This article describes the Danish district heating company, Hvide Sande District Heating, which has become independent of fossil fuels by using wind and solar energy. This has resulted in lower consumer heating prices at a time when other fossil-fuelled district heating plants are raising their heating prices due to higher fossil fuel prices. The article describes the flexibility that daily optimization tools must have to handle the multiple heat sources, participation in the numerous electricity markets, and the need for digital twins for the plant’s medium- and long-term planning.
By Anders N. Andersen, PhD, Ext. Ass. Professor at Aalborg University, R&D projects responsible at EMD International
Hvide Sande is a small fishing town on the West coast of Jutland in Denmark. The district heating plant provides heat to 1,637 consumers. From being a natural gas-fired Combined Heat and Power plant, it has in recent years become more resilient by investing in a solar collector, wind turbines, a heat pump, an electric boiler, and more thermal storage capacity. It is now independent of natural gas. Fact box 1 shows the production units and storages at Hvide Sande District Heating.
Fact Box 1
Present production units and storages at Hvide Sande District Heating:
- Two natural gas-fired gas engine Combined Heat and Power units, each 3,7 MW-elec and 4,9 MW-heat
- Three wind turbines, each 3 MW-elec
- A heat pump of 5 MW-heat
- An electrical boiler of 10 MW-heat
- A solar collector of 9,500 m2
- Hot water storage at a plant of 2,000 m3
- Hot water storage at a solar collector site of 1,200 m3
- Gas peak boilers
The two thermal storages of 2,000 m3 and 1,200 m3, respectively, can store around 200 MWh-heat, allowing a very flexible market-based production on the different production units. The heat delivered to consumers can thus be produced many hours or days before delivery.
However, a vast plant digitalization and advanced bidding methods have been required to take advantage of this flexibility.
Figure 1 shows Hvide Sande fishing town with the solar collector in front and the three wind turbines close to the North Sea. The two red arrows point at the two thermal storages, the one placed at the solar collector site and the other at the site with the CHPs, heat pump, and electric boiler. Please, examine the production units in detail in this YouTube video.
Planning of day-ahead bids in Hvide Sande
The daily market-based productions are a challenge to plan even in the day-ahead market. The manager must decide before noon for each of the next day’s hours. First, how much electricity he wants to sell; second, how much he intends to buy for each hour, and at which prices.
Because of the large thermal storages, the manager must look more days ahead when deciding the bids for the next day and consider the current heat amount in the thermal storage. His decisions are based on forecasts of more days ahead on wind velocity, solar radiation, and ambient temperatures and more days ahead for day-ahead prices.
Furthermore, what complicates the day-ahead bidding in Hvide Sande, is that the wind turbines are behind a meter (private wire-operated). This means that the electricity delivered by the wind turbines and used by the heat pump avoids grid and tax payments.
Therefore, the sale price bids for the wind turbine production shall typically be split into two parts. The amount of the wind turbine production matching the consumption of the heat pump shall be offered at a lower price than the wind turbine production that will be exported, which shall be offered to the wind turbines’ variable operation and maintenance costs.
Hvide Sande participates in three out of four balancing markets
Factbox 2 gives an overview of the balancing markets in West Denmark. Hvide Sande District Heating regularly participates in three of these four balancing markets. It participates in the FCR, mFRR, and mFRR EAM markets.
Participating in FCR
To participate in the FCR market, bids must be made symmetric in 4-hour blocks and shall be able to be activated in 30 seconds. The electrical boiler can easily fulfill an activation in 30 seconds. The offered capacity must be traded in the day-ahead market in the same 4-hour block to make a symmetric bid on the electric boiler.
For example, if a 2 MW symmetric bid in FCR is given for the electrical boiler from 00:00 to 04:00 tomorrow, at least 2 MW must be purchased in the day-ahead market in the same hours. This will allow both positive and negative frequency regulations of 2 MW to be made on the electric boiler.
