Heat Energy Market

Energy Trading in District Heating Systems

Master thesis (2019)

Authors

L.J.A. van Gestel Technology, Policy and Management

Contributors

Laurens De Vries Energy and Industry (supervisor 1)
G. Bekebrede Organisation & Governance - TPM (supervisor 2)
Faculty
Technology, Policy and Management
Copyright: © 2019 Lennert van Gestel
District Heating Network District Heating Horticulture Heat Energy Market Short Term Trade Wholesale
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Published Date

30-10-2019

Language

English

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Faculty

Technology, Policy and Management

Abstract

In order to reduce CO2 emission, district heat networks and carbon-neutral heat energy production are being developed in the Netherlands. This resulted in an increasing amount of district heating systems (DHS) in the horticulture areas. A DHS in a region called the ”B3-Hoek” connects multiple producers with horticulture companies in a single-buyer market model with long term bilateral contracts. This market model has some undesirable aspects that contribute to the willingness of introducing a short term heat market model in the system. However, such a short term market is still prone to market failures, if producers have considerable market power. The aim of this research is to investigate how a short term market can be designed for a DHS in the Netherlands, how producers and large consumers behave on a short term market and how this affects the performance of the market. An interactive simulation of a short term heat market was created, based on the DHS in the B3-Hoek to investigate this.
The findings in this research give a conceptual model of the new market design and it showt that in a short term heat market prices will converge to marginal cost levels when market conditions are not tight. There is a balance of market power between the producers and the horticulture companies collectively. The results of short term market will not be comparable to the case of a perfectly competitive market due to Cournot competitive behaviour, but they can still be considered desirable for both horticulture companies and producers.