IDEAS home Printed from https://ideas.repec.org/a/eee/ejores/v261y2017i1p390-404.html
   My bibliography  Save this article

Optimal operation of a CHP plant participating in the German electricity balancing and day-ahead spot market

Author

Listed:
  • Kumbartzky, Nadine
  • Schacht, Matthias
  • Schulz, Katrin
  • Werners, Brigitte

Abstract

During the last years, operators of combined heat and power (CHP) plants are challenged by changing circumstances in the electricity markets. While ensuring a stable heat and power supply for customers, CHP plant operators seek to maximise the profitability of the CHP plant operation. We propose a comprehensive concept and illustrate its potential for increasing the profitability when operating a CHP plant with heat storage by participating in multiple electricity markets. For this purpose, the structure of the decision-making process consisting of bid submission, market clearing and CHP plant operation planning is represented. A multistage stochastic mixed-integer linear programming (MILP) model is developed that simultaneously optimises the operation of the CHP plant with heat storage and bidding in sequential electricity markets. Price uncertainty is captured by means of stochastic processes. The proposed concept is applied to the real case of a municipal energy supply company that participates in the German day-ahead spot and balancing market. Results of the case study illustrate how trading in sequential electricity markets can result in an increased profitability of the CHP plant operation, where additional revenues from trading offset higher generation costs. Furthermore, we exemplify how the optimal operation of the CHP plant and heat storage device are adjusted according to revenue potential in multiple electricity markets.

