Skagen Varmeværk successfully manages its heat and power production in Denmark’s liberalized energy market


Denmark has taken a proactive role in adapting to the changing needs of the energy market. The rest of Europe can learn from its example writes Anders Ahnger, Bent Iversen and Mikael Frejman.

In the early 1990s, ‘Power for a changing world’ was a well-known marketing slogan used by Wärtsilä Power Plants. Today that slogan is even more appropriate, especially in Europe, with new renewable power generation, such as wind and solar, now a significant part of the energy market.

The notable impact of renewable production changes many operational set-ups, and presents new challenges for the energy industry. At the same time, the European Commission and European Parliament have set, and will set forth, energy strategies up to 2020 and 2050 that, in addition to the use of renewable energy, focus very much on carbon-free, environmentally-friendly power generation, and on the efficient utilization of primary fuels. This will involve a major restructuring of the conservative European energy industry and market.

The work around these EU strategies aims also to give a well-defined framework, with harmonized common rules and regulations for the industry to be equally applied in all Member States, thus providing the basis for investments and healthy growth in the industry. In order to fulfil these strategies, new innovative solutions and flexible multi-purpose plants are needed in a transparent, free-trade market with, to a large extent, distributed energy production.

Denmark is acknowledged as being a frontrunner in forming its own energy laws, and at an early stage adopted very liberalized rules and regulations for its energy industry.

Today, the country scores very high marks for its amount of installed renewable and wind production, as well as for its very efficient CHP (combined heat and power) electricity production, with plants distributed evenly across the entire country. Skagen Varmeværk is a typical Danish district heating company, with its heat and power production based to a large extent on a gas engine plant using three Wärtsilä 28SG generating sets. This article looks at how Skagen Varmeværk manages this plant’s operations in a modern liberalized Danish energy market.

Danish district heating

The very first district heating system in Denmark was established in the city of Frederiksberg in the early 1900s. This lead was gradually followed by other cities across the country, and today Denmark has more than 500 district heating plants. More than half of Denmark’s energy consumption for residential heating is generated by those district heating plants, including Skagen Varmeværk.

All Danish district heating plants are governed by a district heating law that reflects the present energy policy of the Danish parliament. These regulations offer incentives for energy efficiency and, rather importantly, ensure that the Treasury Department collects all the agreed energy taxes. The law also states that district heating companies are not allowed to profit from heat deliveries to its members.

Skagen Varmeværk began operations in 1964 with 535 co-operative society members. The district heat was generated by a boiler plant able to operate on fossil and bio-oils. In 1979, by which time the number of consumers had grown to 1050, the municipality of Skagen commissioned a waste incineration plant that was connected to the district heating system. Fiskernes Fiskeindustri, a private company, started the delivery of waste process heat to the district heating system in 1982.

One of the three Wärtsilä 28SG generating sets that power the CHP plant

Skagen Varmeværk was connected to the national gas grid system in 1988, where a new boiler station, operating on natural gas was commissioned. Precisely ten years later it was time to commission the fully automatic combined heat and power station.

The plant was designed for automatic mode, enabling unattended operation outside normal working hours, when the command for starting and stopping the plant is shifted to the dispatch centre.

Skagen Varmeværk

The company is responsible for supplying district heating to the town of Skagen, the most northern town in Jutland. In winter, its 8400 inhabitants enjoy a quiet life with little traffic and few crowds. However, in the summertime it is transformed into a very crowded, and popular place. This ability to adapt to the rapid changes in the surrounding environment seems also to have become part of Skagen Varmeværk’s business philosophy.

The CHP plant is equipped with efficient heat recovery that reaches a total efficiency that exceeds 90%. Even though the plant is 15 years old, its performance remains very good compared to other modern power plants. The engines were upgraded a few years ago to achieve a higher output and improve performance.

The plant not only produces heat for the city and power for the distribution system operator, but also actively participates in the Danish electricity regulating and primary reserve/frequency balancing markets.

To handle these simultaneous production requirements effectively, highly flexible operation, short start-up and shutdown capability, as well as operator alertness, are essential. The plant is, therefore, equipped with: hot water boilers operating on natural gas and prepared for the possible use of bio-oils and fuel oils; an electrical hot water boiler operating in parallel with the gas engines; and of course with heat storage or an accumulator. All these units allow very flexible and environmentally-sustainable production.

In addition to its own production, a municipal waste incineration plant and a nearby industry are delivering heat to the common Skagen district heating network. The waste incineration plant is run as a baseload plant and provides stable year-round heat production. The heat from the industrial plant is delivered on a more occasional basis, reflecting the industry’s own schedules and working hours. These two additional heat sources adequately fulfil the city’s minimum heat demand during the summer period.

Skagen Varmeværk maintains its plant in good condition and constantly develops its operations to be more efficient. Danes in general are very energy conscious and strive always to utilize the full energy content of the primary fuel for production. There are even governmental rules on how to continuously improve CHP plant operations, as well as for how consumers can save energy.

Recent investments in the Skagen plant include new absorption chillers installed after the exhaust gas economizers. These squeeze out even more heat from the gas engine exhaust gases to gain total plant efficiencies reaching greater than 100%, calculated on the lower heating value. Furthermore, the heat storage capacity has been drastically increased by an additional heat accumulator of 350 MWhth to achieve even greater flexibility for the plant on the power markets. The bigger heat storage capacity between the heat production and the district heating network naturally adds more operational freedom.

