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Optimization of Thermal Power Plants Operation in the German De-Regulated

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Conference Paper · November 2012

DOI: 10.1115/IMECE2012-86113

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 Proceedings of the ASME 2012 International Mechanical Engineering Congress & Exposition
IMECE2012
November 9-15, 2012, Houston, Texas, USA

IMECE2012-86113

OPTIMIZATION OF THERMAL POWER PLANTS OPERATION

IN THE GERMAN DE-REGULATED ELECTRICITY MARKET USING DYNAMIC PROGRAMMING
G. SCARABELLO S. RECH* A. LAZZARETTO
Department of Industrial Engineering Department of Industrial Engineering Department of Industrial Engineering
University of Padova, Italy University of Padova University of Padova, Italy
via Venezia, 1 - 35151 Padova, Italy
Email: sergio.rech@studenti.unipd.it

A. CHRISTIDIS G. TSATSARONIS
Institute for Energy Engineering, Institute for Energy Engineering,
Technische Universität Berlin, Germany Technische Universität Berlin, Germany

ABSTRACT stable electricity supply in the whole system. Since the

The prospect of clean electrical energy generation has
recently driven to massive investments on renewable energies,
which in turn has affected operation and profits of existing
traditional thermal power plants.
In this work several coal-fired and combined cycle power
units are simulated under design and off-design conditions to
adequately represent the behavior of all modern thermal units
included in the German power system. A dynamic optimization
problem is then solved to estimate the short-run profits obtained
by these units using the spot prices of the German electricity
market (EEX) in years 2007-2010. The optimization model is
developed using a Mixed Integer Linear Programming approach
to take the on-off status into account and reduce computational
effort. New market scenarios with increasing renewable shares
(and consequently different spot prices) are finally simulated to
analyze the consequences of a larger capacity of renewable
energies on the optimal operation of traditional thermal power
plants.
INTRODUCTION
In the last years environmental concerns and high oil prices
has led in Germany to a relevant growth of renewable energy
capacity. So, power utilities are facing new market conditions:
lower spot electricity prices and higher volatility, which can
greatly affect operation and earnings of traditional power units.
Moreover, the continuous fluctuation in the renewable energy
supply not only complicates the unit commitment planning, but
also considerably increases the reserve requirement for the
introduction of the European Union Greenhouse Gas Emission
Trading Scheme (EU ETS) in 2005, also CO2 allowance prices
have been participating in the electricity price formation as an
essential part of specific generation costs. For all these reasons
uncertainty on fossil fuel utilities is great (lower prices reduce
full load hours and earnings, while volatility requires higher
flexibility [1]), and investments on these plants need to be
supported by accurate economical estimations, which require:
Knowledge of thermodynamic models of the plants.
General principles of energy system modeling at design
(see, e.g., [2-4]) and off-design (see e.g., [5, 6]) conditions
are widely discussed in the literature. Several paper deal
with the application of these principles to traditional thermal
power plant simulations. Interesting applications to coal-
fired power plants are shown in [7-9]. In particular [7]
compares two different control strategies in terms of part
load efficiency. Other significant applications on combined
cycle power plants are presented in [10, 11] where part load
performance is evaluated using different control strategies.
Definition of the plant optimization strategy.
General principles of energy system design and operation
optimization are presented in [12, 13]. A review of a large
number of modeling methods is shown in [14]. Searching
the optimal operation strategy of power plants under
conditions of deregulated market is usually a dynamic
problem. In order to reduce the computational effort the
optimization model is generally simplified by using only
linear relationships, and the on-off status of each plant is

