With increasingly positive regulatory and energy pricing environments, due in part to concerns about energy efficiency and carbon emissions, cogeneration is garnering renewed interest.
Cogeneration (combined heat and power [CHP]) is the simultaneous production of electricity or mechanical power and useful thermal energy from a single energy source. CHP technology recovers the thermal energy lost in electricity generation, which results in reduction of total source energy use and reduced emissions per unit of energy consumed (illustrated in Figure 1).
How Does CHP Work?
CHP is deployed in two common configurations (according to the order in which power and thermal energy are produced). In a topping cycle, fuel is first used to produce power; heat is the byproduct. In a bottoming cycle, fuel is used to produce heat for thermal processes, followed by utilization of exhaust gases to produce power. Barring a requirement for high-grade heat, topping cycles are more prevalent.
CHP technologies are comprised of two major systems: a prime mover and a heat-recovery system, and/or a thermally activated cooling system. The prime moving technologies are:
- Reciprocating engines. These are most widely used in applications smaller than 1 MW, and they’re the most efficient prime movers. They maintain high mechanical efficiencies over a range of operating loads. They’re available in small sizes and have low installation costs; their O&M costs are higher.
- Steam turbines. These produce high-temperature thermal output and can be sized for several different end-user CHP applications, ranging from 5 MW hospital or campus applications to 25 MW chemical-processing applications. They provide mature technology and excellent service contracts, but environmental and site permitting and packaging can be cumbersome.
- Gas turbines. The last 3 decades have seen significant development of gas turbines. Similar to steam turbines, gas turbines can produce high-temperature thermal output and can be sized for several different end-user CHP applications, ranging from 5 MW hospital or campus applications to 25 MW chemical-processing applications. They provide mature technology and excellent service contracts, but environmental and site permitting and packaging can be cumbersome.
- Microturbines. Lightweight and compact gas turbines that employ recuperators to pre-heat combustion air, microturbines operate on the same principle as gas turbines. They’re smaller and provide greater installation flexibility, though the technology is still new and can pose synchronization problems for large installations.
- Fuel cells. This is the most advanced prime moving technology, which produces direct current and heat through an electrochemical process, and requires no direct combustion of fuel. Fuel cells have very low emissions (exempt from permitting in some areas) and come in “ready-to-connect” packages, but commercial availability is low and initial cost is high.
Table 1.1, shows a comparison of various prime mover technologies. Heat recovered from a prime mover can be used to provide process, space, or water heating, as well as cooling and dehumidification using thermally activated cooling technologies. The most lucrative option of recovering heat is direct use of exhaust gas for direct-drying applications, supplemental firing to improve fuel efficiency, or directly in greenhouses in cold climates to provide heating and a carbon-dioxide-rich environment; however, in several non-industrial applications, direct use of exhaust gas isn’t feasible, and additional components are inevitable.
Heat-recovery equipment, which displaces a boiler, is typically comprised of heat recovery steam generators (HRSGs), gas-to-water heat exchangers, or coolant-to-water heat exchangers. Thermally activated cooling equipment, which displaces an electric chiller, could be single-/double-effect absorption chillers fired by steam or exhaust gas. Absorption systems rely on solution processes to absorb and evaporate the refrigerant rather than a mechanical vapor compression cycle employed by electric chillers. The basic absorption cycle has one refrigerant and one absorbent, which are separated and recombined in different stages of the cycle to produce chilled water. Table 1.2 and Table 1.3, show the comparison of heat-recovery equipment and absorption chillers. In addition, exhaust heat can be used to operate desiccant systems for dehumidification, or stored using thermal storage systems.
The Benefits of CHP
CHP systems provide wide-ranging, inter-related benefits. While the average efficiency of a U.S. power plant is only gradually moving beyond 35 percent, CHP systems can attain total system efficiencies of 60 to 90 percent by producing electricity and ensuring judicious utilization of wasted thermal energy. Additionally, CHP systems are usually located on or near the site of use, eliminating transmission and distribution losses. Higher efficiency leads to lower operating costs and reduced emissions without altering use patterns.
CHP provides a variety of economic benefits. Higher efficiency leads to reduced costs when compared to separate purchase of power and thermal systems on-site. Considering the ability of prime movers to accept several different source fuels, CHP systems allow hedging against volatility of electricity and fuel prices. Through increased reliability and power quality, CHP ensures that critical infrastructure is always online, equating to uninterrupted revenue generation. Additionally, CHP systems, which are often designed to meet peak electric load, help avoid costly demand charges, or they can be designed to meet the base electric load, which increases the duration of their operation, increasing profitability.
While enhanced power reliability is often considered a secondary benefit, its importance can’t be discounted, especially considering stress on the grid. In fact, a study of CHP facilities during the Northeast Blackout of 2003 showed that 10 out of 12 CHP sites performed exactly as planned, including sites that weren’t designed with standalone capability; several site contacts reported that they would “definitely” or “absolutely” recommend CHP systems.
Lastly, the environmental benefits of CHP can’t be discounted. CHP systems mitigate greenhouse-gas emissions and air pollutants like NOx and SOx. The U.S. EPA reports that, since the inception of its CHP partnership, 11.8 million metric tons of carbon-dioxide equivalent will be avoided annually due to the 410 CHP projects initiated by the partnership.
High thermal and electric demands, concurrent need for heating or cooling and electric power, extended operating hours, access to a variety of fuels, a favorable regulatory climate, and favorable fuel rates (commonly referred to as “spark gap,” which is the difference between electric and natural gas or other fuel rate) are important factors that increase the profitability of CHP.
