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
Term
4. Term
Publication year
2014
Submitted on
2014-01-09
Pages
101
Abstract
This Master’s thesis investigates strategic reserves (SR), a capacity remuneration mechanism, in a general energy economic perspective, and in a narrow perspective as a potential means to ensure maintained thermal capacity in the Danish transition to a renewable energy system by inclusion of decentralised combined heat and power plants (DCHP). Strategic reserves are investigated through interviews and literature reviews. In addition to this analysis, techno-economic analyses have been carried out on different types of equippings of a typical Danish DCHP, to determine the required level of SR remuneration. These analyses have been performed through modelling in the energyPRO software, and includes a reference scenario of 2013 with the current equipping of the DCHP. For 2020, equippings of business as usual, solar heating, heat pump and a new, more efficient engine has been modelled. The results show that requirements for remuneration varies among the scenarios, since their revenue from the spot market – the alternative to operating as strategic reserve – depends on the equipping of the DCHP. Furthermore, the analysis shows that under the given conditions, the only option under which the DCHP will be business economically better off than 2013, is if a heat pump is installed. Since none of the scenarios are better off entirely without electric production capacity, it is concluded that SR is not a necessary measure to maintain capacity from DCHP. However, SR might be relevant to apply, in case remuneration is at levels where reinvestment and overhaul of capacity becomes feasible.
Keywords
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