Impact of natural gas distribution network structure and operator strategies on grid economy in face of decreasing demand

Abstract

Currently, natural gas provides more than a third of the energy used in European residential buildings. As part of the general decline of fossil fuels, this gas consumption is predicted to drop in several countries by 25–100% by 2050. We model a decline in gas consumption in 57 urban German distribution grids looking for the influence of grid-specific factors and different distribution network operator (DNO) strategies on grid charges. We find a functional relationship between grid length and customer amount described by a power law, with an exponent correlated with structural grid parameters. The disordered structure inherent to grids typically results in a decline in grid costs much slower than the corresponding demand. We introduce a simplified yearly cash flow calculation model based on the power law and validate it against mixed integer linear optimization. A comparison of the total costs of operation and resulting grid charges for several scenarios and strategies estimates the effects on DNO business models. Depending on a combination of DNO’s strategy and customers’ exit pattern, grid charges may increase, accelerating the substitution of gas-bound technologies that might develop into a self-reinforcing feedback loop, leading to grid defection.