Considering these factors, it’s not surprising that an overwhelming majority of existing CHP systems are used in industrial applications. A 2003 survey of existing industrial CHP systems showed that 75 percent of all systems employ traditional CHP, where waste heat is utilized to produce hot water or steam for process heating; CHP systems with absorption cooling make up 15 percent of the total industrial CHP market. In terms of payback for potential industrial CHP applications, 20 percent offer a payback of less than 2 years, 40 percent offer a payback of 2 to 4 years, and another 40 percent offer a payback of 4 to 6 years. It should be noted that industrial CHP systems run nearly 100 percent of the time, which might not be the case for most commercial applications.
In the commercial sector, hospitals and colleges/universities make up nearly one-third of the national CHP sites, which exhibit high, nearly constant thermal loads and high numbers of operating hours. In terms of capacity, colleges and universities make up more than 25 percent of the commercial CHP capacity, followed by healthcare and lodging. While newer expansion markets (educational facilities, smaller healthcare facilities, and data centers) are focused on the periphery of existing markets (hospitals, colleges, and universities), CHP applications create significant benefits for healthcare, supermarkets, lodging, restaurants, and big-box retail.
Hospitals present the best overall opportunity for CHP, with targeted opportunities for desiccant dehumidification systems in operating suites and nursing homes. While decision-makers are worried about the high cost of new energy equipment and permitting and interconnection issues, working with firms specializing in CHP systems and thermally activated technologies can ease adaptation in renovation and new construction. Hotels/motels present the next largest opportunity, especially among properties that have high thermal loads (spa facilities). This sector also provides promising opportunities for absorption cooling for peak electric demand reduction and desiccant dehumidification for mold, mildew, and comfort control.
A major challenge to penetration of CHP in hotels continues to be the separation of ownership and management, year-to-year turnover of properties, and lack of centralized HVAC.
Supermarkets present a targeted opportunity for desiccant dehumidification systems that prevent frost build-up in refrigeration equipment, enhance shopper comfort, and improve absorption cooling technologies to increase sub-cooling in refrigeration systems. Considering the slim margins of supermarket businesses, energy savings can be a critical factor in profitability. Restaurants have demonstrated some interest in cogeneration, primarily to meet customer needs in power outages and other emergencies; however, lack of thermal loads reduces the opportunity for CHP in restaurants unless recovered heat is used to produce air-conditioning or refrigeration through thermally activated equipment. Big-box retail presents the least opportunity for thermal loads except in cold climates; however, there has been recent interest in absorption cooling and desiccant technologies to meet cooling loads and dehumidification requirements in this sector.
Implementation of CHP
There are several critical areas of consideration in determining the feasibility of CHP:
- Standby/Back-Up Charges: Most customer-sited CHP systems require a back-up or standby source of steam or electric power to meet load requirements during outages or maintenance periods. Utility charges for back-up services are important to consider.
- Gas CHP Delivery Rates: Utility charges for gas CHP delivery rates must be considered, especially considering that an overwhelming majority of commercial CHP systems use natural gas.
- Grid Interconnection: Grid interconnection is non-standard and requires adherence to statewide or utility-compliance requirements. These requirements can be burdensome for smaller systems and require custom engineering, which adds to the cost of installation. There are simplified interconnect standards in a few states, such as California and Massachusetts, that are in the process of being adopted by several other states.
- Environmental Permitting: The treatment of CHP systems by air quality permitting agencies can vary from lax to very stringent, and necessary environmental permits can be difficult to attain.
- Site Permitting: Several criteria, such as water and noise impact, land use, visual impact, fire safety, etc., must be addressed.
- Tax and Financial Incentives: Tax treatment of CHP systems and on-site generation must be understood prior to deployment. Additionally, opportunity to sell power back to the grid via net metering must also be evaluated.
- Net Metering: Some utilities allow net metering for small CHP systems, which has a favorable impact on financial payback.
CHP feasibility analysis is divided into three stages:
- A screening analysis is the least expensive way to determine whether the facility is a good candidate for CHP. It typically involves using energy-consumption and utility-rate information to obtain an approximate size of the CHP system, a rough first cost, and estimated annual savings from the CHP system. The screening analysis provides a first-cut look at financial viability, and isn’t meant for making investment-grade decisions.
- A CHP feasibility analysis provides serious financial data to the decision-makers without the cost associated with engaging in a detailed concept design. This analysis consists of energy analysis, conceptual development, and a financial pro-forma analysis. The energy analysis is useful for sizing the system and developing its use and control schedule. The conceptual development provides block diagrams of the electrical and mechanical layout of the CHP system and its components.
- The final level is the detailed concept analysis. The purpose of this level is to seek a signed project commitment by the facility or building owner. The analysis generates an investment-grade proposal. This analysis is structured along the lines of feasibility analysis; however, the level of detail is much greater.
CHP’s future is bright, and its potential to produce economic and environmental benefits is considerable, but highly dependent on the application. One of the top barriers – and, therefore, priorities – is education of facility managers to enhance the penetration of CHP. Additionally, the CHP industry must continue its collaboration with state and utility partners to overcome barriers to cost-effective implementation.
Varun Singh is a PhD candidate at the Center for Environmental Energy Engineering who conducts energy audits and teaches at the School of Engineering at the University of Maryland, College Park, MD. Dr. Reinhard Radermacher is a professor of mechanical engineering and director at the Center for Environmental Energy Engineering at the University of Maryland, College Park, MD.