1 Copyright © 2012 by ASME

 modeled by binary variables. Accordingly, a Mixed Integer Letter symbols
Linear Programming (MILP) is to be solved. Several papers a generic constant [adimensional]
describe MILP models for short-term scheduling b generic constant [MWh]
optimization. In particular [15] proposes an interesting c specific price/cost [€/MWh or €/t]
approach to model the plant behavior during operation C cost per unit [€/#]
(including load ramps and start-ups behavior). [16] and [17] D electric demand [MWh]
offer significant examples of various constraints in MILP F fuel consumption [MW]
models. m number of period required to a warm start-up [#]
Analysis of different market scenarios with a growth of n number of period required to a cold start-up [#]
renewable energy capacity. P electric power [MW]
Renewable Energy Sources (RES) generation strongly ∆P load ramp rates [MW/h]
influences market prices. Within the wide literature on this RL residual load [MWh]
issues [18] and [19] study the effect of wind capacity in the t time set [#]
German electricity market (EEX). T1, T2 (T2 > T1) time periods that define hot, warm or cold
start-up [h]
In this work the German electricity generation system is ∆Τ time interval [h]
analyzed by an economical point of view. The goal consists in z short-run profit [€]
evaluating profits generated by thermal power plants in years
2007-2010, and in foreseeing how these profits may change in Greek symbols
different market conditions, in particular under a growth of α specific emission of CO2 [t/MWh]
energy production from RES. To this end we first consider δ binary variable [adimensional]
several coal-fired and combined cycle power units, which are η efficiency [adimensional]
representative of the German power units system. These power Subscripts
plants are modeled using a commercial simulation software to av average
obtain their characteristic curves (power vs. fuel). Thereafter, CO2 carbon dioxide
these curves are used in a MILP model to optimize the short-run CS cold start-up
profits obtained using the spot prices of the EEX. Finally, the DT down time
electricity market system is modeled and the share of electric e electricity
energy produced by wind and PV plants is increased to show el electric
how profits deriving from thermal power plants are affected by f fuel
different amounts of electricity generated by RES. HS hot start-up
max maximum
NOMENCLATURE min minimum
OT operating time
Acronyms WS warm start-up
CC Combines Cycles power plant
CC3P CC based on a three pressure levels steam cycle Superscripts
CC1P CC based on a single pressure levels steam cycle min minimum
CCHC high performing CC
CCLC low performing CC THE GERMAN POWER SYSTEM
EEX German electricity market In 2010 the German electricity production amounted to
EU ETS European Union Greenhouse Gas Emission Trading 621·106 MWh. The production was shared between four main
Scheme sources: coal, nuclear, gas and renewable energies. The installed
GT Gas Turbine capacity at the end of 2010 amounted to 165859 MW: 53944
MILP Mixed Integer Linear Programming MW from renewables, 48225 MW from coal, 20490 MW from
PV Photo Voltaic nuclear, 25500 MW from gas and 17700 MW from other
RES Renewable Energy Sources sources.
ST coal-fired Steam Turbine power plant Figure 1 shows the share of electricity production in 2010:
STHC ST based on a subcritical steam cycle with advanced among RES [20]. Wind is the main source with 6% of total
characteristics electricity production, followed by biomass (5%), hydro (3%),
STLC ST based on subcritical steam cycle with low PV (2%) and wastes (1%) [20]. The power plants capacity
characteristics factors were calculated (Tab. 1) as total electricity production
STSC ST based on supercritical steam cycle divided by maximum electricity production (number of hours in
one year multiplied by installed capacity) using data taken from
[20].

