Evaluating the role of waste-to-energy and cogeneration units in district heatings and electricity markets

Abstract

This paper investigates the activity of a multi-utility that uses Waste-to-Energy (WtE) and cogeneration (COG) plants to provide services in the heat and in the electricity markets. We assume that it employs WtE and COG units to participate in the day-ahead and real-time electricity markets and, with the support of heat-only units, it satisfies the heat demand of local district heating areas (DHAs). We use stochastic programming to develop three linked problems that describe the sequence of the decision process regarding the operation of WtE and COG facilities: (i) the first problem considers the point of view of the multi-utility that defines the day-ahead and the real-time heat scheduling of its plants and the maximum amount of electricity that WtE and COG units can offer in the day-ahead electricity market, taking into account the uncertainty of the real-time heat demand; (ii) the second problem models the day-ahead electricity market cleared by the Power Exchange, where the electricity dispatch of WtE and COG units is limited by the maximum power offers defined in step (i); and (iii) given the heat and power schedules respectively determined in steps (i) and (ii), the last problem describes the activity of theTransmission System Operator that re-dispatches WtE and COG outputs and decides their participation in the reserves and the real-time electricity markets, incorporating uncertain electricity demand and renewable power generation. Italian data are taken to investigate the operation of the WtE and COG plants under different assumptions. A reference analysis shows that these facilities obtain stable revenues from the heating market, but those from the electricity markets are very variable and mainly derives from reserve procurement. In addition, we perform two sensitivity analyses: in the first one, where we consider high natural gas and CO_2 prices, the use of WtE and COG units increases to substitute gas-fueled plants with a consequent increase of their profits; in the second one, which describes an electricity market with a high renewable penetration, the activity of these facilities becomes more irregular because of the augmented penetration of intermitted renewable generation.