CHP & Cogeneration Systems: Bringing Heat and Power Together

Combined heat and power (CHP) systems represent a true two-for-one deal for facilities requiring both onsite electricity generation and large amounts of heat for process or plant operations. By capturing heat from electricity-generating equipment that otherwise would be wasted, CHP—or “cogeneration”—offers terrific cost and environmental benefits. The key to such success, however, is the right match between system design and facility needs.

Cogeneration is not a new idea—the obvious efficiencies gained in not wasting the large amount of heat energy created during generator operations have long attracted managers of large utility and industrial plants. As energy prices have gone up and generator technology has improved, such installations have become more common in hospitals, on university campuses and in a range of other building types.

The technology is not difficult to understand—your car’s heating system in winter, which uses engine heat to warm the car’s interior, is a common example of cogeneration in action. In facility applications, the primary driver is typically a natural-gas driven engine generator used as an electricity source. Heat produced by the generator can be used for manufacturing operations or as part of a district heating or cooling system. For example, the seven cogeneration plants operated by New York City’s electric utility, ConEdison, feed steam to 100,000 buildings throughout Manhattan.

In fact, CHP projects represent approximately 8 percent of U.S. electrical generating capacity, according to Jessica Bridges, executive director of the Alexandria, Va.-based U.S. Clean Heat & Power Association, a CHP industry group. She notes that there are approximately 3,400 CHP installations nationwide. In addition to saving on facility energy bills, the technology also offers major environmental benefits, because its higher efficiency means fewer greenhouse gases are produced during facility operations.

“Industrial sites, office buildings, schools and hospitals are natural sites for CHP,” Bridges says. She adds that the availability of renewable resources or otherwise wasted byproducts can help boost environmental and economic benefits of CHP projects even further.

“CHP increasingly is being installed at sites where process waste can be used for a fuel source,” she says. “Biomass by-products such as sawdust, and opportunity fuels such as landfill gas can be used in CHP systems.”

While cogeneration offers great advantages, the technology really only makes financial sense for facilities that feature very specific heat and electrical load profiles. Upfront costs for a natural-gas system-based cogeneration system can be twice as much as they would be for a standard emergency diesel generator, alone, says Louis Braquet, PE, CEM, principal consultant with the Metairie, La.-based energy consulting firm LB Services, LLC.

“Facilities that have a high coincidental need for electricity and simultaneous heat are the optimal fit for CHP,” he says. “If you need electricity tonight and heat tomorrow, it’s not going to work. Also, locations with higher electricity costs and/or access to lower-cost CHP ful, in other words, natural gas, present better CHP fits.”

Having a high utilization factor is another important characteristic of good CHP candidates, Braquet says, because good project economics depend on getting maximum run-time from the CHP plant. And, he adds, the facility needs to be large enough, with a suggested electrical load of 500 kW or greater, for resulting savings to justify the initial project costs. Smaller-scale generator and microturbine installations also may make sense, Braquet says, if the demand for heat is high compared to the electrical demand and where local electricity costs are particularly high.

Investigating whether CHP makes sense for your facility should begin with an analysis of local gas and electricity rates—installations make the most sense in areas with high electricity rates and comparatively lower natural gas rates. This analysis, along with the engineering planning required for a successful installation, can both be pretty complex. "Facilities that need or desire an emergency power generator should carefully consider their CHP options since a good CHP will allow them to accomplish their emergency power needs and save money at the same time," says Braquet. Getting outside help—and not just depending on vendors for advice—could make a big difference in how the system performs.

“There is a lot of potential for savings and greenhouse-gas reduction,” Braquet says. “The real trick is, are the economics going to work. You ought to really consider getting a third-person independent consultant.”