flexibility of in

and

offlexibility in DenmarkKey messages

13 September

Developmentrole

by

AgendaIntroduction to the report Development of the Danish power system and role of flexibility

Period 1 (2000-2004) - Market opening, CHP as base load

Period 2 (2005-2009) - CHP plants changing roles

Period 3 (2010-2015) - Increased flexibility from CHP

Period 4 (2016-2020) - Consumer participation and improved forecasting

In IEA’s terminology, Denmark is now in the 4th category

Denmark leadingin VREintegration

Phase 1. VRE has no noticeable impact on the system

Phase 2. VRE has a minor to moderate impact on system operation

Phase 3. VRE generation determines the oepration pattern of the system

Phase 4. The system experiences periods where VRE makes up almost all generation

Phase 5. Growing amounts of VRE surplus (days to weeks)

Phase 6. Monthly or seasonal surplus or deficit of VRE supply

1

2

3

4

5

6

Minor changes to operating patterns

Greater variability of net load and new power flow patterns

Power supply robustnessunder high VRE generation

Longer periods of energysurplus or deficit

Need for seasonal storageKey transition challenges

Expaining the term

FlexibilityNoun [U]

Definition: The ability of a power system to cope with variability and uncertainty in both generation and demand, while maintaining a satisfactory level of reliability at a reasonable cost, over different time horizons” (Ma, 2013).

0

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MW Solar

Offshore Wind

Onshore Wind

Central power plants

Local power plants

Power consumption

Figure 4

Variability and uncertainty in generation

Four periods From 2000-2020

17.09.2021 5

2000-2004

Period 1

2005-2009

Period 2

2010-2015

Period 3

2016-2020

Period 4

The historical development of the flexibility measures and the variable renewable energy share of the power mix in Denmark

5 main categories of flexibility and role of the marketReport structure: Chronologically reviewing flexibility solutions

17 September 2021

12% 18% 22%

44% 50%

0%10%20%30%40%50%60%

2000 2005 2010 2015 2020

Shar

e of

VR

E

Year

2000-2004 2005-2009 2010-2015 2016-2020 After 2020

Flexible thermal power plants

Utilisation of interconnectors

Forecasting and scheduling systems

Sector coupling

Demand-side flexibility

2000-2004 2005-2009 2010-2015 2016-2020

Period 1 Period 2 Period 3 Period 4March 23, 2021

1

Period2000-2004Market opening in the power sector provided first incentives for flexible operation and interconnector capacity was fully made available to the market

12-19% of VRE

In this chapter

Dynamic electricity pricing

CHP flexibility

Utilising interconnectors

2000-2004 2005-2009 2010-2015 2016-2020


Market design – From fixed tariffs to hourly electricity prices.

• Competition between all producers on a daily auction

• hourly electricity price reflect the short-run marginal costs of generating electricity in each bidding zone of that hour

• Fits better the dynamics of fluctuating energy sources

• Denmark joins Nord PoolFigure 6: Difference between three-part trariff pricing and spot market price formation

Dynamic pricing

2000-2004 2005-2009 2010-2015 2016-2020

Period 1 Period 2 Period 3 Period 417 September 2021

Flexible thermal power plantsCommissioned as base load with low flexibility - incentivised to be flexible

• The last coal-fired CHP were constructed in 1998

• Low need for system flexibility

01,0002,0003,0004,0005,0006,0007,0008,0009,000

10,000

2005 2010 2015 2019

MW

Thermal Variable renewable Interconnection Peak consumption

Figure 1: Development in capacities for thermal power plants, VRE and interconnectors (DEA, 2019) in relation to peak consumption (Energinet).

