Combined Heat and Power (CHP)

has captured the interest of policymakers at the federal and state/provincial level, potential users and developers, and is entering into the business strategies of many utilities, unregulated energy service providers, and customers. CHP has the potential to dramatically change the existing structure of electricity generation and distribution and redefine how electric services are delivered to the customer. At the same time, CHP faces the difficulties of introducing new technologies and practices to the market, an uncertain and changing regulatory environment, and high expectations. Combined Heat and Power, also called cogeneration, is a distributed generation application that, can significantly increase the efficiency of energy utilization, reduce emissions of criteria pollutants and CO 2 , and lower a user’s operating costs.

CHP provides many benefits compared to separate heat and power production. These benefits include increased energy efficiency, operating cost savings, and reduced air pollution. This section describes and quantifies these benefits for the existing and remaining CHP potential. There are additional benefits for industry including increased reliability, power quality, and higher productivity. The electric power industry and its customers can also benefit when CHP capacity is used to support and optimize the overall power grid.

CHP Market

An understanding of existing CHP sites provides insights with respect to project sizes, prime mover technologies, locations, site applications, and the role of natural gas. This section touches on the market potential for CHP. For a detailed state level analysis of CHP potential, see the March 2016 DOE analysis titled ‘Combined heat and Power (CHP) Technical Potential in the United States’, which can be found at: 
Much of the data in this section comes from this DOE study.

This chapter characterizes the prime mover technologies typically used in CHP applications. The characterizations include reciprocating engines, microturbines, gas turbines, steam turbines, and fuel cells. Historically the primary CHP technologies are gas turbines, reciprocating engines and steam turbines. Conventional large CHP systems are relatively widely deployed and utilize readily available thermal technologies.

Commercial & Industrial Applications to Integrate CHP Systems

This section describes some generic commercial & industrial applications that can use waste thermal energy. Integration into a specific manufacturing facility will always require further site-specific analyses. Ideal CHP applications would simply replace or supplement a hot water, steam, or cooling requirement within a plant. Adaptation of cogeneration technologies could be greatly improved by using packaged CHP systems that are developed to minimize site engineering.

Heat transfer rates to the process media are often reduced when using exhaust (the typical heat media from a CHP unit) as opposed to a burner-based operation (e.g., a process furnace). Though the quantity of heat energy available from a CHP unit is often sufficient to maintain a process operation from an energy balance standpoint, the dynamics (temperature and energy transfer profiles) can be significantly different. This is because high temperature (1500-4000 °F), luminous flames induce radiant based heating (rays of energy moving at the speed of light), whereas exhaust energy ranges from 450-1100 °F and moves via convection conduction only.

Site Assessment, Design, and Installation Tips

Gathering site data is a critical phase of a ‘Technical and Economic Feasibility Assessment’ for a CHP plant. This allows for accurate assessment of savings potential without going through all the rigorous design steps; thus reducing up front costs and still providing the site with an accurate estimate of project costs and potential energy (and energy cost) savings. This section provides guidance on the information and data needed for an adequate site assessment. Data needs can be broken down into the following categories:

  • Utility Data
  • Site Data
  • Energy Use Information
  • Company-Specific Data
  • Equipment Data

Collection of the most recent and accurate data available plays a key role in the overall feasibility assessment process.

Evaluating Economic Viability

There are several ways to evaluate the economic viability of a potential CHP project investment and compare multiple energy investment options. The two most common are payback analysis and life cycle cost (LCC) analysis. Both methods require determining costs, revenues incentives and savings attributable to the project, costs attributable to a baseline or alternative case, and developing net annual cash flows (pro forma). More complex analysis can include state and federal incentives such as tax credits or renewable energy attributes where applicable. Key distinctions are that LCC examines the total life of the project while simple payback gives equal weight to all cash flows before the payback date and no weight to any subsequent cash flows.

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