Optimization of a Combined Heat and Power Plant for the Future Electricity Market : A case study conducted at Söderenergi AB

Sammanfattning: The Swedish energy system is changing and two major events that are taking place are the phase out of nuclear power and the increase of wind power. The associated changes affect the electricity market and the electricity producers, including combined heat and power plants. This thesis evaluates the Swedish energy system of 2025 with focus on electricity spot prices. It also investigates how a combined heat and power plant might perform in the future, given certain changes in the electricity price. Six different scenarios are developed where the electricity price is modified according to findings with regards to the influence of wind- and nuclear power. A model of a combined heat and power plant and a district heating network is created in BoFiT. The scenarios are applied to the model and results are analyzed in terms of heat production, choice of operational mode, merit order and economical performance. Major findings show a more volatile electricity price in 2025. Low price hours (<100SEK/MWh) occur throughout the year, while high price hours (>640SEK/MWh) take place mostly during winter - the season during which the heat demand is at its peak. Results show that the developed electricity prices require much more regulation from the modelled power plant and that the power plant is more adapted to handling high price hours than low price hours. The district heating network is also affected by the volatile electricity prices, and more frequent and greater variations are observed in the merit order. This suggests that in the future, the electricity prices will need to be followed more actively, and that a strategy will need to be developed, allowing for quick adaptation to the prices - communication and cooperation between the different actors in the network will be needed.