Is flexibility the future for CHP?

Times are difficult for industrial CHP installations in the Netherlands, especially for must-run plants. Martin Horstink and Stijn Schlatmann discuss the technical and economic possibilities for flexibility enhancements for these units.

Industrial combined heat and power (CHP), which combines a gas turbine and a heat recovery steam generator (HRSG), is used in the industry to produce steady, baseload steam and power. The steam is used for industrial processes at the plant.

The electricity can be self-consumed as well, but often power production is larger than demand and a large part of the electricity is delivered to the grid.

To make industrial CHP economically viable, the electricity should be sold against a good price. However, in the current market the average prices are low, and industrial CHP is experiencing economically difficult times. The operational margin is very thin, and often a decision is taken to decommission a CHP system at the time investments are needed, such as a (major) overhaul.

In the past three years, roughly one third of the original industrial CHP capacity of 3 GWe (in comparison, Dutch peak power demand is approximately 19 GWe) has been decommissioned in the Netherlands. Half of these plants have been mothballed, while the other half have been permanently dismantled. However, technically these systems could operate for at least 10 to 20 more years.

To future-proof industrial CHP systems, the challenge is to make them able to respond to market conditions. The power market is undergoing a major sustainability transition, and it is expected that this will lead to bigger fluctuations in supply and demand, and to more volatile energy prices. To be able to respond to this volatile market, CHP’s operational flexibility becomes important.

However, current industrial CHP systems are designed to produce baseload steam demand; operational flexibility is not incorporated in their design. Therefore the industry is looking for ways to enhance the operational flexibility of their industrial CHP systems. And if these technical possibilities exist, the question becomes whether investments in flexibility will be paid out in a market with volatile prices. To answer this question, Energy Matters performed a study of the technical and economic possibilities of flexibility improvements for industrial CHP in the Netherlands.

The full article can be read on the website of COSPP.

Source: Cogeneration and On-Site Power Production – 2015 – Volume 16 – Issue 5.