2000-2004 2005-2009 2010-2015 2016-2020


2

Period2005-2009CHP plants changing roles from baseload to a key source of flexibility and regulation passes negative spot prices

VRE share between 18-20%

In this chapter

Economic incentives for flexibility

Negative pricing

$

Improved operation of generators

2000-2004 2005-2009 2010-2015 2016-2020


Figure 11: Shift from centralised CHP plants to decentralised CHP

New market structure incentivising flexible operation of CHP

Improved operation of generatorsOverload / lower minimum loadFaster ramp rate

$

CHP plants changed from baseload to key source of flexibility

2000-2004 2005-2009 2010-2015 2016-2020


Negative prices led to more dynamic operation of traditional generation through the use of electric boilers

-50

0

50

100

150

200

250

300

350

400

450

-1.000

0

1.000

2.000

3.000

4.000

5.000Wind turbines

Local plants

Primary plants

Import

1 2 3 4 5 6 7

MWh/h

€/MWhThe spot price even went negative for 5 hours

The market design manage to secure merit order dispatch hour by hour, also taken imports/export into account

Negative prices allowed

Figure 13: Example of how negative spot prices incentivise power plants to consume electricity

2000-2004

Period 1

2005-2009

Period 2

2016-20202010-2015

Period 3 Period 417 September 2021

3

Period2010-2015Increased use of CHP plants as a flexibility source and large investments in interconnectors accompanied by an integrated day-ahead market across Europe

first power system to reach 22-44% VRE share

In this chapter

Utilisation and flexibility of interconnectors

Thermal plants delivering flexibility – decoupling electricity and heat

2000-2004

Period 1

2005-2009

Period 2

2016-20202010-2015


VRE shares created need for thermal power plants to further implement flexibility

General operational

improvements

CHP unit solutions

Enhance the operational limit

values

Lower minimum loadOverload abilityTurbine bypassDecoupling of heat and

electricity or heat: variable heat-to-power ratio

Electric boilers and heat pumps

Decoupling of heat and

electricity: Temporal displacement of thermal load

Heat storage

Short reaction time to market

signals

Faster ramp rates and output

regulationFaster start up and shut down

Figure 15: Implemented flexibility improvements in thermal power plants by owners.

2000-2004

Period 1

2005-2009

Period 2

2016-20202010-2015


-50

-25

0

25

50

75

100

125

150

-200 0 200 400 600

Shor

t run

mar

gina

l hea

t pro

duct

ion

cost

(D

KK/G

J)

Electricity price (DKK/MWh)

Electric boiler

Heat pump

Coal CHP backpressure

Coal CHP extraction plant -bypass

Coal CHP extraction plant -backpressure mode

Coal CHP extraction plant -opportunity cost

Providing fast down-regulation

Ideal choice for negative electricity pricesà electric boilers (lower investment costs but also lower efficiency)

Ideal choice for slightly higher electricity pricesà heat pumps (high efficiency and COP of up to 4)

Figure 16: Illustrative example of short run marginal heat production for different plants depending on electricity prices.

System required decoupling of heat and power to meet its flexibility needs

2000-2004

Period 1

2005-2009

Period 2

2016-20202010-2015


System required decoupling of heat and power to meet its flexibility needs

Figure 19 Operational boundaries for a CHP plant with various flexible measures

050

100150200250300350400450

0 100 200 300 400 500 600 700

New

pow

er o

uput

(MW

)

District heating output (MJ)Normal load Turbine bypass Increased + bypass

Increased load Low load Low + bypass

2000-2004

Period 1

2005-2009

Period 2

2016-20202010-2015


4

Period2016-2020New flexibility measures focus on consumer participation in electricity markets, improved forecasting that allows for proactive balancing, and that wind turbines may provide balancing services

50% of VRE reached

In this chapter

Datahub

Demand-side management

New concepts in the European power market$

2000-2004

Period 1

2005-2009

Period 2

2016-20202010-2015


• Independence from conventional power plants

• New tools/concepts necessary

• Demand-side

management/flexibility/digitalisation

• Passive à Active consumers

• Datahub

• Smart metering

• Aggregators

• Improved proactive balancing /

forecasting

The Danish climate target is

70% carbon emission reductions

By 2030(compared to 1990)

Reaching carbonneutrality by 2050

The second half

reaching 100% RE 17 September 2021

• 100% RE in electricitysupply by 2030

• Carbon neutral society by 2050

• Energy islands / PtX• And much more…

Beyond 2020

2000-2004

Period 1

2005-2009

Period 2

2016-20202010-2015


0

1000

2000

3000

4000

5000

6000

7000

0.0

10.0

20.0

30.0

40.0

50.0

60.0

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Ther

mal

pow

er p

lant

Cap

acity

(M

W)

Gro

ss p

ower

con

sum

ptio

n (T

Wh)

Classical consumption Individual heatpumps Big heatpumpsElectric boilers Transport Data centersPower-to-X Power plant capacity

Future of the Danish grid

Figure 27: Expected trend in electricity demand and power plant capacities from 2020 to 2040 (DEA, 2020).

