Thermal energy community-based multi-dimensional business model framework and critical success factors investigation in the mediterranean region of the EU

Abstract

Rural areas have gained relevance in the EU policy framework as a result of the experienced depopulation trend experienced in these areas. Smart Rural Communities are recognized as effective means to tackle this issue by delivering smart services to local population leading to improved economic competitivity. One of the major challenges, among others, is to deliver renewable energy matching existing demand in opposition of fossil-fuel based solutions. To this end, Energy Communities (EC) potential to deploy Renewable Energies (RE) while improving supplier – consumer engagement and empowering the energy consumer. Despite the advances throughout the EU in the deployment of ECs, the vast majority of them are based on PV systems, leaving a huge path for development of novel business models for thermal energy communities, mainly due to the existing economic and social barriers to thermal energy communities’ deployment.The present work aims at contributing to the closure of this research gap by systematizing community-based business model arrangements for thermal energy communities’ deployment to then identify the relevance of main affecting parameters and identify the critical success factors for business model success. To do so, a novel multi-dimensional business model framework is proposed to promote the deployment of Thermal Energy Communities based on the use of local biomass with a District Heating (DH) network distribution system. The proposed framework analyses business model viability in terms of economic and environmental benefits for different EC layouts according to spatial configuration of the demand –clustered/urban vs. scattered/rural – and to demand profile – industrial/low seasonality vs. residential/high seasonality. Results show that business models are economically viable in terms of payback period below boiler service life and NPV/IRR of the investment needed for all cases, although best results are obtained for clustered and industrial demand as a result of lower investment requirements to deliver the same amount of energy. Critical success factors to ensure business model viability are also investigated, finding the minimum natural gas tariff that makes economically viable the thermal EC business proposition. Last, the business model incorporates the use of digital tools for biomass traceability and low carbon certification enabling local biomass use and supplier – consumer transparency that promotes greater stakeholder engagement. Also, biomass digital traceability is aligned with current regulatory framework in the EU, namely the Renewable Energy Directive (RED II) and the upcoming revision of it (RED III), making the EC business model up-to-date and competitive in terms of services offered to the end-user.