PACE Report: Economic value of mCHP's participating in power and grid service markets

The objective of PACE WP4 is to identify additional income streams from the participation of fuel-cell micro-CHP units (mCHP) in grid service markets, taking advantage of the electrical flexibility that is enabled by the mCHP. The work includes quantitative and qualitative economic value analysis (EVA) of mCHP participation in grid service markets. A broad analysis of potential factors influencing the revenue of the mCHPs from participation in grid service markets is also included in the work. Under current conditions, the greatest opportunity for monetisation of mCHP flexibility comes from maximising self-consumption. Substantial savings in annual electricity costs can be achieved by converting gas to electricity, reducing the expenditure associated with purchasing electricity from the public grid. The effect is maximised for highly efficient CHP units such as those considered in PACE. Device flexibility can be offered to grid service markets in return for payment, where 'grid services' are understood to be broader than classical frequency balancing. A range of grid services exists in Europe, representing a wide variety of commercial opportunities to mCHP owners. At the transmission level, frequency balancing services procured through the transmission system operator (TSO) are identified as being the most easily accessible to mCHP devices in the short-term. In this work, a detailed model-based optimisation framework for mCHP devices is developed, based on a dynamic programming modelling approach coupled with an advanced simulation of household space heating demand, electrical demand and hot water demand. The model is applied to frequency balancing markets in Germany, Belgium and the Czech Republic in order to determine the potential value that could be captured by the device owner. Various scenarios are considered in a quantitative sensitivity analysis, combining self-consumption and revenue from frequency balancing markets. The research also considers grid services for voltage control, congestion management capacity markets and other grid services, but barriers are identified for each. In particular this is due to mCHP dimensions, which limit the available flexibility that can be offered to such markets; as a result further quantitative modelling is not carried out for these services. The analysis found that, out of the countries studied, the most attractive case for self-consumption was Germany, with cost savings from up to 1'429 Euros per year for a single-family house, and up to 2'239 Euros per year for a three-family house. Revenue from flexibility offered to frequency balancing markets was highest in the Czech Republic, where a single-family house could receive an additional income of up to 301 Euros per year in the best case.