Summing up

17 September 2021

5 main categories of flexibility and role of the marketReport structure: Chronologically reviewing flexibility solutions

17 September 2021

12% 18% 22%

44% 50%

0%10%20%30%40%50%60%

2000 2005 2010 2015 2020

Shar

e of

VR

E

Year

2000-2004 2005-2009 2010-2015 2016-2020 After 2020



Forecasting and scheduling systems

Sector coupling

Demand-side flexibility

01,0002,0003,0004,0005,0006,0007,0008,0009,000

10,000

2005 2010 2015 2019

MW

Thermal Variable renewable

Interconnection Peak consumption

Figure 1: Development in capacities for thermal power plants, VRE and interconnectors (DEA, 2019) in relation to peak consumption (Energinet). Decommissions are not included.

VRE is becoming the backbone of the grid

The changing role of CHP in the Danish power system

• CHP’s: from baseload to flexibility providerer

• Flexibility is a tool, not a goal

• Incentivise flexibility through adequate pricing scheme

• District heating – old and new flexibility provider

• The mentality shift

Thank you for the attention

2000-2004

Period 1

2005-2009

Period 2

2016-20202010-2015


Share of VRE

50%

2020Time

In the next phase towards

independence from fossil fuels, a

vertical market perspective will

have a key role

Vertical integration:

• Coupling of sectors

• Activation of consumers

• New market players

• Data-based business

models

Temporal integration

Horisontal integration:

Wide-spread electricity markets

Strong interconnectors


Specialised forecasting tools

Well-known roles and business models

Figure 28: Illustration of a shift in flexibility needs as we go beyond 50 % VRE. Source: Energinet.

01,0002,0003,0004,0005,0006,0007,0008,0009,000

10,000

2005 2010 2015 2019

MW

Thermal Variable renewable

Interconnection Peak consumption

Figure 1: Development in capacities for thermal power plants, VRE and interconnectors (DEA, 2019) in relation to peak consumption (Energinet). Decommissions are not included.

VRE is becoming the backbone of the grid

The changing role of CHP in the Danish power system

1. CHP as baseload

2. CHP shifting to be a key source of flexibility – little investment

3. CHP’s role shifted to fill in gaps of VRE generation – higher investment

4. The power system can run without thermal plants

• Flexibility is a tool, not a goal

• Incentivise flexibility through adequate pricing scheme

• District heating – old and new flexibility provider

• The mentality shift

Suggestions based on the Danish experiences

17 September 2021

• 20 years of experience

• Vital flexibility solutions and market drivers

• In relation to the share of VRE

• Flexibility is not a goal in itself

by

A central, enabling institution was the Danish Transmission System Operator (TSO) Energinet,

which went from thinking:

“we know best what our system can do because we are engineers” to “because we are engineers

we have to develop innovative solutions for what society wants”

(Ackermann, 2006; Wittrup, 2018).

17 September 2021

2000-2004 2005-2009 2010-2015 2016-2020


Flexible thermal power plantsCommissioned as base load with low flexibility - incentivised to be flexible

• The last coal-fired CHP were constructed in 1998

• Limited flexibility options across the energy system

2000-2004 2005-2009 2010-2015 2016-2020


Utilisation of interconnectorsWhen joining the Nordpool exchange, the entire interconnector capacity is made available for market dispatch

Figure 8: Map of interconnectors as of 2004

Figure 7: Flow over the interconnector between Western Denmark and Sweden in January of 1995 and 2000. Positive numbers illustrate import and negative numbers illustrate export, and the shaded area marks the rated capacity of the interconnector

2000-2004 2005-2009 2010-2015 2016-2020


Interconnectors allowing export / import of electricity

Figure 7: Flow over the interconnector between Western Denmark and Sweden in Janaury of 1995 and 2000. Positive numbers illustrate import and negative numbers illustrate export, and the shaded area marks the rated capacity of the interconnector