2 Copyright © 2012 by ASME


Fig. 1: Electricity production by source in 2010 in
Germany [20]
Tab. 1: Average power plants capacity factors by source
in 2010 in Germany.
CAPACITY FACTOR
Coal 0.57
Nuclear 0.74
Gas 0.37
Renewables 0.21
Wind 0.15
Biomass 0.67
Hydro 0.42
PV 0.08
Wastes 0.70
Oil and Others 0.18
This picture is not stable: in 2011 after Fukushima disaster
five nuclear power plants were shut-down, and this source is
expected to be totally abandoned by 2022. Moreover, in the last
years the capacity of renewable energies in Germany has greatly
increased. At the end of 2010 the installed wind capacity was
27 GW, while the PV capacity amounted to 17.3 GW. The
growth of installed capacities in the last years is impressive: the
PV installed capacity has almost doubled in 2010, while the
wind capacity has shown a constant growth of 2 GW per year in
the last 4 years.
These data show how the German production system has
been changing, as well as in most of the European countries.
Investments on new power plants must be supported by careful
analyses: the paper aims at evaluating the influence of these
changes on thermal power plants operation.
DE-REGULATED ELECTRICITY MARKET
Due to technological and economical problems associated
with electricity storage, electricity generation and demand must
be matched continuously in the electricity market. This requires
every unit to follow the operating instructions of a central
dispatcher, and to modify its load according to its schedule. The
dispatchers decide on the hourly operational status of every
single unit of their power plant fleet depending on the
generation costs of the units and the expected electricity market
price, determined by the merit order and the electricity demand.
3 Copyright © 2012 by ASME
Merit order curve
Electricity can be produced in many ways using a variety of
fuels and applying different technologies. On competitive short
term markets, prices are set by the short-run marginal cost of
the plant producing the last unit of electricity required to meet
demand (Fig. 2). The last, or marginal, unit needed to meet
demand is also the one with the highest short-run marginal cost
at a given time. This process ensures that power plants in
operation are those with lower marginal costs among all power
plants available to operate. So, it can be expected that nuclear
and lignite-fired power plants will be dispatched continuously,
i.e. they serve as base load units. These plants (together with
hydroelectric plants) are listed on top of the so-called merit
order list, which means their marginal costs are low compared
to those of the other plants. [21].
Fig. 2: Merit order curve and marginal costs of different
power plants: hydroelectric, nuclear, lignite-fired, coal-
fired, combined cycles (CC), gas turbine (GT)
All plants receive the marginal price of the system. If the
market is competitive, with a sufficiently large number of
generators, each one knows that it cannot affect the price by
changing its own bid. In that case, its profit-maximizing strategy
consists in submitting a bid equal to its own running costs: the
plant must run every time running is profitable, that is when
market price is higher than running costs. A higher bid imposes
the risk that the station will not be scheduled to run during some
periods when the market price is below this bid, but greater than
the station’s costs, implying that running would be profitable. A
lower bid imposes the risk that the station would be required to
run when the price was below its costs, incurring losses.
THERMAL POWER PLANTS MODELING
A system model is the set of mathematical relationships that
defines all the interactions between the quantities required to
describe the real system behavior with the desired degree of
approximation. Basically, these relationships include mass and
energy balances, component characteristic curves and equations
of states [6].
 Typically the design model aims at evaluating the “design
point”, i.e. the size of the system and its behavior at nominal
load, being technological and environmental constraints
assigned. Starting from the design point, the off-design model
describes the system behavior at partial load.
Control Strategy
In building off-design models, attention has to be paid on
the control strategy. In particular, in the steam cycle power
plant models the two main control strategies were used [7]:
Fixed pressure: a nozzle governing stage (see Fig. 3) is
placed between the steam generator and the high pressure
turbine: it consists of a small number of nozzles (mostly
between three and five). When the plant is working at
nominal load, all nozzles are open. On the other hand, when
the plant is working at partial load, some nozzles might be
closed, some might be still completely open and one might
be partially open, introducing a throttling. In this way the
steam pressure at the exit of the boiler is constant. The goal
of this control strategy consists in having the maximum
amount of fluid working at design conditions. An interesting
study on the operation of steam turbines which are
controlled by a governing stage is shown in [8].
Fig. 3: Simple scheme of a steam turbine governing
stage
Sliding pressure control: the turbine operates with fully
opened governing valves in every load condition, and the
pressure at the outlet of the steam generator equals the inlet