Suggested Citation

  • Kumbartzky, Nadine & Schacht, Matthias & Schulz, Katrin & Werners, Brigitte, 2017. "Optimal operation of a CHP plant participating in the German electricity balancing and day-ahead spot market," European Journal of Operational Research, Elsevier, vol. 261(1), pages 390-404.
    • Handle: RePEc:eee:ejores:v:261:y:2017:i:1:p:390-404
    DOI: 10.1016/j.ejor.2017.02.006
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S037722171730111X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ejor.2017.02.006?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Christoph Weber, 2005. "Uncertainty in the Electric Power Industry," International Series in Operations Research and Management Science, Springer, number 978-0-387-23048-1, December.
    2. Kopanos, Georgios M. & Georgiadis, Michael C. & Pistikopoulos, Efstratios N., 2013. "Energy production planning of a network of micro combined heat and power generators," Applied Energy, Elsevier, vol. 102(C), pages 1522-1534.
    3. David Wozabal & Christoph Graf & David Hirschmann, 2016. "The effect of intermittent renewables on the electricity price variance," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 38(3), pages 687-709, July.
    4. Elberg, Christina & Hagspiel, Simeon, 2015. "Spatial dependencies of wind power and interrelations with spot price dynamics," European Journal of Operational Research, Elsevier, vol. 241(1), pages 260-272.
    5. Rong, Aiying & Figueira, José Rui & Lahdelma, Risto, 2015. "A two phase approach for the bi-objective non-convex combined heat and power production planning problem," European Journal of Operational Research, Elsevier, vol. 245(1), pages 296-308.
    6. Justus Haucap, Ulrich Heimeshoff, and Dragan Jovanovic, 2014. "Competition in Germany's Minute Reserve Power Market: An Econometric Analysis," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    7. Swider, Derk J. & Weber, Christoph, 2007. "Bidding under price uncertainty in multi-unit pay-as-bid procurement auctions for power systems reserve," European Journal of Operational Research, Elsevier, vol. 181(3), pages 1297-1308, September.
    8. Boomsma, Trine Krogh & Juul, Nina & Fleten, Stein-Erik, 2014. "Bidding in sequential electricity markets: The Nordic case," European Journal of Operational Research, Elsevier, vol. 238(3), pages 797-809.
    9. Wang, Haichao & Yin, Wusong & Abdollahi, Elnaz & Lahdelma, Risto & Jiao, Wenling, 2015. "Modelling and optimization of CHP based district heating system with renewable energy production and energy storage," Applied Energy, Elsevier, vol. 159(C), pages 401-421.
    10. Katrin Schulz & Matthias Schacht & Brigitte Werners, 2014. "Influence of Fluctuating Electricity Prices due to Renewable Energies on Heat Storage Investments," Operations Research Proceedings, in: Dennis Huisman & Ilse Louwerse & Albert P.M. Wagelmans (ed.), Operations Research Proceedings 2013, edition 127, pages 421-427, Springer.
    11. Kristiansen, Tarjei, 2012. "Forecasting Nord Pool day-ahead prices with an autoregressive model," Energy Policy, Elsevier, vol. 49(C), pages 328-332.
    12. Rech, Sergio & Toffolo, Andrea & Lazzaretto, Andrea, 2012. "TSO-STO: A two-step approach to the optimal operation of heat storage systems with variable temperature tanks," Energy, Elsevier, vol. 45(1), pages 366-374.
    13. Just, Sebastian & Weber, Christoph, 2008. "Pricing of reserves: Valuing system reserve capacity against spot prices in electricity markets," Energy Economics, Elsevier, vol. 30(6), pages 3198-3221, November.
    14. Rong, Aiying & Lahdelma, Risto, 2007. "Efficient algorithms for combined heat and power production planning under the deregulated electricity market," European Journal of Operational Research, Elsevier, vol. 176(2), pages 1219-1245, January.
    15. Bordin, Chiara & Gordini, Angelo & Vigo, Daniele, 2016. "An optimization approach for district heating strategic network design," European Journal of Operational Research, Elsevier, vol. 252(1), pages 296-307.
    16. Alipour, Manijeh & Zare, Kazem & Mohammadi-Ivatloo, Behnam, 2014. "Short-term scheduling of combined heat and power generation units in the presence of demand response programs," Energy, Elsevier, vol. 71(C), pages 289-301.
    17. Rong, Aiying & Lahdelma, Risto & Grunow, Martin, 2009. "An improved unit decommitment algorithm for combined heat and power systems," European Journal of Operational Research, Elsevier, vol. 195(2), pages 552-562, June.
    18. Fleten, Stein-Erik & Kristoffersen, Trine Krogh, 2007. "Stochastic programming for optimizing bidding strategies of a Nordic hydropower producer," European Journal of Operational Research, Elsevier, vol. 181(2), pages 916-928, September.
    19. Christidis, Andreas & Koch, Christoph & Pottel, Lothar & Tsatsaronis, George, 2012. "The contribution of heat storage to the profitable operation of combined heat and power plants in liberalized electricity markets," Energy, Elsevier, vol. 41(1), pages 75-82.
    20. Rolfsman, Björn, 2004. "Combined heat-and-power plants and district heating in a deregulated electricity market," Applied Energy, Elsevier, vol. 78(1), pages 37-52, May.
    21. Lorentziadis, Panos L., 2016. "Optimal bidding in auctions from a game theory perspective," European Journal of Operational Research, Elsevier, vol. 248(2), pages 347-371.
    22. Roberto Aringhieri & Federico Malucelli, 2003. "Optimal Operations Management and Network Planning of a District Heating System with a Combined Heat and Power Plant," Annals of Operations Research, Springer, vol. 120(1), pages 173-199, April.
    23. Li, Gong & Shi, Jing & Qu, Xiuli, 2011. "Modeling methods for GenCo bidding strategy optimization in the liberalized electricity spot market–A state-of-the-art review," Energy, Elsevier, vol. 36(8), pages 4686-4700.
    24. Lahdelma, Risto & Hakonen, Henri, 2003. "An efficient linear programming algorithm for combined heat and power production," European Journal of Operational Research, Elsevier, vol. 148(1), pages 141-151, July.
