Technical features for heat trade in distributed energy generation

Liberated heat market works mainly like a liberated electric market in Nordic countries with the exception that heat market works within a local district heating network. There are producers, customers, a network operator and a system operator as there exist in the electric market. Physical actors are the traditional large scale producers that sell heat to customers connected to the district heating network, and the end users, that would also be small-scale producers using a micro-CHP or a boiler. They would buy heat from other producers or sell heat to customers through the network. The liberated heat energy market will also need the transmission-network-company that takes care of the temperatures, pressures and hydraulic balance of the heating network. A balance-sheet-operator is also needed to coordinate the heat contracts between producers and customers as well as to take care of reserve capacity, spot and future markets and billing. The requirements for the district heating network design in the heat trading context are an aspect that still requires further attention. Our simulations showed that temperature changes were occasionally quite rapid in some parts of the network. They were caused by stagnation of flow in some loops of the network, where flows come from different directions. Small producers seem to bring more time-varying factors into the system. This might lead to a new district heating network design approach where temperature variations can be minimized. The four different physical connection types for the small scale producer in the building side were studied and the recommended connection version was found. The recommended connection version is type 3, in which the small scale producer is connected to the DH-network via heat exchanger. This connection has advantages compared to the other versions: it does not bring any changes to the standard modular substation unit in buildings, it is a safe solution to the user (no water leaks) and to the DH network (no gas leak problems), it is easy to control, it is suitable for new installations and renovations, and maintenance of the CHP unit does not cause any problems to the DH operation. In general, we found out that the physical connection will need standardized rules, in which the quality and the performance of the connection unit are unambiguously defined, same way as the current Finnish Energy Industries/District Heating Department's (earlier Finnish District Heating Association) guidelines do for the district heating substations. However, these new building level guidelines of the small scale producer were not defined in this study. Real option analysis is adopted to evaluate the risks of investment when electricity price and heat price are uncertain.