pressure of the high pressure turbine, which is determined
by the actual process conditions in the steam turbine
(turbine inlet temperature, mass flow rate, and condenser
pressure [22]).
Moreover, the precise knowledge of the off-design behavior
of each plant component is required. This behavior is defined
by the so called “characteristic curves”, which link component
performance and efficiency to load. When not available from
the manufacturers, these curves can be obtained from the
literature or using experimental data (e.g., heat transfer
coefficient vs. load for the heat exchangers).
4 Copyright © 2012 by ASME
Thermal power plants chosen as representative of the
German traditional electricity generation system
Steam and combined cycle power plants were chosen as
representative categories of the “traditional” German power
generation system. Three coal-fired and four combined cycle
power plants were included in each category. Off-design models
of these plants were built using the commercial software
Ebsilon®Professional to obtain reliable characteristic curves
(fuel consumption vs. output power).
The three coal-fired power plants are based on: a
supercritical steam cycle (STSC, Pmax=500MW), a subcritical
steam cycle with advanced characteristics (STHC,
Pmax=500MW) and a subcritical steam cycle with low
characteristics (STLC, Pmax=420MW). STSC and STHC
represent the state of the art of the coal-fired power generation,
instead STLC represents out-of-date and small plants. Design
features of the three plants are based on [9]. Sliding pressure
control is utilized for all models. As an example, the
Ebsilon®Professional model (at design conditions) of STHC is
shown in Annex A. Design and off-design simulations allows
the three characteristic curves in Fig. 4 (in the form thermal
efficiency vs. load) to be obtained.
0,60
η el
STSC
0,55
STHC
0,50
STLC
DesignPoint
0.4605
0,45
0.4300
0,40
0.3727
0,35
0,30
30% 40% 50% 60% 70% 80% 90% 100%
P/P max
Fig. 4: Characteristic curves of the three considered
coal-fired power plants
Two of the four combined cycle power plants are based on a
three pressure levels (CC3P, Pmax=400MW) and a single
pressure level (CC1P, Pmax=385MW) steam cycles. The other
two are a high performing (CCHC, Pmax=416MW) and a low
performing (CCLC, Pmax=350MW) combined cycles. CCHC
and CC3P represent the state of the art of the combined cycles
power generation. Instead, CC1P and CCLC represent small
power plants.
As an example, the Ebsilon®Professional model (at design
conditions) of CC3P is shown in Annex B. Again, the
characteristic curves (Fig. 5) are obtained by running the
simulation models.
 0,60
η el
0,55
0,50
0,45 CCHC
CCLC
0,40 CC3P
CC1P
0,35 DesignPoint
0,30
30% 40% 50% 60% 70% 80% 90%
Fig. 5: Characteristic curves of combined cycle power
plants
OPTIMIZATION METHODOLOGY
The operation of the plants analyzed in the previous section
is optimized in the period 2007-2010 by building a dynamic
optimization model. To adequately model the behavior of the
plans and to simplify the problem a MILP approach is used. The
three main features of the MILP model are:
1. Binary variables are introduced to take the on-off status into
account.
2. Only linear relationships are included in the model in order
to reduce the computational effort derived from the very
large number of time intervals that are considered.
3. The period 2007-2010 is subdivided into one-hour time
intervals, so that the total number of time intervals is
4·8760=35040. Accordingly, any model variable assumes a
discrete value in each interval t.
The fundamental equations of the model consist in:
Characteristic curves of each plant. The characteristics in
Figs. 4 and 5 can be represented also by replacing the
efficiency with fuel consumption F(t), as shown in (1). A
binary variable δ(t) is introduced in (1) to take into account
the on-off status of each unit:
F ( t ) = a ⋅ P( t ) + b ⋅ δ ( t )
P( t ) ≤ Pmax ⋅ δ ( t )
P( t ) ≥ Pmin ⋅ δ ( t )
In fact, when δ(t) is set to 0 the output power production
P(t) and the fuel consumption F(t) of the plant are zero (i.e.
the plant is turned off). On the other hand, when δ(t) is set to
1, P(t) can vary from the minimum value Pmin to the
maximum value Pmax (i.e., the plant is running).
Constraint on the minimum downtime ∆TDT of each plant.
This is introduced to avoid excessive thermal stress of plant
components.
∆TDT (t + 1) = (∆TDT (t ) + 1) ⋅ (1 − δ (t + 1) )
under the condition:
0.5900
(δ ( t + 1 ) − δ ( t )) ⋅ (∆TDT ( t ) − ∆TDTmin ( t )) ≥ 0
0.5662 (3)
0.5428
were δ(t) is the same variable that appears in (1), ∆TDT is the
0.5000
elapsed time from the latest plant shut-down and ∆TDTmin is
the minimum downtime imposed.
According to (2) the value of ∆TDT is increased by one hour
for each hour in which the system remains off (δ=0).
Equation (3) states that the plant can be turned up only if the
minimum downtime has been reached. Equations (2) and (3)
need to be linearized because they include a product
between two time dependent variables (δ and ∆TDT). To this
100%
P/Pmax end the Glover’s linearization method [23] is used.
Constraint on the minimum operating time of each plant.
This is not a technological constraint but it is a “good
practice”:
∆TOT ( t + 1 ) = (∆TOT ( t ) + 1) ⋅ (δ ( t + 1 )) (4)
under the condition:
(δ ( t + 1 ) − δ ( t )) ⋅ (∆TOT ( t ) − ∆TOTmin ( t )) ≥ 0 (5)
where ∆TOT is the elapsed time from the latest start-up of the
