Impact of electricity price fluctuations on the operation of district heating systems: A case study of district heating in Göteborg, Sweden

Journal article, 2017

This paper investigates the characteristics of interaction between district heating (DH) systems and the electricity system, induced by present and future price curves of the electricity system. A mixed integer linear programming unit commitment model has been developed with the objective of studying optimal operating strategies for DH systems. The model minimises the total operating cost of heat generation for a given DH system, which in this work is exemplified by the DH system of Göteborg, Sweden. The results should have important implications for operating strategies for DH systems as a response to future electricity price development. The results indicate significant changes in the operation of heat generation units in DH systems as a response to future electricity price profile with a, relative to today, high yearly average electricity price and more frequent high-electricity-price periods. The observed changes include a 20% decrease in heat generation from heat pumps (HP) and an increase of up to 25% in heat generation from combined heat and power (CHP) plants, owing to a switch in the merit order of these two technologies. We show that large fluctuations in the electricity price lead to an increased value being placed on CHP plants with variable power-to-heat ratio. The results indicate that with reoccurring high-electricity-price periods the value of sold electricity alone can become high enough to motivate investment in CHP plants, i.e. indicating that the generation and selling of heat from CHP plants may not be the core business in the future. Furthermore, there are additional opportunities for increased value of both CHP plants and HPs for time periods of less than 48 h, given that such short duration periods can be identified in a reasonable time in advance, i.e. dependent on, for instance, wind power forecasts.