Instead of trying to draw conclusions on the overall performance of widely dissimilar systems, it is better to step down a level and look at the various recurrent patterns of component interactions across the different scenarios: 

Solar powered heating: essential but moderately effective

Solar panels in combination with heat pumps form the basis for every SIDE system. Unfortunately, the overlap between solar power production in summer and heat pump power consumption in winter is relatively small. Still, depending on the amount of solar power, around 10-30% of the heat pump power consumption can be derived from the sun for a heat pump-PV combination with no other form of heating (AH2, DC1, DC2, SS1, RP1), mostly in spring and autumn. It is important for these heat pumps to have access to a hot water tank so that they can store the heat produced during sunny times for use at a later time in the day. Air-to-water, ground-to-water and water-to-water heat pumps are therefore preferred over air-to-air heat pumps.

Table 3: Solar powered heat pump heating as a percentage of self-consumption and heat pump electricity consumption.

The self-consumption increase that can be attributed to coupling a heat pump with a solar PV installation depends on the circumstances, such as the presence of other generation capacity (e.g. CHP or wind turbine). For the pure solar PV-heat pump cases (AH2, DC2, SS1), around 25% of self-consumption can be attributed to solar powered heat pump heating, given that their control is optimised for self-consumption through an energy management system. 

Ultimately, a heat pump/solar PV combination is energy efficient and sustainable, but not sufficiently flexible. 

Solar powered cooling: an excellent match

The possibility for peak-shaving solar power with the use of cooling systems is very attractive. After all, the demand for cooling is highest on warm, sunny days. Operating the cooling system in tandem with solar power production is, therefore, an obvious choice. 

Table 4: Solar powered cooling as a percentage of self consumption and heat pump electricity consumption.

Only one case used a cooling system for their building: Republica Papaverweg. Its cooling system simply reverses the heat pump cycle to become a refrigeration cycle, distributing cold water from the seasonal storage throughout the building’s network. 

In both scenarios, solar power makes up a high percentage of cooling power. This would have been even more for the first scenario if the solar power would have been able to match peak cooling demand. When solar power peak capacity can meet the peak cooling demand, as is the case in scenario 2, the cooling system can operate almost completely on sustainable electricity. 

The large overlap between solar power production and cooling demand make the solar PV – cooling combination an excellent choice. Not only does it allow the cooling system to operate nearly completely on renewable solar power, it also significantly increases the self-consumption (14- 26% for RP), while reducing energy spikes. 

Solar heating panels: ineffective with heat pump and solar PV

Solar heating panels may seem like an attractive option for producing hot water using solar energy. For SIDE systems, however, their use is quite ineffective. The reason being, that nearly every SIDE system will have at least a heat pump and a solar PV installation due to their excellent performance. If this combination is already present, it is more effective to produce heat using the solar powered heat pump, than it is to produce heat via solar heating panels. Even though solar heating panels can be over four times more efficient in terms of energy produced, the COP of a heat pump essentially brings the solar PV efficiency on par with that of a solar heating panel. In economic terms, there is not much of a difference. Add to that the fact that a heat pump can be used to peak-shave some of the solar power spikes, and it becomes clear why solar heating panels do not have a well-defined role to play in SIDE systems. 

Urban wind power: effectiveness highly dependent on circumstance

Wind power is currently the largest source of renewable electricity in the Netherlands, with 6,95% of electricity consumption in 2016 generated from wind.10 The majority of this power is generated in large scale wind farms, with roughly 70% of electricity generated on land and 30% at sea.11 The market for small-scale wind power is very small compared to the bigger projects, with only 0,3% of wind power generation coming from turbines with an axle height <30m, but there is plenty of room for growth. 

Figure 4: Wind speed in the Netherlands in meters per second at a height of 10m.
Table 5: Wind power production and self-consumption.
Table 6: Battery performance statistics for the different scenarios assuming a 500 EUR/kWh battery price and a battery lifetime of 15 years.

The case for small scale wind turbines in SIDE systems is highly dependent on a couple of factors. By far the most critical issue is that of location: the importance of having sufficient wind (>4,5 m/s preferably) resources in an area cannot be stressed enough. The difference between an average wind speed of 4 m/s and 5 m/s results is a factor 2 in energy output, due to the cubic relation between wind speed and energy output. Another important aspect is the local surroundings: urban environments generally do not have the space nor the wind speed to facilitate a wind turbine. On top of that, regulations restrict the placement of wind turbines in most urban areas. This mostly leaves rural and industrial areas with sufficient wind speed open to consideration for the placement of a wind turbine. 

Given that these criteria are met, a wind turbine can prove to be a valuable asset for a SIDE system. Increased power output in winter due to high wind speeds nicely complements solar power output. Similarly, wind blowing at night can be used to charge electric vehicles, when solar power can not. 

