Strategic Reserve as a Danish Capacity Remuneration Mechanism: The impact of strategic reserve remuneration for decentralised combined heat and power plants
Translated title
Strategisk Reserve som Dansk Kapacitetsgodtgørelsesmekanisme: Indflydelsen af den strategiske reserves godtgørelse på decentrale kraftvarmeværker
Author
Sneum, Daniel Møller
Term
4. Term
Publication year
2014
Submitted on
2014-01-09
Pages
101
Abstract
Denne kandidatopgave undersøger strategiske reserver (SR) – en kapacitetsaflønningsordning, hvor visse elproduktionsanlæg får betaling for at stå standby og kun køre, når de virkelig behøves. Opgaven ser både bredt på ordningen i et energisamfundsøkonomisk perspektiv og snævert på, om SR kan være et middel til at fastholde termisk kapacitet i Danmarks omstilling til vedvarende energi ved at inkludere decentrale kraftvarmeværker (DKV). Undersøgelsen bygger på interviews og litteraturstudier. Derudover er der gennemført teknisk-økonomiske analyser af forskellige tekniske konfigurationer af et typisk dansk DKV for at bestemme, hvilket niveau af SR-betaling der i givet fald skulle til. Analyserne er udført ved hjælp af modelleringsværktøjet energyPRO og omfatter en referencesituation i 2013 med anlæggets daværende udstyr. For 2020 er der modelleret fire varianter: business as usual, solvarme, varmepumpe samt en ny, mere effektiv motor. Resultaterne viser, at behovet for SR-betaling varierer mellem scenarierne, fordi indtægterne fra el-spotmarkedet – alternativet til at fungere som strategisk reserve – afhænger af den valgte konfiguration. Analysen viser også, at under de givne forudsætninger er det kun ved installation af en varmepumpe, at værket bliver forretningsøkonomisk bedre stillet end i 2013. Da ingen af scenarierne er bedre stillet ved helt at opgive elproduktionskapacitet, konkluderes det, at SR ikke er en nødvendig foranstaltning for at fastholde kapacitet fra DKV. SR kan dog være relevant, hvis betalingen ligger på et niveau, der gør reinvesteringer og hovedeftersyn økonomisk mulige.
This thesis examines strategic reserves (SR)—a capacity remuneration scheme in which certain power plants are paid to stay on standby and run only when needed. It considers SR from a general energy economics perspective and, more narrowly, as a way to maintain thermal capacity during Denmark’s transition to renewable energy by including decentralized combined heat and power plants (DCHP). The study draws on interviews and a literature review. In addition, techno‑economic analyses were conducted for different technical configurations of a typical Danish DCHP to identify the SR payment level that would be required, if any. The analyses were performed using the energyPRO modeling tool and include a 2013 reference case with the plant’s then‑current setup. For 2020, four configurations were modeled: business as usual, solar heating, a heat pump, and a new, more efficient engine. The results show that the required SR remuneration differs across scenarios because revenues from the electricity spot market—the alternative to operating as a strategic reserve—depend on the plant configuration. Under the given conditions, the only option that leaves the DCHP better off than in 2013 is installing a heat pump. Because none of the scenarios perform better by abandoning electricity production capacity altogether, the study concludes that SR is not necessary to maintain capacity from DCHPs. However, SR could still be relevant if payments are high enough to make reinvestment and major overhauls economically feasible.
[This abstract was generated with the help of AI]
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