Managing production

Like all district heating companies, Skagen Varmeværk delivers heat according to the demand at the lowest possible cost. The required heat production, therefore, provides the framework within which electricity can be produced, for participating in the regulating and primary reserve markets. Thus, production planning demands a good knowledge of the plant’s capabilities, as well as good forecasting of market behaviour.

The former and new hot water storage units behind the power plant

All the above mentioned production units are jointly utilized in an optimal way, based upon their specific operational characteristics and upon market conditions and fluctuations. The plant operates very much on the day-ahead estimates of the heat demand, and the regulating and frequency balancing markets. Depending on the balance between these two electricity markets, the running strategy is somewhat different and involves co-operation with the dispatch centre for the area and the other power producers.

The predicted heat consumption is flexibly managed through the heat accumulators, and provides the framework as to how the gas engines could or should be run. The varying daily spot prices on the regulating and reserve markets have, of course, an impact on the running philosophy, and the goal is always to produce electricity when the spot prices are high.

When operating in these two electricity markets, the gas engine characteristics prove to be highly valuable. The primary reserve market demands fast starts and stops, and the engines can cope with that. In the regulating market, the engines are run at about 70–80% load, where again the gas engines’ high and constant part load efficiency is invaluable.

If it is not worthwhile to run the engines, the corresponding heat can be produced by the gas boiler or even with the electrical boiler, provided that the electricity spot prices and the electrical network balances are favourable. The 11 MWe electrical boiler is designed to have a large operating window, and can in that way also participate in the electricity markets as a load. The excess electricity from the renewable energy production can, therefore, also be dumped into the electrical boiler and further into the heat accumulator. Electricity production is of course closely coordinated together with the electricity operator for the district or area.

The figure on p.26 is of a typical production track record for the heat production during a full calendar week. The diagram shows also the spot prices on the electricity markets, the regulating and power reserve markets, heat demand and production, as well as the level of stored heat in the heat accumulator.

The engines are kept warm and prepared for an unlimited number of daily starts and stops. Normally though, as indicated in the diagram, once or twice a day is enough. The marginal cost of the plant, in conjunction with the electricity spot prices and possible ancillary service, forms the operation profile. Electricity spot prices decrease at night and the engines are usually stopped. In this operational mode, the total yearly running hours of the engines are nowadays around 2000 hours. The engines are seldom run during weekends when the electricity spot prices are low.

Operational track record for one week in mid February 2012 In the legend the CHP 1 to 3 represents the three Wärtsilä 28SG gas engines

From the figure above, you can also see that the electrical boiler is operating mainly during the night and is then participating in both of the electricity markets. It is able to act fast as a load for getting rid of excess electricity in the grid, or to control the frequency of the grid. The heat from this boiler is fed to storage and to the district heating network.

New harmonized rules

The European Energy Strategy 2020 identifies energy efficiency as one of the key priorities of the EU’s energy policy. The 20% goal for renewable energy is broadly on track, while the 20% primary energy saving target is still a long way off. The recently agreed Energy Efficiency Directive (EED) aims to give new momentum to energy efficiency measures.

The EED is expected to recognize that the anticipated strong growth of renewable power creates a need to also include high-efficiency cogeneration plants in grid stability management, and in the electrical ancillary service market. Unnecessary obstacles for accessing the grid and the ancillary service market should be removed by the member states.

Cogeneration and CHP in plants with flexible running patterns by necessity demand heat storage, which the EED highlights as an area requiring development. In situations with for instance, excess wind power, this energy could be stored for heating purposes.

Engine plants easily fulfil the “high efficiency cogeneration” criteria presented in the EED, as well as fast start-up and turn down capabilities. Furthermore, compared to pure peaking plants, the annual electrical efficiency can be slightly increased in cogeneration plants because of the possibility of using the stored heat for preheating engines on standby.

The EED is now going forward within the EU, and will finally be approved in the EU Parliament. After this approval the EED goes for implementation by the EU Member States. The member states are then to incorporate the EED into their own laws and regulations.

In order to fulfil the EU’s energy policy and strategies, there are a number of different rules and regulations being worked on in order to harmonize the systems and operations between member states. The harmonisation of all the different network codes for the power and electricity industry will provide a framework for the whole Europe. The intention is that electricity trading between member states, between transmission system operators, and between distribution system operators, runs smoothly and fluently throughout Europe.

Advanced thinking

Skagen Varmeværk also has recently invested in a new, very modern office building, which naturally includes a sophisticated HVAC system. The ground beneath the plant and office is somewhat special and can be utilized via heat pumps for both the heating and cooling of buildings, and this characteristic is used for the new office building as well.

During the winter period and cold season, the heat in the ground is ‘pumped up’ for heating the building. This of course cools down the ground and soil, which can then be utilized for cooling down these facilities during the summer.

During the hot season, when the soil becomes heated it can then be used for the coming autumn and winter. The soil therefore acts as a small heat storage system.

Denmark has realized that energy is a big consideration for industry as a whole, and for all its various activities. This attitude and mature energy thinking should therefore be implemented everywhere. Smarter power generation, combined with district heating solution, is undoubtedly a sensible choice for the future.

Anders Ahnger is Sales Director, Power Plants Europe West, Bent Iversen is Business Development Manager, Power Plants Denmark and Mikael Frejman is Senior Development Manager, Power Plant Technology, Flexicycle Process & Energy Efficiency, all at Wartsila. www.wartsila.com.

This article was first published in InDetail, (02/2012), Wärtsilä’s technical journal.

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