Operational Strategies for a Portfolio of Wind Farms and CHP Plants in a Two-Price Balancing Market

Abstract

In this paper, we explore the portfolio effect of a system consisting of a combined heat and power (CHP) plant and a wind farm. The goal is to increase the overall profit of the portfolio by reducing imbalances and, consequently, their implicit penalty in a two-price balancing market for electricity. We investigate two different operational strategies, which differ in whether the CHP plant and the wind farm are operated jointly or independently, and we evaluate their economic performance on a real case study based on a CHP-wind system located in the western part of Denmark. We present a comprehensive mathematical model for describing the different heat and power production units of the CHP plant and suggest different ways of determining its operation in a setup with two trading floors: a day-ahead market and a balancing market. We build a simulation framework that runs in a rolling-horizon fashion, so that forecasts for heat demand, wind power production, and market prices are updated at each iteration. We conclude that the portfolio strategy is the most profitable due to the two-price structure of the balancing market. This encourages producers to handle their imbalances outside the market.Index Terms-Balancing market, combined heat and power (CHP), electricity market, optimal portfolio operation, wind power.

Market Power With Combined Heat and Power Production in the Nordic Energy System

“…1). On a related note, Hellmers et al [15] show that the coordination between CHP and wind in a portfolio maximizes the expected profit for a producer in a two-price structure of the balancing market, and [16] studies the role of heat pumps and regulating CHP to integrate excess wind into the system in liberalized power markets. Overall, the DH sector can improve the performance of energy systems under a high VRE share [17], [18].…”

An approach to optimize the cycling operation of conventional combined heat and power plants

“…For instance, the consideration of transient modes is important where the CHP operation is srudied in portfolio with intermitted generation [22,23] or where different activities are provided with transient modes to optimise the power plant operation as it is presented in this paper.…”

District heating system operation in power systems with high share of wind power

“…In [8], for example, an algorithm is suggested to solve the optimal hourly CHP operation as a function of the electricity price and in [9] a deterministic model is suggested to minimize the CHP operation costs when selling the power to the day ahead market. In [10] both day ahead and balancing markets are considered for a portfolio of CHP and wind power while in [11] a framework for trading CHP generation in day ahead, intraday and reserves markets is proposed. Furthermore, new modeling techniques that help make optimal decisions under uncertainty have found application in the operation scheduling of power systems in general, and in DH systems in particular.…”