the district heating system in greater copenhagen area · the district heating system in greater...

01-03-2018

1

The District Heating System in Greater Copenhagen Area - in a free power market

EnergyLab Nordhavn seminar, 2 March 2018, at DTU

Jørgen Boldt, HOFOR (Greater Copenhagen Utility)

Outline

1.The heat market and Varmelast.dk

2.Optimizing the heat supply

3.Procedures

a) Day-ahead planning

b) Intra-day adjustments

4.Evaluation

5.New developments

6.Questions

01-03-2018

2

Outline



3.Procedures



4.Evaluation

5.New developments

6.Questions

Scale of market

4 integrated district heating systems

• 500,000 end-users

• 34,500 TJ/year

• Orders worth

3 bn DKK/year

• 15% of total heat demand in Denmark

01-03-2018

3

Heat suppliers

• 3 Combined Heat & Power plants (CHP-plants) owned by two different companies: Ørsted and HOFOR 1,700 MJ/s

• 3 Waste incineration (CHP) & 1 Geothermal plant 400 MJ/s

• Politically prioritized production

• Back-up and peak-load Heat-Only-Boilers 1,400 MJ/s

• 2 Heat Accumulators 660 MJ/s

HOB near Copenhagen airport

Major heat suppliers

Natural Gas

Coal

Biomass

Oil

Waste

SMV 7

HCV 7+8

AVV 1

AMV 3

AMV 1

AMF

VESTF

ARGO

AVV 2

6

01-03-2018

4

Is a free market possible?

Most vital condition: No single player enjoys market power.

Market power may be expressed by the

Herfindahl-Hirschmann Index (HHI) =

sum of squares of market shares

HHI = 0: Perfect market (no player more than a marginal share of the market).

HHI = 10.000: One monopoly.

HHI < 1.000 considered unconcentrated.

HHI > 1.800 very concentrated

Heat supply in Copenhagen 2004

Market shares:

• DONG Energy 60 %

• Vattenfall 30 %

• Waste incinerators 10 %

HHI = 602 + 302 + 102 = 4.600,

i.e. highly concentrated market.

01-03-2018

5

Nash-Cournot game

A Nash equilibrium is a stable market situation, where no player can improve its situation by changing its strategy, without other players also changing their strategies.

Cournot game: Players use bidded volumes as strategicinstrument (i.e. not prices).

The Nash-Cournot game identifies a Nash equilibrium in a market, where the players compete by Cournot.

Perfect market

10

01-03-2018

6

Use of market power

11

Oligopolistic competition and little price sensitivity of consumers

A free market can only generate low prices, when consumer demand is very flexible (high price sensitivity)

01-03-2018

7

Varmelast.dk: Daily heat production assignment to CHP-units

Strategic analysis from 2006 revealed 4 options:

1. Complete liberalization of heating market

2. Fixed split between the two suppliers

3. A single price agreement with both suppliers

4. DH companies responsible for heat load dispatch in a cost-based market

Selected

Varmelast.dk has made heat plans since January 2008

Varmelast.dk’sresponsibility and objective

• Ensure efficient production of both heat and power.

• Make heat plans.

• CTR’s og VEKS’ control rooms take care of operation. Both control rooms are manned 24/7.

• Varmelast.dk supports the control rooms duringoperation.

5

01-03-2018

8

Organisation, payment and contracts

• Varmelast.dk is a cooperative between district heating companies

• Payment and heat load dispatch are covered by separate sets of contracts

• Heat load dispatch happens without regard to payment between producers and district heating companies

Outline



3.Procedures



4.Evaluation

5.New developments

6.Questions

01-03-2018

9

Contractual structure

VEKS

ØrstedHOFOR

production

CTR

ØrstedHOFOR

production

Heat-load dispatch contract

Contracts of payment

VEKS HOFOR

Contracts of transmission

CTR HOFOR

Prioritizing production

Waste &

Geothermal

Base load

capacity (CHPs)

Peak/reserve

load (HOBs)

PoliticallyPrioritized

Heat

pro

duct

ion

ass

igned

by V

arm

ela

st.d

k

CTR

VEKS

KE

VF

DO

NG

HO

FO

R P

roductio

n

AM

FVF

KAR

AR

LF

HG

S

OwnerPriority

01-03-2018

10

Costs and prices

• Load dispatching is based on marginal heat costs

• The heat price is defined in bilateral contracts betweensuppliers and buyers

• The optimization procedure shall ensure the maximumeconomic benefit for the entire system

• The contracts define how the total benefit is shared

• Varmelast.dk does not know the price contracts

12

Joint optimization of heat and power production

• All variable costs are considered in the optimization process

• Variable Costs: • Fuel

• CO2-quotas

• Operating and maintenance

• Energy taxes

• Power sales: • Revenue from sale of power on the spotmarket

• Subsidies to power production from biomass

• Variable Costs – Power Sales = Cost of Heat

01-03-2018

11

Heat costs of different technologies

0

5

10

15

20

25

30

35

0 20 40 60 80 100 120

EU

R/

GJ

he

at

EUR/MWh electricity

Heat cost

HOB light oil

HOB gas

CHP gas

CHP coal

CHP wood pellets

Outline



3.Procedures



4.Evaluation

5.Questions

01-03-2018

12

Load dispatchment: Overview

• Day-ahead plan made the morning before day of operation

• Adjustments made 3 times intra-day:

o 15 hrs.

o 22 hrs.

o 08 hrs.

