CHP and dynamic district heating

Date: 5 June 2014

In Wednesday afternoon’s POWER-GEN Europe panel discussion on “Combined-cycle and CHP operational flexibility”, Wärtsilä’s business development director for power plants, Risto Paldanius, first qualified the title of his talk, “Challenges ahead for modern CHP plants in district heating applications”. He explained that “’Challenges’ in US terms means the s**t has hit the fan already, we’re just finding ways to get around it – so instead [this talk] is about finding opportunities for combined heat and power plants.”

Where should investors look in Europe?, Paldanius asked, answering his own question by quoting a previous RWE presentation: investors should look to decentralized power and subsidized power. “One sector, at least, is still subsidized,” he said: CHP, at €18/MWh with 30,000 full operating hours.

And CHP is a growing sector in Europe. In Germany alone, installed capacity grew from 606 MW in 2012 to 828 MW in 2013.

Paldanius then looked at the traditional way of operating CHP vs what he called “dynamic” district heating. Today’s CHP plants involve marginal cost, he said; money is made from both heat and electricity. Operators don’t want to operate when revenues from the market are less than their marginal costs. “It’s a horrible scheme, but it’s how the market is today,” he said.

So what’s the best that a CHP plant can do in such a market? Enter the dynamic district heating plant. Heat is stored in heat accumulators, and at the weekend, when the electricity price drops, district heat is provided by the accumulators. In the winter the plant will run at full power most of the time, but in summer it can be operated only at peak times of the day. “This is the optimal way of operating the new types of dynamic district heating plants,” Paldanius said.

And, he added, there are “plenty of investment opportunities” for dynamic district heating in Europe.

Source: COSPP