plant and ∆TOTmin is the minimum operating time imposed.
Again (4) and (5) are linearized using the Glover’s method
[23]. The detailed reformulation of (2) to (5) can be found
in the appendix of [24]
Counting the start-ups to evaluate the associated costs. A hot
start-up is defined when the time period between shut-down
and start-up is shorter then T1, a warm start-up when it is
shorter than T2 and longer than T1 (T2 > T1), a cold start-up
when it is longer than T2. T1 and T2 are specified periods of
time which depend on the plant being considered.
Three inequalities are used to identify hot, warm and cold
start-ups:
δ ( t ) − δ ( t + 1 ) + δ HS ( t + 1 ) ≥ 0
δ ( t ) − ... − δ ( t + T 1 ) − δ ( t + T 1 + 1 ) + δWS ( t + T 1 + 1 ) ≥ 0 (6)
δ ( t ) − ... − δ ( t + T 2 ) − δ ( t + T 2 + 1 ) + δ CS ( t + T 2 + 1 ) ≥ 0
Inequalities (6) force the three binary variables δHS, δWS and
(1)
δCS to turn their value to 1 when a hot, warm or cold start-up
occurs, respectively. So:
- in the first inequality, the hot start-up implies δ(t)=0 and
δ(t+1)=1 so that δHS(t+1)=1);
- in the second inequality, the warm start-up implies
δ(t)=0,…,δ(t+T1)=0, and δ(t+T1+1)=1 so that
δWS(t+T1+1)=1);
- in the third inequality, the cold start-up implies
δ(t)=0,…,δ(t+T2)=0, and δ(t+T2+1)=1 so that
δCS(t+T2+1)=1);
(2) If no start-up takes place δHS, δWS and δCS are set to 0.
5 Copyright © 2012 by ASME
 Maximum start-up and load ramp rates: four different values
are imposed to the maximum load ramp rates depending on
the working conditions (i.e., hot start-up, warm start-up,
cold start-up and normal operation). The binary variables
δHS, δWS and δCS introduced in (6) are used again to identify
the working condition and the respective maximum load
ramp rate:
P( t + 1 ) − P( t ) ≤ ∆Pmax +
+ δ HS ( t + 1 ) ⋅ [∆Pmax,HS − ∆Pmax ] +
+ δ WS ( t + 1 ) ⋅ [∆Pmax,WS − ∆Pmax ] +
+ δ CS ( t + 1 ) ⋅ [∆Pmax,CS − ∆Pmax ] +
t −m
+ ∑ δ WS ( i ) ⋅[∆Pmax,WS − ∆Pmax ] +
i =t
t −m
+ ∑ δ CS ( i ) ⋅[∆Pmax,CS − ∆Pmax,WS ]+
i =t + 1
t −m
+ ∑ δ CS ( i ) ⋅[∆Pmax,CS − ∆Pmax ]
i =t
where ∆Pmax, ∆Pmax,HS, ∆Pmax,WS and ∆Pmax,CS are the
maximum load ramp rates in normal operation or during a
hot, warm or cold start-up respectively, m is the number of
time intervals required for a warm start-up and n is the
number of time intervals required for a cold start-up (it is
assumed that a hot start-up requires only one time interval).
In (7) the last three summations are introduced to fix the
correct value of the maximum load ramp during the start-
ups. It is worth noting that the constraints on load ramp rates
link every time interval with the others, i.e. makes the
problem dynamic.
The variables Pav(t) and Fav(t) are used to evaluate correctly
the energy production and the fuel consumption during the
load ramps. These two variables are calculated as arithmetic
average between the values of P and F at t and t-1:
P( t ) + P( t − 1 ) F( t ) + F( t − 1 )
Pav ( t ) = ; Fav ( t ) =
2 2
Performance degradation between overhaul and maintenance
interventions is not considered for simplicity.
The objective function z to be maximized is the short-run
profit of each power plant (considered separately). It is
computed as the difference between the revenues deriving from
selling electricity and the operating costs due to fuel
consumption, CO2 emissions, hot, warm and cold start- ups:
where ce is the specific electricity price (€/MWh); cf is the
specific fuel cost (€/MWh); α is the emission of CO2 per unit of
fuel (t/MW); c*CO2 is the specific cost of the CO2 emission (€/t);
CHS, CWS and CCS are the cost (€) of a single hot, warm and cold
start-up, respectively. It is worth noting that a colder start-up
implies a warmer one. Thus, in (6) when a hot start-up occurs
only δHS turns to 1, when a warm start-up occurs both δHS and
δWS turn to 1 and when a cold start-up occurs all the three
variables turn to 1. This is the reason why in (9) the costs of a
warmer start-up are subtracted from the costs of a colder one
(7) (so, CHS is subtracted from CWS and CWS is subtracted from CCS).
The decision variables of the problem are the binary variables
δ(t) and the load P(t) in all time intervals of the period 2007-
2010 (the size of the plants is assigned).
OPTIMIZATION OF THERMAL POWER PLANTS
OPERATION IN THE PERIOD 2007-2010
The optimization methodology described in the previous
section is applied to build and solve seven MILP optimization
models (one for each power plant) using the commercial
software GAMS® and the solver CPLEX.
Input data
Input data used in the optimization model include (these
data were taken from the references indicated within square
brackets):
• Thermodynamic parameters (a and b in (1)) describing the
plant characteristic curves (Figs. 4 and 5).
• Data associated with the dynamic plant behavior (Pmin, T1,
T2, ∆TDTmin and ∆TOTmin) [25,26] (Tab. 2). Note that the
warm start-up is not defined for CC plants (T1=T2, see (6)).
• Start-up costs (Tab. 3) [25]. Warm start-up and hot start-up
costs are obtained by multiplying the cold start-up costs by
the factors indicated in the Tab. 2.
• Specific costs of fuel [27,28] and CO2 emissions [29]
(Tab. 4).
• Features of the hourly price of the electricity (average value
(8) and standard deviation from the average, see Tab. 5).
Tab. 2: Dynamic constraints for the MILP model
ST PLANT CC PLANT
Pmin 0,35 Pmax 0,4 Pmax
T1 3h 2h
T2 5h 2h
∆TDTmin 5h 5h
∆TOTmin 5h 5h

