Clean Energy
CHP Basics | CHP Benefits | Technology Status | Markets for CHP | Opportunity Fuels
CHP Basics
Energy is the most significant driving force of our economy. All buildings need electric power for lighting and operating equipment and appliances. One of the major consumers of energy in buildings is the equipment for space conditioning. Most commercial and institutional buildings for businesses, education, and healthcare require space conditioning for cooling, heating, and/or humidity control.
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Two-thirds of all the fuel used to make electricity in the U.S. generally is wasted by venting unused thermal energy, from power generation equipment, into the air or discharging into water streams. While there have been impressive energy efficiency gains in other sectors of the economy since the oil price shocks of the 1970's, the average efficiency of power generation within the U.S. has remained around 33% since 1960. The average overall efficiency of generating electricity and heat by conventional systems is around 51 percent.
Integrated cooling, heating and power systems can increase total system efficiency to as high as 85%. This increase is accomplished by using thermal energy from power generation equipment that otherwise would be wasted for cooling, heating and humidity control systems. These systems are located at or near the building using power and space conditioning, and can save about 40% of the input energy required by conventional systems. In other words, conventional systems require 65% more energy than the integrated systems, as shown in the above diagram.
Commercial buildings, college campuses, hospital complexes, and government facilities are good candidates for benefiting from integrated systems for CHP for buildings.
Topping vs. Bottoming Cycles
The above description refers to what is commonly known as a "topping cycle" CHP system. In a topping cycle, the fuel is burned in a device that generates electrical or mechanical energy and thermal energy is recovered from the exhaust of this device. In a "bottoming cycle" fuel is first burned in a boiler or other device to generate usable thermal energy and a portion of this thermal energy is extracted to generate electrical or mechanical energy.
Most practitioners refer to systems using a topping cycle when they discuss CHP, but this point often is not clarified. Bottoming cycle systems are equally valuable, particularly when they are fueled by landfill gas, waste wood, or some other fuel that otherwise would be wasted.
CHP Benefits
Building owners may see several benefits from deploying CHP systems including:
- Reduced energy costs
- Reduced life-cycle costs
- Attractive return on investment
- Improved power reliability
Reduced Energy Costs
Building owners can reduce their energy costs by deploying CHP systems because compared to conventional systems these systems provide the following advantages:
- Increased energy efficiency
- Reduced demand charge
- Reduced peak electric energy costs
As discussed above, CHP systems can offer much higher total system energy efficiency than conventional stand-alone equipment items for similar degree of power reliability, comfort cooling, heating and indoor air quality. Because of the higher energy efficiency of the CHP system, it consumes nearly 40% less fuel than conventional systems. The reduced fuel consumption can significantly reduce energy costs.
Note that fuel cost will be even lower if a waste fuel such as landfill gas, digester gas, or waste wood is used to fuel the system. Even though the need for equipment to process these fuels into suitable form will increase system cost, using low-cost, waste fuels can yield a project rate of return that is far superior to systems that use natural gas or distillate oil for fuel in many cases.
The cost of electricity to buildings is generally based on power demand (measured in kW) and electric energy usage (measured in kWh). The power demand charge is generally a monthly charge ($/kW) based on the peak/maximum power used during a month for a specified period, generally 15 minutes to 30 minutes. Power demand charge rates can vary with time-of-year. CHP systems reduce power demand in two ways: 1) by generating some of the power at site, and 2) by using thermal energy from power generation equipment, instead of electricity, for operating cooling, heating and/or humidity control equipment.
The charge for electric energy usage generally varies with the time-of-year and the time-of-day. This charge is the highest during peak periods, generally from 9AM until 3PM , and the least during off-peak period, generally from midnight until 7AM . Therefore, primary reduction in electric energy cost savings for using CHP systems comes from avoiding purchase of electric energy during peak periods.
Reduced Life-Cycle Costs
Even though the initial cost of CHP systems for buildings is higher than purchasing all electric power needs and using conventional chillers and boilers for cooling, humidity control and heating needs, the life-cycle cost of the CHP systems is often lower because of the energy cost savings over its useful life of more than 20 years.
Attractive Return on Investment
As discussed above, on an overall basis, CHP systems can reduce energy costs for buildings. If the incremental installed cost of CHP systems over conventional systems is treated as an investment, and the annual savings in its energy costs are treated as the return on that investment, the return can be very attractive.
Improved Power Reliability
Economic losses due to power outages in the U.S. have cost American businesses billions of dollars. The following table shows the economic impact of power outages on some industries.
| Industry | Avg. Cost of Power Outage $/hr |
| Brokerage Operations | $6,480,000 |
| Credit Card Operations | $2,580,000 |
| Airline Reservations | $90,000 |
| Telephone Ticket Sales | $72,000 |
| Cellular Communications | $41,000 |
Since CHP systems generate power on-site or near-site, these systems improve power reliability by either reducing or eliminating a building's dependence on the electric power grid, and by providing an additional power option to the building. Also, because CHP systems are located at or near buildings, power outages experienced because of losing a distribution line are improbable.
The higher the number of buildings that use CHP systems, the lower the demand on the electric grid will be. In areas where the grid is at or near capacity, the reduced demand provided by CHP will result in increased grid reliability.
Technology Status
Descriptions of the various technologies that form integrated CHP systems is available through the following links:
Distributed Power Generation
Distributed power generation is used for producing electric power on-site or at a location close to where electric power is needed. Waste heat from these power generators is recovered for operating thermally-activated machines. Additional information on generators that can be used in CHP systems is available at:
- Gas-Fired Distributed Energy Resource Technology Characterizations - Detailed report sponsored by NREL.
- DOE Distributed Energy Program
- EPA Combined Heat & Power Partnership
Markets for CHP
While CHP systems can be used in virtually any application, they tend to be most attractive in selected commercial, institutional, and industrial applications.
Industrial Plants:
CHP systems can help manufacturers reduce production cost by recycling energy that currently is being wasted. Additional benefits CHP systems may include eliminating or reducing waste product disposal cost (via combustion as fuel), increasing power supply reliability, obtaining "free" space conditioning from wasted heat, improving power quality, and improving public image as an environmentally responsible firm. Industries that frequently benefit from CHP include:
- Petroleum refining
- Chemical process plants
- Food processing
- Glass industry
- Steel industry
- Metal Casting
- Forest products
- Paper manufacturing
Commercial & Institutional Facilities:
CHP systems can help reduce the cost of heating, cooling, or providing power to a wide variety of commercial and institutional facilities. Additional CHP benefits can include increased power supply reliability, better occupant comfort, improved indoor air quality, and reduced boiler emissions.