Figure 9: Main phases of the power market

2000-2004 2005-2009 2010-2015 2016-2020


0

100

200

300

400

500

600

0

2

4

6

8

10

12

14

16

18

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016 Ac

cum

ulat

ed in

stal

led

heat

ing

capa

city

MW

Num

ber o

f ele

ctric

boi

lers

Number of electric boilers Accumulated installed heating capacity MW

Finding the right price point

• Regulation from 2009-2012 favored electric boilers

• Missing balance

• Changes in the incentivessignificantly reduced the amount of new capacity from electric boilers

Figure 14: New electric boilers and accumulated installed capacity

2000-2004

Period 1

2005-2009

Period 2

2016-20202010-2015



General operational

improvements

CHP unit solutions

Enhance the operational limit

values

Lower minimum loadOverload abilityTurbine bypassDecoupling of heat and

electricity or heat: variable heat-to-power ratio

Electric boilers and heat pumps

Decoupling of heat and

electricity: Temporal displacement of thermal load

Heat storage

Short reaction time to market

signals

Faster ramp rates and output

regulationFaster start up and shut down

→ VRE-share continually increasing – demanding innovations and retrofitting

→ Various CHP unit solutions contribute to higher flexibility

→ Higher VRE shares brought longer periods with electricity prices lower than the marginal cost of running CHP Figure 15: Implemented flexibility improvements in thermal power

plants by owners.

2000-2004

Period 1

2005-2009

Period 2

2016-20202010-2015


0%

20%

40%

60%

80%

100%

120%

05

101520253035404550

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Prod

uctio

n re

lativ

e to

cap

acity

Elec

trici

ty p

rice

EUR

/MW

h

hour

Daily operations with retrofitted and standard flexibility

DAM price (EUR/MWh) Marg inal price (EUR/MWh)

DAM production schedule standard (%) DAM production schedule retrofitted (%)

Figure 14 Example of daily operations in day-ahead market (CEM, 2018)


2000-2004

Period 1

2005-2009

Period 2

2016-20202010-2015


0%

20%

40%

60%

80%

100%

0% 20% 40% 60% 80% 100%

Single Danishwind site

Entire DanishFleet

OptimisedEurope

Europe

Figure 18


Increasingly used to balance wind power production

-2500-2000-1500-1000

-5000

500100015002000

0 500 1000 1500 2000 2500 3000 3500N

et e

xpor

t MW

h/h

VRE production (MWh/h)

Figure 19

2000-2004

Period 1

2005-2009

Period 2

2016-20202010-2015


0500

1,0001,5002,0002,5003,0003,5004,000

6/16

/201

4

6/17

/201

4

6/18

/201

4

6/19

/201

4

6/20

/201

4

6/21

/201

4

6/22

/201

4

MW

Onshore wind Offshore wind Local CHP

Central CHP Gross consumption

Flexible operation of interconnectors provided flexibility in addition to CHPs

Figure 20: Power generation in Western Denmark divided by types and demand.

Import of power in hours where total generation is lower than consumption

Export of power occurs when the total power generation is above the power demand

2000-2004

Period 1

2005-2009

Period 2

2016-20202010-2015


Implicit auctions of interconnector capacity in the day ahead market

Illustration of market coupling between bidding areas with low and high marginal cost (MC), respectively. Source: Energinet.

2000-2004

Period 1

2005-2009

Period 2

2016-20202010-2015


Implicit auctions of interconnector capacity replaced explicit auctions in the day ahead market

Figure 26 Illustration of combinations of day-ahead electricity prices in Denmarkand Germany and directions of flows between the two countries under explicit auctions.

Becomes more complicated, yet simpler.Operating the power system

• Without thermal power plants

• Wind delivers ancillary services

• Proactive balancing is key

17 September 2021

2000-2004

Period 1

2005-2009

Period 2

2016-20202010-2015


Future of the European power market

• XBID (Cross border intraday market)

• PICASSO (Platform for

the International Coordination

of Automated Frequency

Restoration

and Stable System Operation)

• MARI (Manually activated reserves

Initiative)

flexibility of in

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