This might become increasingly relevant in the future, when electricity consumption taxes are expected to be lowered.
Overall we have identified the following factors influencing the future development of electric boilers in the Danish electricity system.
Factors positively influencing the investment in and profitability of electric boilers in Denmark:
• Reduction of tax on electricity consumption
• Future increases in renewable power production will result in more hours with low power prices
• Shut down of coal and nuclear power stations in Europe
Factors negatively influencing the investment in and profitability of electric boiler:
• Closer cross-border market integration of balancing services as especially hydropower production in neighboring countries offer very competitive balancing prices
• Increased interconnector capacity to neighboring countries reduce the number extreme events on electricity markets – and the potential for electric boilers are as a flexible unit able to make profits on extreme events and prices.
In the following, two cases of electric boilers in Denmark will be presented that will be affected by the abovementioned factors. The first is Skagen Varmeværk52 that already has a relatively long history. The second is an electric boiler at a large CHP plant owned by Orsted.
6.7 The case of the electric boiler in Skagen
The Skagen CHP plant is supplying 2.600 households (60.000 MWh) with heat. The heat is produced in mixture with waste incineration plant, gas boilers, a 12 MW electric boiler (since 2008), gas fired engines and also supplied with excess heat from a fish oil factory.
The gas fired engines, the gas boilers, the electric boilers, the heat storage tank and the grid is owned by a cooperative of consumers. The waste incineration plant is owned by the municipality and the fish oil factory is privately owned.
The objective of the investment in the electric boiler was to participate in manual down-regulation, but the primary down-regulation was also a part of the principal business case as the TSO had published plans to change the market design in favour of electric boilers.
The investment in the electrical boiler had a very good business case from autumn 2009, paying itself back three times over a two-year period, based on income from primary reserve market from autumn 2009 to autumn 2011. Thus, the investment decision was made on an expectation of future profitable markets, but the decision was also made under a large degree of uncertainty as the price developments could not be predicted accurately.
Participation in the day ahead market and manual reserve market implies a substantial heat production, limiting the heat production of other units when the heat storage tank is full.
52 The small scale CHP plant supplying district heating in the town of Skagen in Denmark.
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Therefore, the daily planning of heat production is relatively complex and the operator of Skagen CHP plant must take into account:
• expected heat demand from town based on statistical model and weather forecasts
• level of free capacity in heat storage tank
• gas prices
• expected electricity prices in the day ahead and manual reserve markets
• impacting both electric boiler and gas engines
To optimize daily operations most BRPs and some SCADA providers, therefore, offer optimization software to the CHP stations to able them to take all the above-mentioned factors into account.
Figure 64 shows a simplified figure from the SCADA system of Skagen CHP’s production the 1. march 2018. The figure illustrates how the gas boiler, fish oil factory and waste incineration plant are supplying most of the heat demand from the town.
The fish oil factory and the waste incineration plant are baseload units most of the year. The gas boilers can easily be turned off, but as March 2018 was cold and the heat consumption high, the gas boiler was also operated as a baseload unit this day with relatively stable production. The flexible units such a gas fired engines and electric boiler are activated when electricity prices are favourable. As we did not see high electricity prices that particular day, the engines were not activated. Low electricity prices incentivised that the electric boiler was activated for some hours of the day. This can be seen from figure 64b. In hours with low down-regulation prices, the electric boiler is producing and in those hours the heat is stored in the heat storage tank and the heat storage content is increasing.
Part II Europe
154 175Figure 6-5: SCADA figures for the production at Skagen CHP, March 1, 2018.
Fejl! Henvisningskilde ikke fundet. also shows that down-regulation prices between 11 – 15 hours that day are not low. That indicates that the activation of the Skagen electric boiler in those hours was due to
‘special down-regulation’ ordered by the German TSO via the Danish TSO as a redispatch measure to overcome constraints in the German grid. Data on volumes for the ‘special down-regulation’ are available, and prove that indeed ‘special down-regulation’ was activated from hours 11 – 15 that particular day.
Figure 64: SCADA figures for the production at Skagen CHP, March 1, 2018.
Figure 64 also shows that down-regulation prices between 11 – 15 hours that day are not low. That indicates that the activation of the Skagen electric boiler in those hours was due to ‘special down-regulation’ ordered by the German TSO via the Danish TSO as a redispatch measure to overcome constraints in the German grid. Data on volumes for the
‘special down-regulation’ are available, and prove that indeed ‘special down-regulation’ was activated from hours 11 – 15 that particular day.
