A novel bidding method for combined heat and power units in district heating systems

Ignacio Blanco, Anders N. Andersen, Daniela Guericke*, Henrik Madsen

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review

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We propose a bidding method for the participation of combined heat and power (CHP) units in the day-ahead electricity market. More specifically, we consider a district heating system where heat can be produced by CHP units or heat-only units, e.g., gas or wood chip boilers. We use a mixed-integer linear program to determine the optimal operation of the portfolio of production units and storages on a daily basis. Based on the optimal production of subsets of units, we can derive the bidding prices and amounts of electricity offered by the CHP units for the day-ahead market. The novelty about our approach is that the prices are derived by iteratively replacing the production of heat-only units through CHP production. This results in an algorithm with a robust bidding strategy that does not increase the system costs even if the bids are not won. We analyze our method on a small realistic test case to illustrate our method and compare it with other bidding strategies from literature, which consider CHP units individually. The analysis shows that considering a portfolio of units in a district heating system and determining bids based on replacement of heat production of other units leads to better results.

Original languageEnglish
JournalEnergy Systems
Pages (from-to)1137–1156
Publication statusPublished - 1 Jan 2019


  • Bidding method
  • Combined heat and power units
  • Day-ahead electricity market
  • District heating
  • Mixed-integer linear programming
  • Operational planning


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