Fuel Cell micro-CHP systems have the potential to support electricity grids by providing flexibility. When a number of Fuel Cell micro-CHP units are connected together they can be turned into a virtual power plant (VPP) that provides electricity to the grid during periods when power supplies from other sources (including solar and wind) are insufficient to meet the level of demand. Stationary Fuel Cells can thereby play a positive role in helping to balance electricity supply and demand – notably during peaks in domestic energy use.
In the framework of the PACE project, the HSLU’s ‘Business Engineering’ Competence Center (CCBE) has analysed the quantitative economic value for grid service markets in Germany, Belgium and the Czech Republic as well as the potential economic value added of micro-CHP flexibility avoiding grid reinforcement. Based on the results of these analyses, a roadmap was developed which describes steps in the transition from the current situation to a future in which virtual power plants (VPPs) consisting of stationary Fuel Cells will play a significant role in helping to ensure that the supply of electricity matches demand.
The economic value analysis found that out of the countries studied (i.e., Germany, Belgium, and Czech Republic), the highest revenue to be made from flexibility offered to frequency balancing markets was in the Czech Republic, earning up to 301 Euros per year in the best case.
In addition, a consultative process that involved interviews conducted with the consortium’s FC-mCHP original equipment manufacturers (OEMs), aggregators, and industry body COGEN Europe was made in order to find gaps that need to be addressed in supporting the widespread adoption of FC-mCHP in VPPs for participation in grid service markets. The gaps identified between aggregator requirements for VPP integration and OEM provided technical specifications and capabilities of FC-mCHP were used as a basis for developing the roadmap. Areas identified as being critical to the technology’s successful VPP integration and grid services markets participation include economic, technical, engagement and administrative aspects.
Aggregators and OEMs agreed that in the absence of intervention a time horizon of at least 5 to 8 years is needed for FC-mCHP to be more commonly integrated in VPPs. From the manufacturers’ perspective, making their Fuel Cell units capable of being integrated into a VPP is seen neither as a priority, nor as providing them with a competitive advantage in the market. A focus in upcoming years will be improving the interoperability of FC-mCHP units with other devices and their integration into Home Energy Management Systems (HEMS). Meanwhile, aggregators see potential for micro-scale devices such as the FC-mCHP, but also express concerns regarding the viability of the business case.
Regarding the business case for connecting FC-mCHP units together in VPPs, there are several factors hindering integration. First and foremost, the financial benefits for customers in many countries are seen as too small and not sufficiently attractive. Secondly, installation costs are burdensome for aggregators and under some contractual agreements affect asset owners. In addition, the reaction time of available devices do not facilitate participation in the more lucrative grid service markets, in particular primary control. Mitigating local congestion issues and peak shaving could potentially be valuable benefits, but this would require the establishment of local flexibility markets to provide incentives and rewards to FC mCHP unit owners.
In order to foster the widespread integration of FC-mCHP units in the electricity market, they would need to be established as a ‘mass market’ home energy solution. Through economies of scale, unit production costs as well as VPP integration costs would then become attractive to asset owners, DSOs and aggregators. However, conditions for scaling-up would also require the support of open industry-accepted standardisation frameworks that establish interoperable communication between devices and VPPs.
Including standardised ICT solutions in future generations of FC-mCHP units would help to drive down connection costs. Furthermore, progress made in interoperability could support HEMS integration which increases flexible capacity and simplifies the integration process for aggregators. Close collaboration between OEMs and aggregators will be necessary in order to share research and development (R&D) costs and support the development of commonly-accepted technical standards, integration requirements and operational rules.
Article by Marco Kunz, Master’s Assistant of the Competence Center for Business Engineering (CCBE) at the Lucerne School of Engineering and Architecture – which is part of the Lucerne University of Applied Sciences and Arts (HSLU) in Lucerne, Switzerland