the district heating system in greater copenhagen area · the district heating system in greater...
TRANSCRIPT
01-03-2018
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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
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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
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
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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
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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.
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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
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Use of market power
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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)
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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.
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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
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
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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
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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
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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
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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
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.Questions
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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.
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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
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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
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Day-ahead procedures
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Day-ahead procedures
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
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Day-ahead procedures
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
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Day-ahead procedures
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.
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Day-ahead procedures
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.
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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.
Day-ahead procedures
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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.
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Day-ahead procedures
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The heat plans have now beencompleted, and the suppliers can maketheir bids to power market
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P
Q
P
Q
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
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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
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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
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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.
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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
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
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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
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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
Questions?