Profitable for district heating to contribute to grid balancing

The production and consumption of electricity must always be in balance to ensure a stable electricity grid. This is achieved by buying and selling electricity in several stages. The day before the consumption hour, electricity is bought and sold based on what the different actors estimate they will produce and consume. But trading is based on forecasts. When the electricity is due for delivery and consumption, things can happen. It may be less windy than expected, a production unit may have to be taken out of operation because of some unexpected problem, or the consumption may be different than expected. To handle this, flexibility is needed.

“In Sweden, Svenska Kraftnät is the authority responsible for maintaining the stability and balance of the grid in real-time. If, for example, consumption is greater than production at one point in time, it needs to be corrected by activating different types of reserve capacity”, says Camille Hamon, researcher at RISE.

Ancillary service markets

Flexibility, such as reserve capacity that can be activated at short notice, is purchased by Svenska Kraftnät on ancillary service markets, to use when needed.

“As the amount of renewable electricity production increases, the need for these ancillary services also increases. Traditionally, hydropower has delivered a large part of this flexibility, but there is a great need for more actors to be involved and contribute with flexibility. But to do so it also needs to be profitable for these actors”, says Camille Hamon.

Increased revenue

Many district heating companies sell electricity from cogeneration plants that can produce both heat and electricity, but not on the ancillary service markets. In the SeCoHeat project, financed by Göteborg Energi, Camille Hamon and his colleagues have, among other things, investigated whether it can be economically profitable for district heating companies to participate in these markets.

“We have seen that there is great economic potential for the district heating companies. In some cases, revenues can increase 20 percent, although it varies from year to year. There are also some technical challenges to be solved to participate, but financial incentives are the first condition that needs to be in place to even consider participating in these markets, and we have clearly showed in the research we performed in the SeCoHeat project that it is profitable to participate in these markets.”, says Camille Hamon.

Stability and balance

The share of total electricity production from cogeneration plants is currently around ten percent in Sweden. Participating in the ancillary service markets will not increase this share significantly, at least not at first.

“In the short term, the ancillary service markets have a marginal effect of the total share. This is about stability and balance, which is a prerequisite for an electricity grid that can cope with electrification and the increasing share of renewable electricity production. But in the long term this can mean more investments in cogeneration plants and thus lead to a higher share in the energy mix”, says Camille Hamon.