Optimization of energy production of a CHP plant with heat storage

Combined heat and power (CHP) production is a very efficient technique to produce power and heat in an integrated process. In CHP plants, generation of heat and power follows a joint characteristic, which means that production planning of both commodities must be done in coordination. The hourly produced power can be sold to the grid at market price, but heat must be produced to meet the local demand of district heating or heat for specific industrial processes. Typically, the most profitable operation of a CHP system can be planned by using an optimization model. The high efficiency and profitability of CHP plants can be further improved by utilization of energy storage units. Heat storages make it possible to relax the constraint to produce heat each hour to exactly match the local demand. This allows satisfying the variable heat demand more cheaply by storing heat during low demand and discharging heat when demand is high. By relaxing the connection between heat and power production, heat storages also allow producing more electricity to the power market when the spot price is high and reducing the power generation when spot price is low. The aim of this study is to develop a model for optimizing the operation of a CHP plant together with a heat storage. The model is a linear programming (LP) model consisting of hourly models connected together with dynamic storage constraints. The objective is to minimize the production (fuel) costs subtracted by revenue from selling power to the market. The model is demonstrated using modified real-life data of a Finnish city. The results are useful for planning efficient operation of the plant. The model can also be adapted for determining the optimal size of the storage.