Holistic analysis of consumer energy decarbonisation options and tariff effects

Michael Ryland and Wei He

Applied Energy, 2024, vol. 353, issue PB, No S0306261923015295

Abstract: The consumers' perspective on low-carbon technologies is critical to decarbonise their emissions, the effect from the array of modern tariff structures and the dramatic variation in tariff rates on the technology viability is yet to be realised. Here we present a comprehensive holistic approach that includes electrification and hydrogen options to understand the trade-offs in technologies and tariffs for consumers in their energy decarbonisation which is missing from the technology specific analysis in the literature. The novel framework considers all consumer demands simultaneously through combinations of different low-carbon technologies over a 20-year lifetime, linked with conventional and emerging electricity tariff structures. Using the UK as a case study, we found that electrification is more cost-effective than hydrogen for most consumers to reduce their energy emissions and that the lowest 20-year low-carbon solution of air source heat pump, electric vehicle, and photovoltaics may have slightly (9%) higher lifetime cost to the gas boiler and petrol car baseline but can achieve 54% emission reduction using the grid electricity mix and energy tariffs in 2020. In terms of technologies, electric vehicles and solar photovoltaics are the only evaluated technologies that have the potential to reduce customer's energy costs, 8% and 0.2% respectively, alongside emissions reductions, of 28% and 2% respectively. Energy storage technologies, though significantly benefit the grid by unlocking demand-side flexibility, were not economic beneficial to customers until the tariff increase due to the energy crisis. Designing the average day rate of a tariff is most important for adopting electrified heating, on the other hand energy storage use requires low off-peak rates, where we quantified the minimum required difference in tariff peak to off-peak rates to allow energy storage financial justification. This learning can be used to help incentivise consumers to adopt these technologies, allowing greater system benefits.

Keywords: Decarbonising; Heating; Transport; Energy storage; Tariff (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1016/j.apenergy.2023.122165

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