The importance of sector coupling for a gas DSO. Eva Hennig Energy Utility Week, 2017 Amsterdam

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1 The importance of sector coupling for a gas DSO Eva Hennig Energy Utility Week, 2017 Amsterdam Munich, March

2 Cooperation creates added value this conviction allows the Thüga Group to master any challenge. Partnership Model: Broaden our shareholdings Focus on appropriate regional investments Enhance the business of our shareholdings Provide consulting and support services Develope existing platforms Offer competitive services for our partner utilities 2

3 The basic idea of the Thüga Model is independent companies cooperating in a common network. Cooperation within the Thüga Model: Responsibilities of our Partners Provide market proximity H A B Management and operation of energy supply systems Local sales and customer service Promotion of the local brand G Thüga Model C Thüga Business Activities Investment partner for cities and towns Minority shareholder with consulting services. Adds value by F E D providing guidance as to how invest funds and manage risks coordinating cooperation benchmarking Supply energy directly Shared services 3

4 The Thüga Group constitutes the largest alliance of municipal utilities in Germany. Key figures : Turnover 19.0 billion Gas sales billion kwh Heating sales 9.0 billion kwh Investments 1.0 billion Electricity sales 49.8 billion kwh Gas customers 2.0 million Water sales billion m³ Electricity customers 4.0 million Employees 17,200 Heating customers 0.1 million Water customers 0.9 million 4

5 Sector coupling means physically linking gas, electricity, heat and mobility infrastructures and thus making renewable energies systematically, economically and macroeconomically effective in all sectors. Thus sector coupling becomes an integrated decarbonization project. Source: DVGW, VDE 5

6 Gas DSO have invested in millions ok km of grid that can be used in the effort for the decarbonisation Storage of renewable electricity is just one topic in a gas grid Grid for storage Injection of Biomethane and H2 Grid for distribution CHP: local electricity and heat production close to the consumer has many advantages Biomethane: more existing plants will be connected to the grid Decarbonise Industrial consumers Injection of H2 CHP in all sizes Maybe? more Decarbonise Heating consumers Connect filling stations Decarbonizing industrial applications: the availability of efficient applications and low CO 2 abatement costs are key. Decarbonising Heating: deep renovation rates are low, switch to electricity heating will take ages Gas in transport: fuel cells can play an important role. DSO start to think about the conversion to H2 infrastructure (Leeds Project) 6

7 Optimal cooperation should be the goal of the energy sector instead of the individual optimization of each infrastructure Source: Eurogas

8 Peak demand for heating is always in winter where electricity from PV is low and wind strongly intermittent Peak load for heating is 7x higher than for normal electricity usage Heating demand is extremely seasonal Putting all loads on a single infrastructure, e.g. electricity, requires a massive build-up of grids and additional renewable and back-up generation capacity for a low number of utilisation hours Source: Thüga, Agora Energiewende

9 Due to a phase of Dunkle Flaute in Jan 2017 all available power plants were operating at full throttle Source: Agora Energiewende 9

10 Germany operates km DSO grid. 1 km of grid stores between 1,3 to 33 MWh of electricity in the form of SNG. The level of the storable energy depends on the pressure level in the grid and the usable pressure level. Many DSO operate high pressure grids up to 84 bar. And a gas spehre stores up to 500 hours Source: Thüga 10

11 The DSO have to move now and showcase their solutions to be part of the decarbonization path at the lowest societal costs But: To be successful political and regulatory barriers have to be removed Start-up financial support is needed for a limited time similar to other renewable energies. P2G plants shall not be considered as an end consumers in regards of levies and fees. P2G can reduce investment for grid extensions on electricity TSO and DSO level, which should be remunerated. Technical rules have to be adapted to increase the percentage of hydrogen in gas grids. Renewable Hydrogen or SNG must be recognized as biofuels and count towards energy efficiency Solutions in Addition with biomethane If market tests prove a lack of investments in filling stations, DSO should be allowed to invest until the market picks up. 11