It is important to consider the variability and intermittency of wind power production, which results in a highly erratic production profile. A wind turbine is therefore best suited in SIDE systems with a high number of load balancing components, such as electric vehicles, heat pumps and batteries. 

In the two cases considered that feature a wind turbine (DC2 and SS2), the wind turbine performs quite good. Even if we disregard the fully off-grid fantasy scenario that is SS2, the percentage of self-consumed wind power is 63%, which is significantly better than solar PV. With an average wind speed of 3,9 m/s for both cases, the levelised cost of wind power equals 0,18 EUR/kWh. Although this is cheaper than grid electricity, it takes over 15 years for the investment to pay itself off. Note that, if the wind speed were to be 1m/s higher, the wind turbine would pay off within 8 years. 

Batteries: useful but still too expensive

Perhaps the most obvious way to increase the flexibility of an energy system is to add buffering capacity in the form of batteries. Older, yet well-matured battery technologies such as lead-acid batteries suffer from high (>30%) losses and are therefore too inefficient for intensive energy management. Li-ion batteries, with losses of only 10%, are becoming a more attractive option. The recent surge in electromobility has greatly reduced the cost for Li-ion batteries: over 70% since 2012.12

12Lithium-ion batteries below $200/kWh by 2019 will drive rapid storage uptake, finds IHS Markit

Still, residential battery modules are too expensive in their current state. None of the scenarios considered manages to break even on its battery investment, even when assuming net-metering has been replaced by a feed-in tariff. The levelized cost of storage varies from 0,22 to 0,29 EUR/kWh,13 which is significantly higher than the price of electricity. Depending on the height of the feed-in tariff (that will replace the current net-metering starting 2020), which is still a matter of uncertainty at the time of writing, another 70-90% decrease in battery costs is required for batteries to become an economically attractive option, when the difference between the electricity price and the feed-in price exceeds the Levelised Cost of Storage. With current cost reduction trends continuing, this price point will be reached somewhere before 2030.

13Excluding Republica Papaverweg, whose battery is not designed for optimal self-consumption.

The battery performance is fairly constant across the considered cases. Self-consumption increased between approximately 10-20%, depending on circumstances such as the presence of a wind turbine and the amount of solar PV compared to total consumption. The usage of the batteries is good for all cases except Republica Papaverweg: at approximately 200-250 cycles per year, the battery will make 3000-3750 cycles throughout its 15 year lifetime, which is roughly its cycle lifetime as well (3000-5000 cycles).

From a pure self-consumption point of view, batteries are moderately effective and still too costly. However, a battery can perform many other useful ancillary services to the microgrid that cannot be expressed in energy savings alone. Examples of such services include frequency regulation, power quality control, backup power supply and peak-shaving. Determining the values of these services is outside of the scope of this research, but could prove vital to the operation of not only the SIDE system itself, but also the grid at large. All in all, in due time, batteries will most likely prove themselves to be a vital part of any sufficiently advanced SIDE system.

Electric vehicles: enormous challenge or big opportunity?

Electric vehicles will be a key ingredient of the smart grids of tomorrow. Their large energy consumption and high power spikes are both a challenge and an opportunity. Our current power infrastructure may not be sufficiently prepared for the increase in peak power demand. However, if their energy consumption can be intelligently controlled using smart charging software, as was done in the model used for this report, EV’s can greatly increase local self-consumption, while simultaneously reducing peak demand.

Although solar power can be used to charge EV’s during the day, most EV’s will be charged primarily in the evening. A solar power system is therefore not fully equipped to provide most of the EV’s charging needs, as exemplified by scenario AH2: more than 50% of power still has to come from the grid. However, in cases with additional sources of renewable power generation, the reliance on grid power is greatly diminished (AH3, DC2, SS2, RP2). All renewable generation technologies (solar PV, wind, and CHP), can provide between roughly 20-40% of EV’s charging needs, depending on sizing and circumstances.

In any case, electric vehicles have a very positive effect on self-consumption, ranging from 17% to 79%, depending on the share of EV’s and the specific SIDE system configuration. EV’s therefore form an essential component of any sufficiently advanced SIDE system.

Table 7: Electric vehicle energy consumption as a percentage of self-consumption.

Conclusions

By looking at four different cases, each with their own unique set of boundary conditions, a detailed overview of the performance of a set of widely different SIDE system configurations was constructed. Central to their performance assessment were four KPI’s: production, self-consumption, capital investment and payback period.

Detailed analysis using a time-series simulation model revealed widely different outcomes for the four KPI’s, both per case individually and across the cases themselves. This variability in outcomes makes it hard to generalise the conclusions. Still, it has become clear that there is a wide range of techno-economically feasible SIDE systems for an evenly wide range of use-cases. Although SIDE system configurations and performance are highly context-specific, residential neighbourhoods, office parks and mixed area developments can all benefit from the system integration that SIDE systems can offer.

