Impact of Natural Gas Distribution Network Structure and Operator Strategies on Grid Economy in Face of Decreasing Demand

Abstract

Currently, natural gas provides more than a third of the energy used in European residential buildings. As part of the general decline of fossil fuels, this gas consumption is predicted to drop in several countries by 25–100% by 2050. We model a decline in gas consumption in 57 urban German distribution grids looking for the influence of grid-specific factors and different distribution network operator (DNO) strategies on grid charges. We find a functional relationship between grid length and customer amount described by a power law, with an exponent correlated with structural grid parameters. The disordered structure inherent to grids typically results in a decline in grid costs much slower than the corresponding demand. We introduce a simplified yearly cash flow calculation model based on the power law and validate it against mixed integer linear optimization. A comparison of the total costs of operation and resulting grid charges for several scenarios and strategies estimates the effects on DNO business models. Depending on a combination of DNO’s strategy and customers’ exit pattern, grid charges may increase, accelerating the substitution of gas-bound technologies that might develop into a self-reinforcing feedback loop, leading to grid defection.

Interdependencies of Infrastructure Investment Decisions in Multi-Energy Systems—A Sensitivity Analysis for Urban Residential Areas

“…As heat applications account for 61% of the gas demand on average for all 28 EU countries [2], energy efficiency improvements or a substitution of gas-based systems have a strong effect on the gas network operator's supply task and thus on its future business model. An economic risk will arise for the gas distribution network operators (DNOs) in the future: If energy efficiency rises and the number of gas customers drops, a disproportionately long gas network has to be operated for a decreasing amount of energy, which-depending on the DNO strategy and regulatory environment-leads to a decrease in the profitability of the grid and finally to an increase in grid charges [16,17] (Figure 1). We postulate a self-reinforcing feedback loop between building energy retrofit decisions and gas and electricity grid charges, which increase the risk of a complete defection of the natural gas grid.…”

“…There are studies that investigate the interactions between investment decisions in buildings and investment decisions of the grid operator in the electricity sector mostly with the focus on self-supply [31][32][33][34]. Work exists that has transferred these approaches to the gas sector: Some focus on the development of the gas DNO's business model and the corresponding grid charge development [16,17]. Others examine the feedback effect between actors in a specific network area and analyze the impact of variations in the regulatory and political framework and DNO strategies [22].…”

A GIS-Based Planning Approach for Urban Power and Natural Gas Distribution Grids with Different Heat Pump Scenarios

“…A comparison of optimization methods of gas distribution grids is presented in [39]. The uncertain necessity of dismantling parts of the distribution grid in different ways due to a possibly declining natural gas demand has been recently addressed in [40]. The effects of increasing grid charges for natural gas that incentivize energetic refurbishment have been further investigated in [41].…”

pandapipes: an Open Source Piping Grid Calculation Package for the Application in Coupled Multi-Energy Grid Simulations

“…• Assessment of supply options with different energy infrastructures: With increasing interconnection of infrastructures the way of supplying energy to end consumers can vary greatly. For instance, Then et al [5] give an overview of studies on the controversial role of the natural gas infrastructure and elaborate on the effects that a decline in energy demand can have on grid charges. In [6] they resume that increasing grid charges could accelerate gas grid defection as a self-induced effect.…”

“…This planning process in future needs to address the increasing interconnection to other infrastructures and new opportunities for flexibility trading or storing energy [8]. Approaches should take into account the possibility to rededicate parts of the infrastructure to other carriers or even remove infrastructure that is not required anymore [2,5]. It is crucial to identify suitable investment paths towards a future supply infrastructure taking into account the longevity and high capital expenditure of infrastructure assets.…”