z = ∑[ Pav ( t ) ⋅ ∆T ⋅ ce ( t )] −∑[ Fav ( t ) ⋅ ∆T ⋅ ( c f + α ⋅ c *CO2 )] +

t t Tab. 3: Start-up costs
(9)
− ∑[ δ HS ( t ) ⋅ CHS ] − ∑[ δWS ( t ) ⋅ (CWS − CHS ) ] + ST CC
t t SPECIFIC COSTS
PLANT PLANT
− ∑[ δ CS ( t ) ⋅ (CCS − CWS ) ] Fuel additional cost [€/MW] 35.30 56.00
t CCS
Maintenance additional cost [€/MW] 4.80 10.0
CWS Warm start-up factor 0.50 0.50
CHS Hot start-up factor 0.30 0.30

6 Copyright © 2012 by ASME

 Tab. 4: Fuel and CO2 emission costs In 2007 the very low fuel and CO2 costs resulted in high
profits. In 2008 the EEX prices increased more than coal and
2007 2008 2009 2010
CO2 costs yielding high profits for all plants. Instead, in 2009
COAL [€/MWh] 9.23 14.01 12.04 12.50
GAS [€/MWh] 17.19 23.15 17.95 17.73
and 2010 coal and CO2 costs decreased less than EEX prices so
CO2 [€/t] 0.66 17.38 13.00 14.32 that profits decreased as well.
Table 7 and Fig. 7 show the optimization results of the
Tab. 5: Summary of EEX prices in 2007-2010 period combined cycle power plants operation. Total profits in the four
years amount to 465.77 €/kW for CCHC (ηel=59.00%), 426.91
ce,av Standard deviation €/kW for CC3P (ηel=56.62%), 387.82 €/kW for CC1P
[€/MWh] [€/MWh]
(ηel=54.26%) and 314.71 €/kW for CCLC (ηel=50.00%).
2007 38.11 28.51
2008 65.90 30.32
As for the coal-fired plants, 2008 turned out to be a very
2009 38.86 19.40 profitable year. Profits in 2007 are much closer to 2010 and
2010 44.49 13.98 2009 than for coal-fired plants: CO2 costs are less relevant in
combined cycles because of lower carbon emission from natural
Results gas and higher efficiency of these plants. On the average,
The main results of the seven optimization problems are specific profits increased by 17 €/kW per each efficiency point
summarized in the following. between 50% and 59% during the period 2007-2010.
Table 6 and Fig. 6 show the optimization results of the coal- Figure 8 shows the average production costs of each power
fired power plants operation. Total profits in the four years plant, including fuel consumption, CO2 emissions and start-up
depend on plant efficiency. So, higher profits are obtained with costs. It is worth noting how the merit order has changed from
the STSC (ηel=46.05%, 513.53 €/kW), lower profits for STHC 2007 to 2010. In 2007 the lowest costs are obtained by coal-
(ηel=43.10%, 457.71 €/kW) and STLC (ηel=37.27%, 341.02 fired plant configurations (see Fig. 8 (a)). In the following
€/kW). On the average, specific profits increased by 20 €/kW years, the importance of CO2 costs increased so that combined
per each efficiency point between 37% and 46% during the cycle became progressively more convenient in spite of the
period 2007-2010. increase in natural gas cost (see Fig. 8 (b) to (d)).

Tab. 6: Specific profits of coal-fired power plants Tab. 7: Specific profits of CC power plants

TOTAL PROFITS 2007-2010 TOTAL PROFITS 2007-2010

Power plant STSC STHC STLC Power plant CCHC CC3P CC1P CCLC
Total specific profits z/Pmax Total specific profits
513.53 457.71 341.02 465.77 426.91 387.82 314.71
[€/kW] z/Pmax [€/kW]
∆ ( z / Pmax ) ∆ ( z / Pmax )
[ €/kW ] 19.64 [ €/kW ] 16.78
∆ η el % ∆ η el %

600 600
z/Pmax [€/kW]
z/P max [€/kW]

2007 2008
2007 2008
500 500 2009 2010
2009 2010

400 400

300 300

200 200

100 100

0 0
STSC STHC STLC CCHC CC3P CC1P CCLC
(ηel=46.05%) (ηel=43.10%) (ηel=37.27%) (ηel=59.00%) (ηel=56.62%) (ηel=54.28%) (ηel=50.00%)

Fig. 6: Profits of coal-fired power plants in 2007-2010 Fig. 7: Profits of CC power plants in 2007-2010

7 Copyright © 2012 by ASME

 OPTIMIZATION OF THERMAL POWER PLANTS
production cost [€/MWh]

60
2007 OPERATION FOR INCREASING MARKET SHARE OF
50
RENEWABLE ENERGIES
40
Different scenarios of market share increase of renewable
30 energies are analyzed in the following to forecast the changes in
20 the optimal operation strategy of tradition thermal power plants
10 operation in the German electricity market.
0
Effect of renewable energy in the merit order
(ηel=46.05%)

(ηel=43.10%)

(ηel=37.27%)

(ηel=59.00%)

(ηel=56.62%)

(ηel=54.28%)

(ηel=50.00%)
RES fuelled power plants have priority on traditional power
CCHC
STHC

CCLC
CC3P

CC1P
STSC

STLC

plants in the German electricity market. So, the market share of

the latter is reduced depending on the amount of RES generated
(a) electricity [30].
production cost [€/MWh]

60
2008
50

40

30

20

10

0
(ηel=46.05%)

(ηel=59.00%)

(ηel=43.10%)

(ηel=56.62%)

(ηel=54.28%)

(ηel=37.27%)

(ηel=50.00%)
CCHC

STHC

CCLC
CC3P

CC1P
STSC

STLC

(b)
production cost [€/MWh]

60
2008 Fig. 9: Merit order effect of RES
50

40
This concept is shown in the cost vs capacity curve (Fig. 9).
30
The so-called residual load is the power that must be supplied
20 by thermal power plants:
10

0
RL(t ) = D(t ) − PRES (t ) (10)
(ηel=46.05%)

(ηel=59.00%)

(ηel=43.10%)

(ηel=56.62%)

(ηel=54.28%)

(ηel=37.27%)

