Provision of Ancillary Services from an Aggregated Portfolio of Residential Heat Pumps on the Dutch Frequency Containment Reserve Market

Abstract

This study investigates the technical and financial potential of an aggregation of residential heat pumps to deliver demand response (DR) services to the Dutch Frequency Containment Reserve (FCR) market. To determine this potential, a quantitative model was developed to simulate a heat pump switching process. The model utilizes historical frequency and heat pump data as input to determine the optimal weekly bid size considering the regulations and fine regime of the FCR market. These regulations are set by the Dutch Transmission System Operator (TSO). Two strategies were defined that can be employed by an aggregator to select the optimal bid size; the ‘always available’ scenario and the ‘always reliable’ scenario. By using the availability and reliability as constraints in the model, the effects of TSO regulations on the potential for FCR are accurately assessed. Results show a significant difference in bid size and revenue of the strategies. In the ‘always available’ scenario, the average resultant bid size is 1.7 MW, resulting in €0.22 revenue per heat pump (0.5kWp) per week. In the ‘always reliable’ scenario, the average resultant bid size is 7.9 MW, resulting in €1.00 revenue per heat pump per week on average in the period 03-10-2016–24-04-2017. This is based on a simulation of 20,000 heat pumps with a total capacity of 1 MWp. Results show a large difference in potential between the two strategies. Since the strategies are based on TSO-regulations and strategic choices by the aggregator, both seem to have a strong influence on the financial potential of FCR provision. In practice, this study informs organizations that provide FCR with knowledge about different bidding strategies and their market impact.