Abstract

This study investigates a method for quantifying the climate impact of flexibility solutions in the electricity grid and compares how emissions vary across different grid development scenarios. Flexibility solutions can reduce peak demand by reallocating local resources as needed, and offer an alternative to conventional electricity grid expansion, which is typically associated with long time horizons and climate impact from material extraction and manufacturing. The analysis includes postponed, reduced or avoided electricity grid expansion enabled by flexibility markets. In addition, the study aims to develop a general method for estimating the climate impact of flexibility solutions.

The methodology is based on two case studies, conducted in Hässleholm and northeastern Skåne in Sweden, where the climate impact of both grid expansion and participants in flexibility markets is estimated for the seasons 2024-2025 and 2025-2026. The results from these case studies are used to analyze the three development scenarios in each region. Furthermore, a generalized method for calculating the climate impact of flexibility solutions is also presented.

The study’s results demonstrate that the climate impact of flexibility solutions can be quantified using a method that combines life cycle assessment of grid expansion, with emission calculations for flexibility resources based on their respective emission factors. The northeastern Skåne flexibility market has more actors with lower emission factors than Hässleholm, while the northeastern Skåne grid expansion emitted more carbon dioxide emissions. In the scenario of deferred grid expansion, flexibility markets generally result in lower annual emissions than new grid investments. Well-functioning flexibility markets, dominated by resources with low emission factors, may be more climate-beneficial than new investments that do not utilize the full technical lifetime of components. In the reduced dimensioning scenario, the flexibility market’s emissions exceeded the potential savings in Hässleholm, but not in northeastern Skåne, which suggests that the result depends on context. In northeastern Skåne, a dimensioning scenario can lead to climate savings. The scenario with avoided grid expansion can lead to the largest climate savings. In northeastern Skåne, flexibility markets can remain active for a period of over 300 years in this study while still producing lower total emissions than grid expansion, whereas the results for Hässleholm were more variable. This scenario with avoided grid expansion assumes a long-term and stable flexibility market, as well as a continued development of policy instruments that provide good conditions for flexibility solutions.

Overall, the study highlights that flexibility markets are not climate positive by definition, and the result depends largely on the types of resource on the flexibility market, the characteristics of the planned grid expansion and the maturity of the flexibility market.