Tools - Modelling Systems

RESolve-H/C

RESolve-H/C is a model covering the renewable heating and cooling (RES-H/C) in the 27 European Union Member States (EU-27). The model assesses scenarios for future penetration paths of renewable heating and cooling technologies, such as solar thermal, deep and shallow geothermal and various biomass options. The assessment is based on an analysis of costs and benefits of replacing fossil fuel-based technologies with renewable technologies. In the model three demand sectors are distinguished: households, services and industry. Renewable heat support measures, such as investment subsidies, feed-in tariffs and tax exemptions are included. The model has been used in the RES-H Policy (www.res-h-policy.eu) project and in Biomass Futures.

The RESolve-H/C model consists of numerous consecutive steps, which can all be attributed to two main loops

1. Determining the potential of RES-H/C per sector
2. Determining the penetrations of RES-H/C per sector under various policy assumptions

Starting point for the modelling work is based on EU-27 wide data sources. Applying and evaluating a series of generic datasets ultimately yields a set of potentials for RES-H/C penetrations. The modelling approach can be summarised in four steps A to D as follows:

1. Based on various data sources, energy use per energy carrier is determined for each of the three demand sectors on a per temperature range classification, up to the year 2030.
2. Each of the abovementioned decomposed energy uses are assigned to energy conversion technologies, based on statistical information.
3. Applying a series of substitution and exclusion rules, a set of constraints is compiled which indicates where substitution opportunities for RES-H/C are available.
4. Once this realisable potential has been defined, additional constraints determine the extent to which renewables options effectively penetrate into the market. In this way, price effects of substitution of non-renewable energy sources, policy measures, and stakeholder behaviour are considered and evaluated.

The figure below shows the calculation sequence in more detail.

  

Steps A to D result in projected RES-H/C penetrations in the three demand sectors covered, and derived indicators such as required budget for investments and impact on CO2-emission. The profitability of investment in a renewable heat technology can be determined once the costs and avoided costs are known. For each possible investment, an Internal Rate of Return (IRR) is calculated. The IRR is the interest rate that makes the net present value (NPV) of the investment equal to zero. The cash flows are based on perfect foresight. Future energy prices are input to the model. The model considers the cash flows from the perspective of the investor. Important components of the cash flows are investment costs, benefits from reduction of the energy demand and consequently the avoided fuel costs due to savings on non-renewable energy carrier expenses. Also subsidies, CO2-costs from emissions trading, taxes and transport and distributions costs for energy can be taken into account. Cogeneration has an effect on the cash flow through the electricity sales.

For more information please contact RESolve.