    25. Nadine Kumbartzky & Brigitte Werners, 2016. "Optimising Energy Procurement for Small and Medium-Sized Enterprises," Operations Research Proceedings, in: Marco Lübbecke & Arie Koster & Peter Letmathe & Reinhard Madlener & Britta Peis & Grit Walther (ed.), Operations Research Proceedings 2014, edition 1, pages 321-326, Springer.
    26. Marco Lübbecke & Arie Koster & Peter Letmathe & Reinhard Madlener & Britta Peis & Grit Walther (ed.), 2016. "Operations Research Proceedings 2014," Operations Research Proceedings, Springer, edition 1, number 978-3-319-28697-6, June.
    27. Katrin Schulz & Bastian Hechenrieder & Brigitte Werners, 2016. "Optimal Operation of a CHP Plant for the Energy Balancing Market," Operations Research Proceedings, in: Marco Lübbecke & Arie Koster & Peter Letmathe & Reinhard Madlener & Britta Peis & Grit Walther (ed.), Operations Research Proceedings 2014, edition 1, pages 531-537, Springer.
    28. Fang, Tingting & Lahdelma, Risto, 2016. "Optimization of combined heat and power production with heat storage based on sliding time window method," Applied Energy, Elsevier, vol. 162(C), pages 723-732.
    29. Rong, Aiying & Hakonen, Henri & Lahdelma, Risto, 2008. "A variant of the dynamic programming algorithm for unit commitment of combined heat and power systems," European Journal of Operational Research, Elsevier, vol. 190(3), pages 741-755, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rong, Aiying & Lahdelma, Risto, 2017. "An efficient model and algorithm for the transmission-constrained multi-site combined heat and power system," European Journal of Operational Research, Elsevier, vol. 258(3), pages 1106-1117.
    2. Bloess, Andreas, 2020. "Modeling of combined heat and power generation in the context of increasing renewable energy penetration," Applied Energy, Elsevier, vol. 267(C).
    3. Alipour, Manijeh & Zare, Kazem & Mohammadi-Ivatloo, Behnam, 2016. "Optimal risk-constrained participation of industrial cogeneration systems in the day-ahead energy markets," Renewable and Sustainable Energy Reviews, Elsevier, vol. 60(C), pages 421-432.
    4. Kuttner, Leopold, 2022. "Integrated scheduling and bidding of power and reserve of energy resource aggregators with storage plants," Applied Energy, Elsevier, vol. 321(C).
    5. Hamdi Abdi, 2023. "A Survey of Combined Heat and Power-Based Unit Commitment Problem: Optimization Algorithms, Case Studies, Challenges, and Future Directions," Mathematics, MDPI, vol. 11(19), pages 1-36, October.
    6. Bohlayer, Markus & Fleschutz, Markus & Braun, Marco & Zöttl, Gregor, 2020. "Energy-intense production-inventory planning with participation in sequential energy markets," Applied Energy, Elsevier, vol. 258(C).
    7. Fang, Tingting & Lahdelma, Risto, 2016. "Optimization of combined heat and power production with heat storage based on sliding time window method," Applied Energy, Elsevier, vol. 162(C), pages 723-732.
    8. Cao, Lihua & Wang, Zhanzhou & Pan, Tongyang & Dong, Enfu & Hu, Pengfei & Liu, Miao & Ma, Tingshan, 2021. "Analysis on wind power accommodation ability and coal consumption of heat–power decoupling technologies for CHP units," Energy, Elsevier, vol. 231(C).
    9. Abdollahi, Elnaz & Wang, Haichao & Lahdelma, Risto, 2016. "An optimization method for multi-area combined heat and power production with power transmission network," Applied Energy, Elsevier, vol. 168(C), pages 248-256.
    10. Daniela Guericke & Ignacio Blanco & Juan M. Morales & Henrik Madsen, 2020. "A two-phase stochastic programming approach to biomass supply planning for combined heat and power plants," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 42(4), pages 863-900, December.
    11. Short, Michael & Crosbie, Tracey & Dawood, Muneeb & Dawood, Nashwan, 2017. "Load forecasting and dispatch optimisation for decentralised co-generation plant with dual energy storage," Applied Energy, Elsevier, vol. 186(P3), pages 304-320.
    12. Marshman, D.J. & Chmelyk, T. & Sidhu, M.S. & Gopaluni, R.B. & Dumont, G.A., 2010. "Energy optimization in a pulp and paper mill cogeneration facility," Applied Energy, Elsevier, vol. 87(11), pages 3514-3525, November.
    13. Pape, Christian & Hagemann, Simon & Weber, Christoph, 2016. "Are fundamentals enough? Explaining price variations in the German day-ahead and intraday power market," Energy Economics, Elsevier, vol. 54(C), pages 376-387.
    14. Ottesen, Stig Ødegaard & Tomasgard, Asgeir & Fleten, Stein-Erik, 2016. "Prosumer bidding and scheduling in electricity markets," Energy, Elsevier, vol. 94(C), pages 828-843.
    15. Hu, Chenlian & Liu, Xiao & Lu, Jie & Wang, Chi-Hwa, 2020. "Distributionally robust optimization for power trading of waste-to-energy plants under uncertainty," Applied Energy, Elsevier, vol. 276(C).
    16. Santos, Maria Izabel & Uturbey, Wadaed, 2018. "A practical model for energy dispatch in cogeneration plants," Energy, Elsevier, vol. 151(C), pages 144-159.
    17. Gao, Shuang & Jurasz, Jakub & Li, Hailong & Corsetti, Edoardo & Yan, Jinyue, 2022. "Potential benefits from participating in day-ahead and regulation markets for CHPs," Applied Energy, Elsevier, vol. 306(PA).
    18. Wang, Jiawei & You, Shi & Zong, Yi & Cai, Hanmin & Træholt, Chresten & Dong, Zhao Yang, 2019. "Investigation of real-time flexibility of combined heat and power plants in district heating applications," Applied Energy, Elsevier, vol. 237(C), pages 196-209.
    19. Putna, Ondřej & Janošťák, František & Šomplák, Radovan & Pavlas, Martin, 2018. "Demand modelling in district heating systems within the conceptual design of a waste-to-energy plant," Energy, Elsevier, vol. 163(C), pages 1125-1139.
    20. Ito, Masakazu & Takano, Akihisa & Shinji, Takao & Yagi, Takahiro & Hayashi, Yasuhiro, 2017. "Electricity adjustment for capacity market auction by a district heating and cooling system," Applied Energy, Elsevier, vol. 206(C), pages 623-633.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ejores:v:261:y:2017:i:1:p:390-404. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eor .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.