Variable heat cost versus electric spot without charge
Figure 1 Heat cost versus electric spot prices
plant units with grid connection or a large consumer of power from the grid, it is crucial to know how power prices will affect your economy during production and even more so during sudden unexpected changes in the production plan.
Figure 2 shows how the regulating power market (mFRR) has gained a more significant percentage of the total daily produc- tion in the west Danish price area “DK1 West” in 2022. Figure 2 illustrates monthly duration curves for prices in mFRR in 2022. Data are from the local Danish TSO “Energinet.” From the du- ration curves, we observe that in several hours, the electricity prices are very high or very low, giving a considerable financial potential to DH companies, which can both consume or pro- duce with very short notice during situations. Risk management is crucial to unlock the full potential of pro- duction and minimize future electricity costs while ensuring that production facilities receive uninterrupted power supply as needed. Fjernvarme Fyn - Large-scale portfolio optimization Fjernvarme Fyn is owned by the Municipalities of Odense and Nordfyn. The company owns the largest combined heat and power plants in Funen, has more than 300 employees, and is one of Europe’s largest heat utilities. The company covers approximately 97% of the heating demand in Odense and the surrounding area, corresponding to more than 100,000 homes, industrial companies, and institutions. The district heating sup- ply takes place according to the general guidelines specified in the heating plan, which defines supply areas and more. Fjern- varme Fyn’s goal is to provide customers with the best possible heat supply at the lowest possible prices while contributing to increased energy and environmental awareness among cus- tomers. Figure 3 shows the location of Fjernvarme Fyn in Denmark. The system includes 2,300 kilometres of underground pipes, providing domestic hot water and heat to 100,000 households and businesses. How to get an overview of the many heat sources at the plant The complete plant consists of 12 different units with different electricity and heat input and output performances. See the plant overview in Box 1. On a system like Fjernvarme Fyn, the main objective is to produce the right amount of hot water for the district heating grid at the lowest possible price while supporting the company’s emission goals. Fjernvarme Fyn has combined the portfolio as several individual plants to ensure
The need for optimal production planning for consumers and suppliers is thus essential.
• As a power supplier with a large-scale portfolio of power plants, you would produce electricity when the price is high.
• As a consumer needing large amounts of energy, you would consume when the price is low.
Supplier mindset and perspective Let’s look at a large portfolio of maybe up to 20 CHP units with different marginal prices and multi-fuel. Such a diverse setup makes it difficult to calculate when and how to supply to the power grid in combination with heat delivery unless advanced software tools are taken into operation. The example shown in Figure 1 from different CHP units demonstrates how complex it is to identify the optimal operation point. Figure 1 illustrates how eight different units (A to H) all have different price-production rate characteristics depending on heat and electricity. Consumer mindset and perspective The fast-developing and expanding trend in volatility in the power markets will increase the demand for fast response for stabilizing energy products. Figure 2 shows a duration curve for mFRR in 2022 from the electricity market in DK1 West. It is remarkable that the midrange area where demand for mFRR activation is slowly decreasing still indicates that the need for national TSO supporting regulation and activation is increas- ing. Each month consists of 744 hours. As an example, look at “dec- 22,” where it is shown that only between hours 271 and 401 is the period where mFRR is not active (17% of the month). The rest of the time, mFRR is active, giving the possibility to pro- duce or consume electricity at very high price levels if the plant has the setup supporting this.
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