(ηel=50.00%)
CCHC

STHC

CCLC
CC3P

CC1P
STSC

STLC

where D(t) is the electricity demand and PRES(t) is the

production from RES at time t, which is considered at zero
variable production costs in this representation. This implies a
(c) shift of the merit order curve to the right, which in turn results
60
production cost [€/MWh]

in a decrease in the electricity price ce determined by the

2010
50
intersection between demand and supply at time t. The
40 consequence is the exclusion of high production cost traditional
30
power plants from the market.
20
Model for the evaluation of the new price patterns
10 We consider here that the contribution for RES to electricity
0
production may vary while both the number and type of
traditional power plants remain the same.
(ηel=59.00%)

(ηel=46.05%)

(ηel=56.62%)

(ηel=43.10%)

(ηel=54.28%)

(ηel=50.00%)

(ηel=37.27%)
CCHC

STHC

CCLC

Starting from available hourly data of electricity demand

CC3P

CC1P
STSC

STLC

and hydroelectric, wind, biomass and photovoltaic production

estimates, the actual residual loads (RL(t)) can be evaluated. For
(d) simplicity we assume that the shape of the merit curve remains
the same during the period in which the contribution of RES to
Fig. 8: Average production costs of the power plants electricity production is varied. Each point of this curve is

8 Copyright © 2012 by ASME

obtained using the electricity price (ce(t)) and the corresponding
value of RL(t), which in turn is evaluated by subtracting PRES(t)
to D(t). This assumption of constant shape of the merit curve
would actually apply only during a short period of time in
which bids of traditional power plants remain the same due to
approximately constant electricity production costs.
The merit order curve is finally used to calculate “new”
electricity prices corresponding to different renewable shares,
which create a shift of the curve to the right depending on the
considered values of RES production.
A model is created in Matlab Simulink® environment (Fig. 10)
to evaluate the effects of increasing RES generation.
Inputs of the model are:
• The actual hourly pattern of electricity demand D(t).
• The actual hourly patterns of electricity production by PV,
wind and biomass.
• The merit order curve (constant in time) that was built as
described above.
The RES electricity production (PRES(t)) in each hour t is
obtained by summing the electricity productions by PV, wind
and biomass, which are first amplified (multiplying by a
constant) to model a capacity increase of each RES. The
residual loads (RL(t)) in each hour are then obtained by
subtracting PRES(t) from the demand D(t). Finally, RL(t) is used
as an input in the merit order curve to evaluate the new hourly
pattern of electricity price (ce(t)).
Accordingly, the following four scenarios are considered, which
differ for PV and wind installed capacities only:
• Base: it includes the 2010 photovoltaic and wind installed
capacities.
• PV3: the photovoltaic installed capacity is three times as
much the 2010 one.
• W2: the wind installed capacity is twice as much the 2010
one.
• PV3W2: the photovoltaic and the wind installed capacities
are three times and twice as much the 2010 ones,
respectively.
The Base scenario reproduces the actual 2010 power system,
but market prices of this scenario are not exactly corresponding
to the actual ones as they are given by the merit order curve that
was built as described above (basically, price peaks are
smoothed). These prices are used as reference in the
comparison with other scenarios. PV3W2 scenario represents
the installed capacity expected in 2020 [31]. Three test-months
are considered as representative of Summer, Mid-season and
Winter conditions: August 2010, October 2010 and December
2010. A single month is a long enough period to cover a quite
wide spectrum of price values, and sufficiently short at the same
time to consider a merit order curve “constant”, as explained
above. Table 8 shows the prices obtained from running the three
Simulink® models (one for each test-month).
Tab. 8: Electricity prices in the different scenarios

AUGUST OCTOBER DECEMBER

ce,av price ce,av price ce,av price
[€/MWh] volatility [€/MWh] volatility [€/MWh] volatility
Base 39.43 12.42 48.80 13.91 54.21 18.57
PV3 35.57 13.45 46.22 13.51 53.49 18.17
W2 34.35 14.57 40.55 16.93 45.48 21.58
PV3W2 30.56 14.79 38.03 16.42 44.85 21.17

It is worth noting that there are two effects of the renewable

energy share on the electricity price: the first effect is on the
average price ce,av, the second one is on price volatility. Solar
and wind sources have different frequencies and amplitudes
during days and seasons, therefore, their influence on the prices
is different:
®
Solar source has daily and seasonal periodic trend. Thus, the
Fig. 10: Simulink model of the electricity market in the solar power source reduces prices only during the day and,
PV3W2 scenario in particular during peak hours. This effect is higher in
Summer. In fact in December and October, a higher PV
The main assumptions of the model are: feed-in (PV3 scenario) involves a lower volatility than the
Bids of traditional power plants match exactly their short- Base case. On the other hand, in August the high PV feed-in
run marginal costs; involves a higher price difference between day and night
Biomass production is considered constant; (i.e. the volatility is higher). In addition, during weekends
While being a RES, hydroelectric production is not the prices of electricity can drop to very low values.
considered in PRES(t). This simplification is justified by the Wind source is characterized by a frequency that not
fact that hydroelectric production is not expected to vary necessarily follows a daily trend. A windy period can last
significantly in future. some consecutive days, having a bigger effect on electricity