Also, FCR bids are regularly made on the CHPs. A gas engine CHP cannot regulate in 30 seconds without running. So, Hvide Sande District Heating only sells 80% of the CHP capacity in a specific 4-hour block in the day-ahead market. In this way, it can offer the remaining 20% of the capacity in the FCR market.
Participating in mFRR
The mFRR market is an hourly reserve market. Winning an mFRR capacity bid in a specific hour tomorrow obligates the plant to offer this capacity into the mFRR EAM market. However, the plant decides at which prices the upward regulation is offered.
When it is windy or sunny, it will often be cheaper to produce the heat on the heat pump, the electrical boiler, or the solar collector rather than on the CHPs. In such an hour tomorrow, it is obvious to offer the CHPs in the mFRR market. When coming to the hour and if there is insufficient content in the thermal storages, the obligatory activation bid can be made sky-high to avoid winning the activation.
The heat pump is operated for many hours. In these hours, it is again possible to offer mFRR because closing a heat pump reduces the electricity consumption and thus offers an upward regulation.
Participating in mFRR EAM
As mentioned, after winning mFRR bid in a specific hour, the plant must make an offer of this capacity into the mFRR EAM. However, even if it has not won an mFRR bid in a particular hour, it may still offer activation in mFRR EAM. The simple starting point for making bids in mFRR EAM is to make it as the opposite bid as won in day-ahead. For example, if a 1 MWh purchase bid has been won on the heat pump in day-ahead in a particular hour, the opposite bid of 1 MW can be offered as upward regulation in mFRR EAM.
Note that winning an upward regulation on the heat pump means less heat is produced, which may mean that the thermal storages will be emptied, and the gas boilers must be started. But that is, in fact, the way bidding prices are calculated – as the economic consequences of winning a bid. At www.emd-international.com/livedata we show online the operation of Hvide Sande District Heating. Figure 3 shows an example of a won activation of the two CHPs in mFRR EAM.
Fact Box 2
The balancing markets in West Denmark
FCR, Frequency Containment Reserves
- The FCR market is relatively small, and as the name indicates, this market shall not bring the frequency back to 50 Hz but only contain a frequency problem, e.g., stop a reduction in frequency.
- A production unit shall be able to be activated in a maximum of 30 seconds, and the activation shall be able to be maintained for 20 minutes.
- The bids are split into 4-hour blocks and are symmetric; the won FCR shall be able to deliver both positive and negative frequency regulation.
- Gate closure is at 8 a.m. the day before, and Marginal pricing exists. That is, all won bids get the same price.
- There is no payment for energy activation.
aFRR, automatic Frequency Restoration Reserves
- The month ahead market.
- The reaction time is maximum 15 minutes.
- The bids are symmetric.
- The prices are settled as Pay-as-bid
mFRR, manual Frequency Restoration Reserves
- The reaction time is maximum 15 minutes
- Asymmetric bids are allowed, either for upwards regulation or for downward regulation.
- Hourly bids and there are Marginal pricing
- Gate closure at 9.30 the day before.
mFRR EAM, Energy Activation Market in mFRR
- Gate closure is one hour before the operating hour. For won mFRR bids in a particular hour, it is obligatory to make an offer of this capacity into the mFRR EAM in that hour.
- Marginal pricing.
- The mFRR EAM market is often called the regulating power market.
The digital twin of Hvide Sande District Heating
This article illustrates that daily optimization tools must be used for the day-to-day planning of bidding amounts and bidding prices in the different electricity markets. However, it is also important that the manager maintain a digital twin of the plant. The daily optimization will often give inspiration to new investments to be made. It is also about finding the right balance between investments in production units, storages, and grid infrastructures, and regularly the manager has to create budgets for the coming periods. That is what the digital twin shall be used for. Figure 3 shows the digital twin that Hvide Sande District Heating is using. An overview of different digital twin tools is shown in this article.
For further information, please contact: Anders N. Andersen, firstname.lastname@example.org