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155 Hour 11 12 13 14 15
MWh 292 438 484 437 484
Table 6-5: MWh special regulation down, March 1, hours 11-15 , 2018228
Table 6-5 shows that the German TSO ordered considerable amounts of downward special regulation (compared to approximately 500 MW installed capacity of electric boilers) 229 . This indicates that the prices of special regulation down could have been very low these hours leading to very low NHPC.
6.8 The case of the electric boiler at Studstrupværket
The electric boiler has been established in cooperation between Orsted, the owner of the largest CHP plant "Studstrupværket" in the area and AVA, operating both the heat distribution network and some CHP plants. The electric boiler with 2x40 MW capacity230, and a capex of approximately 10 million EUR, is placed next to the CHP plant, which has an installed capacity of 350 MWel and 455 MWheat.
The electric boiler is included in Orsted’s real time optimization system used at the CHP plant. Having an asset able to deliver in more than one market 24/7, makes Orsted able to shift between units depending of various prices in various markets. In particular, the electric boiler is used in the following situations:
1) For heat production when a) the CHP plant has to be running due to forced production when there is high demand for district heating, and b) the day-ahead spot market prices are low. Hence the CHP plant and electric boiler are co-optimized against the spot price. Co-optimising assets with different fuels (power and coal, in this case), provide maximum flexibility to Orsted to optimize in the day-ahead market with fluctuating prices.
2) For heat production when the CHP plant suffers full or partial breakdown. That is, the Orsted load dispatcher will be ready to start the electric boiler if supply of heat is threatened. The electric boiler cannot, cover the full production from the CHP plant, but it will buy time for starting emergency production. When the situation is stabilized, the electric boiler can be part of the heat production, given the intraday market price is attractive.
3) The heat production of the electric boiler can prolong the windows for maintenance of the CHP plant. This is a benefit if day-ahead market or intraday market prices are low. Then being able to postpone the startup of the plant, can be a benefit to Orsted.
4) Selling flexibility on the ancillary service market, mainly manual down regulation. The electric boiler does not supply frequency controlled reserves at the moment.
228Source: https://www.nordpoolgroup.com/Market-data1/Regulating-Power1/Special-Regulation1/Special-regulation-volumes/ALL/Hourly/
229 Please note that also other units provide regulation down. That could be shut down of wind turbines or scaling down coal fired CHP electricity production.
230 2X40 MW was chosen because 40 MW electric boilers are off-the-shelf products.
Table 22: MWh special regulation down, March 1, hours 11-15 , 201853.
Table 22 shows that the German TSO ordered considerable amounts of downward special regulation (compared to approximately 500 MW installed capacity of electric boilers)54. This indicates that the prices of special regulation down could have been very low these hours leading to very low NHPC.
6.8 The case of the electric boiler at Studstrupværket
The electric boiler has been established in cooperation between Orsted, the owner of the largest CHP plant ”Studstrupværket” in the area and AVA, operating both the heat distribution network and some CHP plants. The electric boiler with 2x40 MW capacity55, and a capex of approximately 10 million EUR, is placed next to the CHP plant, which has an installed capacity of 350 MWel and 455 MWheat.
The electric boiler is included in Orsted’s real time optimization system used at the CHP plant. Having an asset able to deliver in more than one market 24/7, makes Orsted able to shift between units depending of various prices in various markets. In particular, the electric boiler is used in the following situations:
1. For heat production when a) the CHP plant has to be running due to forced production when there is high demand for district heating, and b) the day-ahead spot market prices are low. Hence the CHP plant and electric boiler are co-optimized against the spot price.
Co-optimising assets with different fuels (power and coal, in this case), provide maximum flexibility to Orsted to optimize in the day-ahead market with fluctuating prices.
2. For heat production when the CHP plant suffers full or partial breakdown. That is, the Orsted load dispatcher will be ready to start the electric boiler if supply of heat is threatened. The electric boiler cannot, cover the full production from the CHP plant, but it will buy time for starting emergency production. When the situation is stabilized, the electric boiler can be part of the heat production, given the intraday market price is attractive.
3. The heat production of the electric boiler can prolong the windows for maintenance of the CHP plant. This is a benefit if day-ahead market or intraday market prices are low.
Then being able to postpone the startup of the plant, can be a benefit to Orsted.
4. Selling flexibility on the ancillary service market, mainly manual down regulation. The electric boiler does not supply frequency controlled reserves at the moment.
53 Source: https://www.nordpoolgroup.com/Market-data1/Regulating-Power1/Special-Regulation1/Special-regulation-volumes/ALL/Hourly/
54 Please note that also other units provide regulation down. That could be shut down of wind turbines or scaling down coal fired CHP electricity production.
55 2X40 MW was chosen because 40 MW electric boilers are off-the-shelf products.