9 Copyright © 2012 by ASME

 price than solar source. As a consequence, in the scenario fact, when one of the two RES additional contribution implies
W2 prices fall when a windy period occurs and they can the shut down of a traditional power plant, the effect of the
decrease significantly also in low demand periods (like night other RES is null being the plant already off.
or weekends). For this reason wind energy has a remarkable
effect both on mean price and price volatility. The effect on October and December
volatility is similar in all months considered. In October and December the profits reduction deriving by an
When generation by both these sources increase (PV3W2 increase of RES electricity production is lower than in summer
scenario) the two effects are achieved together: in December because of the higher demand. In addition, the contribution by
and October the volatility is lower than in W2 thanks to the PV is generally lower, so that PV3 profit reduction is limited.
higher photovoltaic feed-in. On the other hand, in August On the other hand, the high wind production in October had a
the volatility increases due to both energy sources. significant effect on W2 profits, which fell by 37% and 35% for
STHC and CC3P, respectively. PV3W2 profit reduction is
Optimization of thermal power plants operation lower than in August because of the lower overall RES
The maximum short-run profits (9) of two power plants contribution.
(STHC, CC3P) showing average performance within the Steam
and Combined Cycle categories are evaluated using the new Note that all profit reductions are expected to increase if
hourly pattern of electricity price (ce(t)) calculated in the plant efficiencies are lower than the considered ones, and may
previous section for different RES shares. The goal consists in lead to exclusion of older plants from the market. Note also that
foreseeing how RES generation influences the optimal the analysis took into account the variation of the real installed
operation of these traditional power plants. capacity in Germany in August, October and December 2010,
Tables 9 and 10 show the STHC and CC3P CC3P maximum and the consequent effects on the electricity price.
achievable profits and number of full load hours in the three
scenarios (PV3, W2 and PV3W2) compared to the Base one. It CONCLUSIONS
appears clearly that profit decreases similarly for both plants in The economic performance of traditional thermal power
each scenario, as explained in detail in the following. plants in Germany was analyzed in this paper, both using
historical data of the period 2007-2010 and foreseeing new
Tab. 9: Optimization results for the coal-fired power plant market scenarios characterized by additional renewable
AUGUST OCTOBER DECEMBER
electricity production in the next future.
full load full load full load 1. The significant increase of CO2 costs in the period 2007-
profit hours profit hours profit hours
PV3 -37% -16% -17% -7% -4% -1% 2010 resulted in a strong reduction of profits for all
W2 -29% -19% -37% -25% -29% -23% traditional power plants, and lead to a reverse merit order of
PV3W2 -62% -37% -50% -35% -32% -23% steam coal Rankine and natural gas fired combined power
plants. The latter replaced the former as to lowest operation
costs in spite of the stronger increase in natural gas cost with
Tab. 10: Optimization for the combined cycle power plant
respect to coal.
AUGUST OCTOBER DECEMBER
full load full load full load 2. Additional contributions to electricity production from
profit hours profit hours profit hours renewable sources demonstrated to decrease the profits from
PV3 -30% -14% -17% -9% -5% -1%
W2 -23% -23% -35% -30% -28% -24% traditional power plants dramatically (up to 68% when
PV3W2 -53% -32% -48% -33% -31% -24% photovoltaic is three times as much and wind is doubled
compared to the real installed capacities of 2010). Profit
August reduction resulted to be only slightly lower for natural gas
The most relevant profit reductions occur in August because of fired combined cycle power plants than for coal-fired steam
the combined effect of low electricity demand and significant plants.
contribution by RES. In particular, in PV3 STHC and CC3P
profits fall by 37% and 30%, respectively, due to the high solar 3. Profit reduction at point 2 may lead to the exclusion from
irradiation. In W2 profits fall similarly because of the relatively the electricity market of less performing traditional power
high load factor of wind energy. On the other hand, full load plants, with a positive effect on the average efficiency of the
hours are lower in W2 than in PV3 because of the higher price German power generation system.
volatility generated by possible wind energy production both
during the day and the night. The combined effect of PV and 4. The presented study demonstrates why investments in
wind capacities of the PV3W2 scenario results in a stronger thermal power plants are being held back nowadays in
profit reduction (up to 62% for STHC), which does not Germany due to the inclusion of electricity market rules
correspond to the sum of profit reductions in PV3 and W2. In favorable to renewable sources within the demand/supply

10 Copyright © 2012 by ASME

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Copyright © 2012 by ASME
 ANNEX A
®
EBSILON PROFESSIONAL MODEL OF A POWER PLANT BASED ON A SUBCRITICAL RANKINE CYCLE WITH
ADVANCED CHARACTERISTICS

13 Copyright © 2012 by ASME

 ANNEX B
®
EBSILON PROFESSIONAL MODEL OF A THREE PRESSURE LEVEL COMBINED CYCLE POWER PLANT

14 Copyright © 2012 by ASME

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