Danish smaller size CHP plants participate in the Primary and Tertiary Reserve Market

Practical examples show that in Denmark it is feasible even for smaller size CHP plants to enter the primary reserve market, offering both positive and negative primary reserve. Won Primary reserve in West Denmark has to be delivered at a frequency deviation up to +/-200 mHz from the reference at 50 Hz with a dead band of +/-20 mHz, and it has to be delivered linear between 20 and 200 mHz within 30 seconds. The won Primary reserve must be maintained until Secondary reserves and the Regulating power takes over, not exceeding 15 minutes. The Primary reserve market is organized as a day ahead marginal price market. This daily market is split into two markets. One market for Positive Primary Reserve and one market for Negative Primary Reserve. The market is further split into 6 four hour periods. Gate closure for bidding is at 15.00 the day before. Least offer volume is 1 MW, but can be made up by a number of units. The Danish CHP installation Skagen participates successfully in the Primary and Tertiary Reserve Market. In the same time it trades its electricity production into the Scandianvian spot market Elspot. Furthermore, participation of smaller size CHP plants in the Secondary Reserve Market is in preparation and will be possible from 2011. A visualisation of the Skagen CHP plant operation management, including a history, and further information about the installation can be found at www.emd.dk/desire/skagen/

   U.K. incentivises deployment of large-scale renewable electricity generation

During the last months the UK Government decided on new measures supporting low-carbon electricity generation. For the MASSIG project team these decisions are of special relevance, since they need to be considered when comparing and assessing different market strategies.
Key-point is the start of a feed-in tariff for electricity generation in projects up to 5 MW. The FITs scheme is intended to encourage deployment of additional small scale low carbon electricity generation, particularly by individuals, householders, organisers, businesses and communities who have not traditionally engaged in the electricity market. On the launch of FITs in April 2010, tariffs will only be offered to technologies which can realistically and effectively be deployed in the short term.

The presentation we offer for information purpose only has been prepared by Galina Romanovsky, University of Manchester, for the MASSIG project meeting, which took place on 25 February 2010 in Freiburg, Germany.

   Results of Work Package 3 Pre-conditions for entering "big markets" by "small DG" available

A comprehensive Report about market products and conditions for entering energy markets in different European counties has been elaborated under co-ordination of the WP leader badenovaWÄRMEPLUS.  Starting point were the market options that have been identified as most promising in Work Package 2 and which are shown in the following table:

The report gives detailed information about the conditions for entering trade markets and the technical and non-technical requirements for selling electricity and other products on these markets with focus on Denmark, Germany, Poland and UK.

Bibliography: Raimann, M.; Erge, T.; Siewiersky, T., Watts, M., Andersen, A.N.: "Pre-conditions for entering 'big markets' by 'small DG'. Deliverable D3.1 for the IEE project MASSIG (Market Access for Smaller Size Intelligent Electricity Generation), Freiburg, 01. December 2008

   Showcase "CHP Friesenheim and Mauerfeld" started

In the MASSIG project, options for intelligent marketing of electricity from distributed generation will not only be discussed on an academic level, but for (at least) one concrete showcase real options should be elaborated and put into practice. For this purpose, the project partner badenovaWÄRMEPLUS introduced to the project team two installations with CHP units located in South-West Germany at smaller locations called Friesenheim and Mauerfeld. Currently the CHP make money by selling the heat and receiving revenues from fed-in electrical energy due to the German CHP-law and fuel tax relief. Within the project concepts will be worked out, how to optimise the system operation management and to sell heat and electricity in a more "intelligent" way - e.g. by offering reserve power to the grid.

The CHP installations have the following technical parameters:

CHP “Mauerfeld” installation:
Thermal power: 10,500 kW, including 2 peak load boilers with 2,300 kW each
Electrical Power: 6,144 kW, 5 CHP units with 460 kW each, powered by natural gas
1 CHP unit with 3,850 kW, powered by diesel oil (used only for peak loads, due to limited operating licence)
Thermal storages with a volume of 4 x 50,000 l

CHP “Friesenheim” installation:
Thermal power: 4,700 kW, including 2 peak load boilers with 650 kW each
Electrical power: 2,300 kW, 5 CHP units with 460 kW each, powered by natural gas
Thermal storages with a volume of 2 x 45,000 l

A comparison between remuneration after CHP support scheme and electricity marketing at the spot market combined with offering positive tertiary control power was done for the CHP “Friesenheim”. This was based on a simulation tool called EnergyPro, developed by the Danish project partner EMD. A comparison was done for an exemplary month of operation, September 2008, and it turned out that economics can be improved substantially by the means of such innovative electricity marketing strategies.

   Changes in German Feed-In Law make it easier to implement MASSIG marketing strategies

The crucial German law promoting the investment in Renewable Energy Systems (RES) has been revised in 2008: the "EEG" - the feed-in law addressing generation from renewable energies. It clarifies one question, that has been under vivid discussion in Germany during the last years: is it possible to sell electricity from RES to third parties and earn money from a demand driven production from RES systems?

With the "Act Revising the Legislation on Renewable Energy Sources in the Electricity Sector and Amending Related Provisions – Renewable Energy Sources Act – EEG 2009" it was clarified, that owners of RES systems can decide on a monthly basis, whether they want to get paid by the EEG feed-in tariffs, or if they want to go to the electricity markets and sell their energy themselves. For this they must inform their grid operator one month in advance about their decision and about the RES power, they want to manage on their own (it is possible to sell only a certain percentage of the RES system output, which however must be kept at any time during that period).

It is expected, that with further authorisation to issue ordinances the German Government will develop further incentives for distributed generation  to improve their grid integration. A corresponding section is already part of the EEG law.

The official document of 25 October 2008 was published in the Federal Law Gazette (Bundesanzeiger) 2008 I No. 49 issued at Bonn on 31 October 2008, p. 2074. An English translation is available here: http://www.erneuerbare-energien.de/files/pdfs/allgemein/application/pdf/eeg_2009_en.pdf

   Draft for new EEG balancing mechanism simplifies RES marketing

The German Federal Ministry of Environment has presented a first draft for further developing the balancing mechanism after the Renewable Energies Act (EEG). Different to current practise the physical transfer of electricity from renewable energy sources (RES) will end from 1st of January, 2010. Consequently, there is no further obligation for electricity suppliers to accept RES electricity from the Transmission System Operators (TSO). Instead, RES electricity should be sold transitionally directly at a power exchange.

As the average price realised at a power exchange will probably be lower than remuneration after EEG paid to the plant’s owner, the resulting difference between feed-in tariff and EEX revenues may be transferred from the TSO to the electricity suppliers and finally to each electricity consumer. This new regulation establishes a basis to overcome the current practise of physical rollover, including costly prognoses and band levelling. A substantial decrease in associated costs (amount of 650 million € in 2007) is expected.

Nevertheless, premium models (e.g. model “Kombikraftwerksbonus” or model “Gleitende Marktprämie”) for renewable electricity which aim at electricity generation adjusted to electricity supply and associated load removal of the grids are in discussion but still far from implementation.

UPDATE (October 2009):
On 2 July 2009 the German Parliament (Bundestag) agreed on the "Ordinance on the Further Development of the Nationwide Equalisation Scheme". An English version is available HERE.