Abstract
The flexibility of district heating systems can be utilized to provide ancillary services for electric power systems and hence the investors can make profits by taking advantage of the arbitrage in multiple markets. This paper proposes a strategic investment scheme for a district heating system participating in both electricity energy and reserve markets, which enables the enhanced investment decisions for the installation of combined heat and power units, heat pumps, and thermal energy storage. A new business model is proposed for the district heating system that acts as a prosumer participating in energy and reserve markets, where the flexibility region of the district heating system is particularly modeled to ensure the feasibility of deployed reserves. The strategic behavior is modeled as a bi-level optimization problem. The upper-level problem determines the capacities and optimal offering/bidding strategies of district heating system, while the lower-level problem represents the energy and reserve market clearing over a set of representative days. The bi-level model is converted into a single-level mathematical program with equilibrium constraints using Karush-Kuhn-Tucker optimality conditions, and then reformulated as a mixed-integer linear problem by linearizing the nonlinear terms. Simulation results demonstrate that the total investment and operational costs of the district heating system are reduced by strategically offering in reserve market and the investor prefers to invest in thermal energy storage to shave peak heat load and combined heat and power units to increase the district heating system’s flexibility other than heat pumps. The effectiveness of the flexibility model of the district heating system for feasible reserve deployment is also verified.
Highlights
The share of renewable energy resources such as wind power in the electric power system (EPS) has been growing rapidly
A new business model is proposed for the district heating system that acts as a prosumer participating in energy and reserve markets, where the flexibility region of the district heating system is modeled to ensure the feasibility of deployed reserves
Simulation results demonstrate that the total investment and operational costs of the district heating system are reduced by strategically offering in reserve market and the investor prefers to invest in thermal energy storage to shave peak heat load and combined heat and power units to increase the district heating system’s flexibility other than heat pumps
Summary
The share of renewable energy resources such as wind power in the electric power system (EPS) has been growing rapidly. Reference [11] proposed an integrated sizing methodology for multi-energy microgrid including electricity, heating and transportation sectors, which optimizes the installed capacities of fuel cells, CHP units, gas boilers, and photovoltaic generators taking into account the flexibility from the other two energy sectors. In [18], a capacity extension planning was conducted for a DHS including CHP units, gas boilers, electric boilers, HPs and TES, which shows that the DHS can achieve the biggest benefit by utilizing the flexibility from DHSs that enables electricity sales for EPSs. In [19], the optimal size of power-to-heat and thermal storage systems in the DHS was obtained with the consideration of electricity prices which are mainly affected by wind power. (1) A strategic investment scheme is proposed for a DHS considering the arbitrage opportunities in energy and reserve markets, which determines the optimal installed capacities of CHP units, HPs, and TES.
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