From Overhead To Opportunity: How Monetising Your CHP is Good For Your Business and Good For The Grid

Achieving optimum efficiency from a CHP plant starts with correctly sizing and specifying it to meet site demand.

The Big Zero report

By Wayne Davies, Energy Markets Programme Manager, Enel X UK

Achieving optimum efficiency from a CHP plant starts with correctly sizing and specifying it to meet site demand.

However, site demand varies over time. According to our research, four out of every five CHP assets in the UK were commissioned three or more years ago and a third were specified to meet the site’s past energy needs.

Energy managers who optimised their CHP to meet the site’s past needs may now find themselves with power capacity to spare, especially where energy efficiency measures have reduced site demand.

This spare capacity can be traded in a number of ‘flexibility’ markets and become a source of revenue for the organisation.

Flexible capacity is valued because it is key to enabling more renewable energy; it provides locational resources to grid operators allowing them to better manage the variable output from distributed renewable assets that electrify the wind and sun.

Dynamic operating schedules

CHP units that are not optimised to serve variable site loads typically operate at sub-optimal performance and therefore offer less than optimal economic returns. Generating heat and electricity that is surplus to requirements simply wastes energy, reduces site efficiency and is bad for the environment.

By retrofitting intelligent software controls to optimise management of CHP plant, energy managers can improve the efficiency of their CHP units. Optimisation also maximises the revenues that they can generate by trading surplus energy in energy markets.

The static schedule in Figure 1 shows two CHPs – a 3.6MWe CHP unit in yellow and a 6MWe unit in orange, alongside the power price (blue line). The 3.6MWe CHP operates at 100% output 24×7, while the 6MWe unit operates at 100% during business hours. The dynamic operating schedule shows how the same units would respond to changes in power prices. The 3.6MWe CHP operates at 100% during business hours (8am – 8pm) but reduces output midday on 2/04 and 2/05 reacting to a dip in power price. The 6MWe CHP operates at 100% during business hours, but shuts off completely at midday 2/04 and 2/05, reacting to the dip in power price.

Compared with deploying a static operating schedule, using intelligent software to control the CHP unit dynamically minimises energy waste and maximises the value of flexible capacity.

Monetising flexible capacity

Organisations with significant CHP deployments typically have a dedicated team responsible for optimising operation of the assets and trading flexible capacity.

Businesses with small to medium-sized CHP assets, typically up to 10MW, may not have a specialist team responsible for optimising the CHP. In this case, and where there is a need to augment the capabilities of the in-house team, a technology-based approach to optimisation and trading is worth considering.

By using intelligent software to combine knowledge of operating parameters with grid signals and market indicators, such as energy market price information, it’s possible to create the best running schedule for the CHP plant. The algorithms can then identify opportunities to trade any flexible capacity in the most appropriate markets.

Dispatch signals from the energy markets can be sent to CHP assets by interfacing with SCADA or local control rooms, making it possible to realise market value within short notice periods.

By optimising the operating schedule, organisations can maximise the return on their investment by fully utilising all of the capabilities of the assets. This approach enables new streams of revenue from trading excess capacity; a benefit often previously only available to larger teams.

Deploying intelligent CHP controls

Deploying intelligent, dynamic management technology increases control and monitoring over the whole CHP system. This enhanced level of visibility provides clarity over site energy costs; helps energy managers to accommodate site/contract constraints and minimises energy costs by reducing waste and inefficiencies.

With more visibility, operators can identify when it’s best to plan maintenance to minimise revenue loss and decide how to size new CHP plant to maximise profitable operation.

The path to good grid citizenship

As Britain continues on its net-zero journey, the country will require more distributed assets to provide much-needed flexibility so that the grid operator can balance supply and demand.

CHP operators now have an opportunity to become ‘good grid citizens’ by making flexible capacity available to the grid. By optimising the operation of their plant and participating in grid services, energy managers can reduce waste and inefficiencies as well as generate additional revenue through market trading.

This is a promoted article.

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