The goal of this study was to investigate the feasibility for Smart Integrated Decentralised Energy (SIDE) systems to contribute to the resilience, flexibility and circularity of the Dutch national power system infrastructure, so that the ambitious renewable energy targets for 2030 can be met. The potential for SIDE systems to support the energy transition from the bottom-up is clear; some of the systems outlined in this report, such as Aardehuizen scenario 3, demonstrate an almost fully (89%) self-sufficient and techno-economically feasible energy system. It’s highly synergetic local energy systems like these that can greatly improve the flexibility and resilience of our national energy system, without requiring expensive infrastructure upgrades.

The decentralisation of production and consumption of renewable energy allows for interesting new business cases that force us to rethink the way we structure, design and control our energy system. The line between producers and consumers of energy is blurring, as more and more people take matters into their own hands and form energy cooperatives that produce and distribute their own renewable energy. Ultimately, the bottom-up design philosophy that SIDE systems embody may prove to be an essential cornerstone on which to build our fully renewable energy system.

Urban neighbourhoods are a less-tested but ideal place for decentralised energy grids. De Ceuvel is pictured here.

Takeaways

With the outcomes of the analysis of nine different scenarios, several conclusions, recommendations and best practices have been identified that can aid the development of the next generation of microgrids, i.e. SIDE systems. They are summarised below:

  • Both solar panels and heat pumps are essential components to any SIDE system. They have good technical and economic performance and provide the basis for local heat and power production. A solar PV – heat pump combination can result in approximately 25% extra self-consumption of solar power, although it also results in high seasonal power imbalances
  • Solar power performs very well in combination with cooling systems; reducing power peaks while increasing self-consumption.
  • Solar heating panels become obsolete in the presence of a heat pump and solar panels, and therefore do not play a well-defined role in SIDE systems.
  • Urban wind turbines can be a good option provided that the circumstances are right and there is local opposition. Their business case is highly dependent on wind speed, thereby excluding most urban locations.
  • Combined Heat & Power units can be a very effective addition to a SIDE system as they flexibly provide heat and power at those times it’s needed most (winter). However, they require active control and maintenance, as well as an external biomass source. On top of that, their business case is heavily reliant on subsidies.
  • Based on energy storage alone, batteries are still a factor 3-10x too expensive to incorporate in SIDE systems economically, depending on the height of the feed-in tariff. However, their economic feasibility may increase if there is a need for other services the battery can provide, such as backup power supply, power quality management, or offering flexibility to the power market. By 2030, their business case should be solid.
  • Electric vehicles are an essential component of any sufficiently advanced SIDE system, as they allow for substantial local energy management. Smart charging algorithms can greatly increase the self-consumption of renewable energy.
  • District heating systems are a good choice for any SIDE system. They greatly improve the system integration, energy efficiency and overall flexibility of a SIDE system. High capital costs can be mitigated by the resulting scaling advantage of the heating systems.
  • The difficulties surrounding traditional Seasonal Thermal Energy Storage systems can be mostly overcome through smart integration with other technologies. STES systems can therefore be a great addition to many SIDE systems.
  • Local energy trading allows for a modest increase in self-consumption and can help incentivise smarter energy systems, provided that regulatory barriers can be overcome. Ideally, smart-grid technology will allow for a real-time local energy price, similar to the stock market. Local price signals will then help create a highly flexible system.
  • Although combinations between two individual SIDE components tend to have modest synergies with one another, most components have synergies with multiple other components. These effects stack up to create a highly symbiotic energy system, as exemplified by the latest scenario of each case.
  • Local Energy Management Systems are complex in nature and raise many important issues regarding our energy infrastructure and legal architecture. It is safe to say that LEMS technology is not yet mature. Hopefully the lessons learned from pilot projects such as the ones considered in this report can help LEMS technology get through puberty.
  • Hydrogen systems (fuel cell, storage, electrolyser), despite some unique properties that can aid SIDE system performance, are too inefficient and expensive to be a realistic component of most SIDE systems, with the exception of off-grid cases (e.g. islands).
  • The experimenteerregeling in its current state is still too restrictive to fully unlock the potential of SIDE systems. Ideally, the experimenteerregeling allows a microgrid to have a single connection, with every house or connection behind it aggregated into a single entity. Although difficult for tax reasons, it will improve local energy trading and help create more interesting business cases.
  • The brutoproductiemeters required for the SDE+ subsidy have a severely negative effect on the business-case of microgrids with many different small-scale PV-owners such as the ones assessed in this report.

Colophon

Research Consortium

Metabolic, Spectral, De Ceuvel, Aardehuizen, Fraunhofer

Special thanks to

Philip Gladek (Spectral), Wouter de Graaf (Aardehuizen), Chandar van der Zande (De Ceuvel)

Project lead

Eva Gladek

In partnership with Spectral. This project is executed with a subsidy from the Dutch Ministry of Economic Affairs, National arrangements EZ-subsidies, Topsector Energy executed by the Netherlands Enterprise Agency