Is flexibility the future of 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.

CHP plants must be able to respond to market conditions
CHP plants must be able to respond to market conditions
Credit: Nuon

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.

Improving flexibility and decreasing startup times

It was found that the control behaviour of aeroderivative gas turbines is considerably better than the control behaviour of the so-called heavy duty or land-based gas turbines. For instance, an aeroderivative gas turbine can start in five to 10 minutes, while a heavy duty gas turbine needs one to 1.5 hours to start up.

Also, the required minimum downtime and minimum uptime, as well as the cycle costs, are more favourable for aeroderivative gas turbines. In combination with an HRSG, the HRSG becomes an important factor in the total startup time and flexibility of a CHP system.

For an existing gas turbine the possibilities to decrease the startup time itself are limited. However, in combination with an HRSG there are several options.

One measure is to shorten the ventilation period. This can be achieved by increasing the speed of gas turbine’s electric starter motor. Depending on the situation, it is also possible to skip (part of) the ventilation process. In particular, the precondition of a five-fold purge of the HRSG before the gas turbine is allowed to be started can take a relatively long amount of time. This precondition was part of the Dutch (Gasunie) requirements for the gas turbine startup process. However, these requirements have been abolished and replaced by more general European and American requirements, which state that the ventilation process can be skipped if there is conclusive evidence that there is no explosion danger without purging.

Adding a bypass stack and a fresh air burner enhances flexibility, but takes up space

Another option to enhance a CHP system’s startup time is to add a bypass stack, which is a second chimney behind the gas turbine. Many industrial CHP installations are not equipped with a bypass stack.

A bypass stack takes up space, and that space must still be available at the site to make this option applicable. A bypass stack will add approximately eight metres in length to the exhaust system, which makes it difficult to apply in most existing cases.

The goal of flexibility is, among others, to be able to operate the gas turbine in start/stop mode. However, steam demand is often more or less stable, so there must be an alternative system for steam production. This can be accomplished with a separate gas-fired boiler.

Figure 1. Flexibility enhancements for a gas turbine, HRSG and steam turbine Source: Siemens AG

An alternative is to equip the HRSG with a fresh air burner. In this manner the HRSG can be operated independently of the gas turbine in fresh air mode.

A fresh air burner is comparable to an auxiliary burner, with the difference that it is supplied with fresh air instead of the turbine’s exhaust gases. However, in order to meet stricter NOx emissions legislation from 2016 onwards, flue gas recirculation is needed. This adds extra ducting to the existing system, and there should also be enough space available around the CHP installation to make this option applicable.

As soon as a CHP system is equipped with a bypass stack and can be operated in fresh air mode, it becomes possible to bring the gas turbine back into operation after a stop via the bypass stack and then ‘fly’ over to the HRSG, which is operated in fresh air mode during the stop. In this way the steam production is uninterrupted. A dip in steam production can also be prevented by a bypass stack at the time the gas turbine has to take over the fresh air burner’s load.

In order to improve part-load behaviour, variable inlet guide vanes can be used to improve part-load efficiency. If not yet installed, an auxiliary burner can take over (part of) the steam production in case the gas turbine is used in part-load.

Keep the system warm to decrease startup time, lower temperature gradients and minimise stresses

The maximum allowable temperature gradient of thick-walled parts is an important factor in the startup time of a CHP system. Adding a stack damper in the chimney of the HRSG will minimise natural draft during a stop. The HRSG remains warm for a longer period of time, and the system can be started up faster after a stop.

It is also possible to actively heat thick-walled parts of the HRSG by steam sparging systems. In this way, a warm startup cycle can be created after a (short) stop.

With advanced stress monitoring systems, the startup processes can be further optimised. Also, in case a steam turbine is coupled to the industrial CHP system, stress monitoring can optimise the startup sequence.

In general, there is also some conservatism around the capability of HRSG boilers to withstand fatigue stress, and this limits the use of the system’s flexibility. Most of the time there is space enough for the bundles and headers to expand so that stress cycles remain limited.

Furthermore, it is advised to optimise the startup and shutdown procedures in co-operation with the subsystem suppliers, since it is often still possible to remove unnecessary time delays from these procedures. By doing this, not only are startup and shutdown times improved, but reliability is often improved as well.

Figure 2. Net present value of different deployment strategies for a 20 MWe CHP system once a major overhaul has to be done (project period 12 years, 2% per year price indexation and 14% internal rate of return)

The application of the measures mentioned above should be evaluated in close co-operation with the suppliers of the gas turbine(s) and HRSG(s). The measures’ applicability depends on both available space and construction method. Often not all measures can be applied. Therefore, it is strongly recommended that an assessment is performed together with suppliers in order to investigate which measures are possible for a specific system.

The following (technical) measures have been identified as improving the flexibility of a CHP system:

ࢀ¢ Speed up the HRSG’s purge time (for instance, with higher rpm of the starter motor) or skip the purge process, for instance by proving a safe situation with sensors;

ࢀ¢ Use a bypass stack to avoid inertia in the HRSG;

ࢀ¢ Use supplementary firing in combination with fresh air mode (or use a separate boiler);

ࢀ¢ Use a stack damper to keep the HRSG warm during standstill;

ࢀ¢ Use material stress monitoring to be able to start as quickly as possible;

ࢀ¢ Install variable inlet guide vanes (IGVs), if not yet applied, to improve part load efficiency.

