Conventional but inflexible power stations are poorly suited to balancing the intermittent power output of wind farms and large solar photovoltaic arrays. Far better is advanced CHP, although this must be carefully controlled and operated. Anders N Andersen and Peter Sorknæs report from Denmark.

A major challenge when an electricity supply is based on fluctuating renewable electricity sources (RES), such as wind turbines or photovoltaic, is to develop the comprehensive and necessary toolbox of flexible tools to match the variable supplies of RES and the restricted capacities on the grid – with the weekly and daily demand patterns. This challenge already exists today in Denmark.


Normally, the occurrence of high electricity generation from renewable sources (particularly from wind turbines) and at the same time low consumption, would push conventional baseload power plants out of the market. However, there are two effects which will increasingly result in a shutdown of renewable energies in order to let the conventional power plants continue operation.

Ancillary services are today delivered almost exclusively by conventional power plants. But plants require a minimum power band to deliver some ancillary services, which significantly reduces the system’s total flexibility. Overloads lead to a shutdown of the fluctuating generators – despite their marginal costs of nearly zero – before conventional power plants are shut down. Substituting conventional power plants in the field of power balancing and ancillary services is therefore essential for reaching goals in expanding renewable energy. Fluctuating generators have very limited potential to deliver positive control reserves and they must be complemented by controllable power production units like CHP.

Skagen District Heating
Skagen District Heating – the 4000 m3 heat store is seen to the left

Inflexible baseload power plants face significant starting as well shutdown costs and cannot restart full operation immediately after the market prices rise above their marginal costs. Therefore, they are willing to pay negative prices to avoid the costs associated with a shutdown.

For example at the electricity market EEX, a very low consumption and a relatively high electricity production from wind generators led to a minimum price of -€500/MWh in October 2009. Therefore, transmission system operators in Germany are now allowed to shut down renewable energies, if the prices exceed their price limit (of -€150 to -€350/MW).

Inflexible base load power plants are not able to fulfil the requirements of the future highly efficient energy system based on renewable energies, and have to be substituted by a new generation of more flexible power plants. Next-generation CHP can play a significant role in this substitution with regard to power balancing as well as ancillary services.

Next to the balancing of demand and generation on a regional level, local grid problems play an increasing role and will create a massive need for the expansion of distribution networks if there is no intelligence in the feed-in of decentralized generation to balance generation and consumption on a local level.

Both at regional and distribution level, grid problems reflect a lack of flexibility in conventional electricity production and consumption. The European Union has many distributed CHP plants, but few are used as flexibly and intelligently as they could be. Most of the European and national CHP initiatives aim to increase electricity generation from CHP (like the German Act on Combined Heat and Power Generation or the EU-CHP Directive), but lack ambitions to include CHP into system services and balancing.

Balancing of demand and production is an increasing challenge in countries with limited potential for (flexible) hydropower and a rising share of fluctuating power. The increasing fluctuating shares will, in the current legislative framework and power plant park, increase the probability of extreme market situations (like negative electricity prices) as well as threats to stable grid operation. This is not only a result of the rising PV and wind generation but particularly a lack of flexible generators, consumers and market mechanism.


Next generation CHP is especially relevant in countries with both a high share of energy from fluctuating sources as well as a (potentially) high share of CHP, such as:

  • Denmark (CHP share: 43%);
  • Germany (CHP share of 12%, with only one quarter of the economic potential exploited);
  • Netherlands (CHP share of 30%);
  • Belgium (CHP share of 13%);
  • UK (CHP share of 6% with only one third of the economic potential being exploited);
  • Spain (high share of fluctuating energy and 7% CHP);
  • Poland (17% CHP).

These countries face similar problems. Hydropower’s potential as a flexible generator is limited and to a large extent already exploited, but there is plenty of potential for fluctuating energy to be exploited in the medium term.


The most advanced country in the terms of including CHP in delivering ancillary services and balancing is Denmark.

The big success of involving distributed CHP in Denmark for balancing tasks is because the transmission system operator (TSO) has organized the balancing markets in a way that matches these plants.

The Danish electricity markets are shown in Figure 1. As examples of the flexible organization of the balancing markets the TSO has organized the primary reserve market as a day-ahead market, split into six four-hour periods and split into a market for positive primary reserve and a market for negative primary reserve. Furthermore, the primary reserve market is organized as a marginal price market and not as a pay-as-bid market.

In the same way the regulating power market is split into an availability market organized as a day-ahead market and an activation market organized as an hour-ahead market, and it is possible to offer activation even if you have not won availability. This organization of the tertiary control market is more flexible than the German TSO´s organization of the German Minuten reserve market. In the Minuten reserve market you are only allowed to offer activation if you have won availability (Leistung) the day before. The Danish Regulating power market is organized as a marginal price market.

Overview of the Danish electricity markets
Figure 1. Overview of the Danish electricity markets

To illustrate next generation CHP, we have shown the operation of Skagen CHP plant in Denmark on 25 March 2011. Besides selling electricity on the electricity spot market Nord Pool Spot, the Skagen CHP plant participates in the market for regulating power (Regulating Power Market) and the market for frequency regulation (Primary Reserve Market). The Skagen CHP plant has three 4 MW natural gas CHP units, a 10 MW electric boiler, natural gas boilers and also receives heat from local industry and waste incineration.

The flexibility of the plant is created through a 4000 m3 thermal store, as shown in the photograph. The produced heat is delivered to the local district heating scheme in the town of Skagen.

Figure 2 shows the heat production at Skagen District Heating on 25 March 2011, where the plant won deliveries in three different electricity markets.

The figure shows that from midnight to 4:00 am, the electric boiler is operated at a capacity of about 1.4 MW. The reason for this is that Skagen District Heating in these four hours won Negative Primary Reserve on the 10 MW electrical boiler, which therefore had to operate at 1.4 MW in order to react to changes in the frequency in the required 30 seconds.

Heat production at Skagen District Heating
Figure 2. Heat production at Skagen District Heating on 25 March 2011, as shown at

Then, a little before 3:00 am the electric boiler won a downward regulation in the Regulating Power market, while still performing the frequency regulation won in the Primary Reserve.

After 4:00 am, no Primary Reserve was won on the electric boiler – thus the electric boiler was offered as 10 MW downward regulation in the Regulating Power market, winning it for a full hour. From 4:00 pm to 8:00 pm the CHP units were not sold full load in the spot market, making it possible to offer Positive Primary reserve in these four hours.

This concrete example of how next-generation CHP is operating very flexibly in practice also underlines the challenge of this approach to CHP units; it makes the daily operation of the CHP plant more complex. IT equipment and software to help with the planning and the daily operation are therefore essential for its efficient use.

Anders N Andersen is the Manager, Energy Systems Department, with EMD International, Denmark Email:

Peter Sorknæs is also with EMD International.

EMD International has participated in several development projects emphasizing the importance of promoting the transition from ‘first generation CHP’ to flexible ‘next generation CHP’, including the EU project MASSIG (Market Access for Smaller Size Intelligent Electricity Generation, and the EU project DESIRE (Dissemination Strategy on Electricity Balancing for Large Scale Integration of Renewable Energy funded by the Sixth Framework Programme,

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