14

Outline



3.Procedures



4.Evaluation

5.New developments

6.Questions

01-03-2018

13

OCTOPUSLastfordelingsmodel. Beregner:-Udbudsflader-Timebaserede varmeplaner

HEP’s modelLastfordelingsmodel. Beregner:-Udbudsflader-Timebaserede varmeplaner

KATJAHydraulikmodel til planlægning af den daglige lastfordeling

DUFUdbuds-fordelingsmodel

ØrstedIndmelding på NordpoolUd fra varmeplan bestemt af tidligere procedure

HEPIndmelding på NordpoolUd fra varmeplan bestemt af tidligere procedure

Ørsted HOFOR EnergiProduktion

Varmelast.dk

Day-ahead-procedures:Planning, models and data flows

15

Day-ahead procedures

01-03-2018

14


Heat demand forecast

• Each supplier receives a file with district heating demands, CHP demands, and required heat transmissions

• The heat demand forecast is made by the district heating companies

• The waste incineration plants deliver production forecasts

• Together this informs the suppliers, which demands they need to supply

18

01-03-2018

15


Producers calculate their bid surfaces

• Based on each supplier’s own forecast of electricity prices

• One bid surface per plant per day

-

50.000

100.000

150.000

200.000

250.000

300.000

1.500 2.000 2.500 4.000

Vand [

GJ]

Om

kost

nin

g [kr]

Damp [GJ]

(constructed data!)20

01-03-2018

16


Optimization

• The bid surfaces are aggregated into one consolidatedbid surface.

• From this the total costs are then minimized by linearprogramming (GAMS).

• The result is an order for a given volume of steam and water (in GJ/day) to each supplier.

22

01-03-2018

17


The suppliers make their productionplans per production unit and per hour

• The suppliers distribute their heat production on thosehours, which is optimal according to their expectations to the power market

• The production plans are submitted to Varmelast.dk

• Tables of marginal costs are attached to the productionplans, i.e. the costs of up- and down-regulation. The marginal costs are given in load intervals.

24

01-03-2018

18

Example of preliminary heat plan

Not actual data

This is a part of one of the filesthat are sent between participantsevery day.

Other files contain prices, capacities,and forecasts.

An entire day’s heat planning, includingscheduled intraday adjustments,requires a total of 75 different files tobe sent between participants.


01-03-2018

19

Amendments due to hydraulicconstraints

• The plans are only adjusted, if they cannot beimplemented from hydraulic reasons.

• The heat stores are used to compensate for deviations between planned and actual heat demands, plus to enable the suppliers to place their heat production, whenit is most favorauble according to the power market.

• However, the stores are relatively small compared to the scale of the overall district heating system.

29


01-03-2018

20

The heat plans have now beencompleted, and the suppliers can maketheir bids to power market

31

P

Q

P

Q

Outline



3.Procedures



4.Evaluation

5.New developments

6.Questions

01-03-2018

21

Intraday

• 3 scheduled adjustments of heat plan every day.

o Updated heat consumption forecasts, updated capacities and power prices

• Further adjustments when necessary (breakdowns or neagtive power prices)

• All adjustments are made by CTRs control room and approved by VEKS’ control room

• Varmelast.dk involved when needed

Backoffice

• Producers supply Varmelast.dk with all relevant information from all CHP units.

• Varmelast.dk compares planned production to realized production and theoretical optimal production

• Difference between realized production and theoretical optimal production is currently around 1% of total variable costs

• Varmelast.dk can draw on mother companies’ analysis capabilities when needed

01-03-2018

22

What defines intra-day regulations?

• Deviations in

o Demand forecasts

o Production by waste incinerators

o Production by CHPs

• Unplanned outages

man tirs ons tors fre lør søn man tirs ons tors fre lør søn

33

Data flow

• During one day of normal operation 75 files arecommunicated between Varmelast.dk and the suppliers.

• All files are sent via a FTP-server, most as excel-files.

34

01-03-2018

23

Outline



3.Procedures



4.Evaluation

5.New developments

6.Questions

Evaluation

• Weekly operations report

o Suppliers inform Varmelast.dk of all relevant data

o Varmelast.dk calculates the optimal load dispatch hour by hour

o Economic benchmark of actual operation and optimal plan is shared among all stakeholders to identify improvement potentials

35

01-03-2018

24

Summary

• 3 owners of DH-systems collaborate in Varmelast.dk to assign heat production to 4 CHP plants.

• Waste incineration plants and the geothermal plant are given priority, by political will

• Remaining heat demand is assigned to CHP-plants according to marginal costs

• Producers then make their bids on NordPool

• Plans are made 4 times a day:

o 1 day ahead plan (before spot prices are known)

o 3 intraday regulations (after spot prices are known)

New developments

• Planning two days ahead; from October 2017

• 6 intraday adjustments per day; from October 2017

• Recent analysis: Still not a good idea to use prices instead of costs

• Load dispatchment of waste incinerators

• Load dispatchment of small heat producers, e.g. industrial waste heat

• Steam network finally dismantled in 2021

• Dynamic tariffs

34

01-03-2018

25

Outline



3.Procedures



4.Evaluation

5.New developments

6.Questions

Questions?

the district heating system in greater copenhagen area · the district heating system in greater...

Documents