Search

• We present soft linking of energy system capacity expansion models. • Zero emission neighbourhoods make European decarbonization more cost-efficient. • Neighbourhood energy systems replace investments in nuclear, wind, and fossil gas. • Politically decreasing EU ETS emission caps earlier could avoid CO 2 price spikes. Climate policy is transforming the energy system and the building sector. Since these sectors overlap, we need to understand how the short-term operational link between them impact their long-term development subject to overlapping climate policies. This paper investigates how the integrated development of the European heat and electricity system is influenced by net-zero emission neighbourhoods that compensate own carbon emissions with local renewable energy. The study is made in the context of EUs emission trading system. In our approach, we soft-link two mathematical programming models to couple energy transition policies at the European level with the neighbourhood scale. Results suggest that zero emission neighbourhoods make European decarbonisation more cost-efficient. When low carbon energy technologies in neighbourhoods become competitive, investments in large-scale technologies are reduced on the European level, including nuclear and fossil gas power and heating. Thus, early policy support to neighbourhood technologies could prevent stranded assets later in the transition. Further, results imply that more stringent emission caps earlier could help avoiding CO 2 allowance price spikes later. [ABSTRACT FROM AUTHOR]

Existing literature on Zero Emission Neighborhoods (ZENs) and Buildings (ZEBs) only allow for reaching the zero emission target locally. This paper evaluates the impact of allowing to buy CO 2 compensation to reach that target in the design of ZENs. This is motivated by questions regarding the relevance of investing in local renewable production (mainly from PV) in a power system dominated by renewable hydropower. Further, it contributes to the existing literature regarding ZENs and ZEBs by highlighting the importance of the choice of the CO 2 factor of electricity for the design of ZENs' energy system. A case study illustrates the impact of those choices on the resulting energy system design using the existing ZENIT model. Three CO 2 factors for electricity are used in the case study: a yearly average CO 2 factor for Norway (18 gCO 2 ∕ kWh), an hourly average CO 2 factor for Norway and a yearly average European factor (at 132 gCO 2 ∕ kWh). The energy system design of the ZEN is little affected when using hourly CO 2 -factors compared to yearly average factors, while the European factor leads to less investment in PV. Hourly marginal CO 2 emission factors are also investigated using three accounting methods. There large differences in energy system design and emissions depending on where the factor is applied. The price of external compensation is varied between 0–2000 €/ tonCO 2. A lower price of external CO 2 compensations mainly reduces the amount of PV investment. Allowing the purchase of CO 2 compensations at 250 €/ tonCO 2 could reduce the total costs by more than 10%. • Average European emission factors results in less PV investment. • Hourly and yearly average factors give minor investment differences. • Allowing the purchase of external compensations results in overall cost reductions. • With marginal factors, what it is applied to (which imports or exports) is important. • Increasing CO 2 price leads to an increase of the size of PV and heat pumps. [ABSTRACT FROM AUTHOR]