The value of flexibility in times of change

What lessons can CHP owners learn from the first four months of 2020?  Looking back at the electricity market in Belgium we all have observed that the pandemic has significantly impacted demand. This frequently caused the electricity spot prices to go negative. For many owners of CHP units this would usually make little difference in their decision to operate their asset. Due to way that CHP support mechanisms and grid costs are organized in Belgium, there is hardly an incentive the reap the benefits of low electricity spot prices.

What lessons can CHP owners learn from the first four months of 2020?  Looking back at the electricity market in Belgium we all have observed that the pandemic has significantly impacted demand. This frequently caused the electricity spot prices to go negative. For many owners of CHP units this would usually make little difference in their decision to operate their asset. Due to way that CHP support mechanisms and grid costs are organized in Belgium, there is hardly an incentive the reap the benefits of low electricity spot prices.

The situation in the past months, however, was exceptional. Our experience with some of our customers show that owners, who optimized the dispatch of their CHP units, could have saved up to 10k€ per MW downwards flexibility in a few weeks time. This is on the day ahead market only. The possible savings on the imbalance markets were even higher, but a bit more complex to capture.

The short term situation will probably stabilize. However, in the next few years the integration of renewable energy (PV, wind) will undoubtedly increase again the demand for flexibility. Given its technical capabilities, CHPs have an important role to play in these changing market conditions. More information? Contact us at www.entras.be.