Is investing in flexibility worthwhile? The Dutch case

So, technically, possibilities exist to make an industrial CHP system more flexible. But can investments in flexibility be justified in economic terms? To determine the value of flexibility, gas turbine exploitation and Energy Matters’ Energy Market Forecast model have been used. With these models it is possible to make technical and financial calculations for steam installations under different deployment strategies and market scenarios.

Three sizes of gas turbine – a 6 MWe aeroderivative turbine, a 20 MWe aeroderivative turbine and a 50 MWe land-based turbine – have been analysed using five different deployment strategies:

1. CHP in baseload operation – The CHP system is running in baseload mode to supply the steam demand. The produced electricity is delivered to the grid.

2. CHP in part-load operation – In the moments when the steam supply from a CHP system is economically unattractive, the gas turbine is set in maximum part-load. The remainder of the steam demand is supplied by a gas-fired boiler.

3. CHP in day/night operation – The CHP system is operated during the peak hours of the power market on weekdays, when power prices are usually high. Overnight and at the weekends, when power prices are usually low, steam is supplied by a gas-fired boiler.

4. CHP in flexible operation – The CHP system is operated based on marginal costs. If steam supply by the CHP is economically unattractive, the gas turbine is turned off and the HRSG is set to fresh air mode, taking over the steam supply. Technical limitations, like minimum downtime/uptime and startup time, are taken into account.

5. Boiler operation – Steam demand is completely supplied by a gas-fired boiler.

The market scenarios that have been used in the study are: a business-as-usual scenario (BAU – 2014 day-ahead price levels of power and gas), a scenario in which the effects of the Netherlands’ sustainability ambitions (SER Energy Agreement) on the energy market are included (SER EA 2020 – Energy Market Forecast analysis) and recovery of the energy market to the day-ahead price levels of 2008 (Recovery E-market).

For each size of gas turbine, it is computed which installation (CHP or gas-fired boiler) is the most economic to run, including variable O&M costs and, if applicable, startup costs, under the different deployment strategies and market scenarios. This is done on an hourly basis. Subsequently, depending on the technical (pre-)conditions of the installations, it is judged whether the installation can practically be deployed.

Based on the operational deployment of installations, the yearly costs can be determined for each particular deployment strategy and market scenario. In combination with investment costs and fixed costs, the net present value can be determined and the different deployment strategies and market scenarios can be compared.

With regard to the economic viability of improving CHP’s flexibility, the following conclusions can be drawn:

ࢀ¢ Under current market conditions (BAU), existing CHP units supplying electricity to the grid run marginal. Once a (re-)investment in a major overhaul of the gas turbine has to be done, CHP’s profitability worsens.

ࢀ¢ Under the SER Energy Agreement scenario the profitability of CHP systems operating in baseload mode shows little improvement, while investing in flexible CHP in this scenario yields a profitable business case. The value of flexible power increases considerably in the SER EA scenario.

ࢀ¢ A switch to boiler-only operation, in combination with the removal of the CHP system, leads to great risks in terms of an industrial site’s energy costs. If the market situation changes to the SER EA or Recovery E-market scenarios, the costs of steam generation with a boiler will be considerably higher.

ࢀ¢ Smaller gas turbines and aeroderivative gas turbines are more flexible than (larger) heavy duty gas turbines. However, a heavy duty gas turbine can also be made flexible, which improves the business case considerably.

ࢀ¢ Investing in a new CHP unit becomes relevant only with full recovery of electricity prices to a level that covers the full integral cost of natural gas power, as was the case in 2008.

Based on these results, Dutch operators are recommended to keep an existing cogeneration system in business as long as possible until an overhaul is required. Also, an assessment of suppliers on the possibilities of flexibility is recommended.

If enhancement of operational flexibility is possible but overhaul is needed in the short term, it is recommended that the CHP system should not be dismantled but mothballed. Then, when the market improves in future, an overhaul and operational flexibility enhancements can be carried out. By mothballing the CHP system, the future risk of high steam prices is lowered compared to boiler-only operation when spark spreads improve. The challenge for industrial companies will be to reduce the risk of high steam prices. In the Netherlands the present steam price is relatively high due to the poor spark spread.

The study of the technical possibilities, combined with the model simulations, shows that operational flexibility enhancements for industrial CHP systems in a market with growing sustainable power production offer opportunities to reduce costs, especially if CO2 prices rise.

Whether operators can wait for a market recovery is questionable. However, the costs of mothballing a CHP system are limited, while a CHP system that has been removed will not easily be replaced.

These are exciting times for existing industrial cogeneration systems, and industrial parties will have to carefully consider the different scenarios in order to make an informed decision about the future of their CHP units.

Martin Horstink and Stijn Schlatmann are consultants at Energy Matters

Energy Matters’ study was funded by GasTerra, a Dutch natural gas trading company. The study, available in Dutch only, can be downloaded at

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