Combined Heat and Power: Taking Energy Efficiency to the Next Level

Minimizing energy costs, ensuring a reliable energy supply and reducing the impact of energy use on the environment are all important considerations for companies and organizations today. For over a century, organizations across the globe have used combined heat and power (CHP), also known as cogeneration, as a strategy to provide reliable electricity, steam, hot water and cooling with lower cost and emissions than grid-supplied electricity and an on-site boiler.

CHP has always been a good fit for large applications with electricity and heating demands including in chemical plants, universities and food processing facilities. But now new developments have made CHP an attractive option for smaller applications (e.g., office buildings, multifamily residential buildings, supermarkets and hospitals). And for organizations seeking US Green Building Council LEED green building program certification, CHP can significantly improve the LEED score a building will achieve.

mcneill column CHPWhy CHP?

CHP offers companies and organizations several key energy management benefits:

  • Lower energy costs. CHP reduces energy bills because of its high efficiency. By using waste heat recovery technology to capture wasted heat associated with electricity production, CHP systems typically achieve total system efficiencies of 60 to 80 percent, compared to 50 percent for conventional technologies (i.e., purchased utility electricity and an on-site boiler). Consequently, a facility’s combined electricity and gas bills will be lower with CHP.
  • Reduced risk associated with electric grid outages. Unreliable electricity service represents a quantifiable business, safety and health risk for some companies and organizations. CHP is an on-site generation resource and can be designed to support ongoing operations by continuing to generate electricity in the event of a disaster or grid outage.
  • Less exposure to electricity rate increases. Because less electricity is supplied by the grid, facilities have less exposure to rate increases, creating cost stability. In addition, a CHP system can be configured to operate with different fuel types such as natural gas, biogas, coal and biomass; therefore, a facility could build in fuel switching capabilities to hedge against high fuel prices.

mcneill column CHP2Recent Developments

In recent years, a number of developments have made CHP more attractive and easier to implement for building types that may not have considered it in the past.

  • Packaged (modular) CHP units. These units include all of the CHP components packaged together, including engine, generator, heat recovery equipment and electrical switchgear. Previously, CHP systems were individually engineered for each application, but organizations now have a cheaper and easier way to install CHP. Packaged units can be engine, microturbine or fuel-cell based, and can be as small as 60 kilowatts.
  • Third-party ownership arrangements. Often, barriers to CHP development include the upfront cost to install the equipment and the time and cost associated with operation and maintenance. In third-party ownership arrangements, an energy services company, CHP project developer or equipment manufacturer builds, owns and operates the CHP system. This can simplify the installation and operation process for the building owner, while eliminating initial costs, reducing energy costs and minimizing risk.
  • LEED green building program. Energy consumption reduction measures offer LEED projects an excellent way to earn LEED points. CHP can help LEED projects maximize the number of points earned. Projects in the design phase have seen CHP contribute nine to 14 more points than they otherwise would have earned using purchased utility electricity and an on-site boiler. This is significant given that projects need only 40 points to earn LEED certification.
  • Modern absorption chillers. Absorption chillers use the waste heat captured by a CHP system to produce chilled water for air conditioning. Because of improvements in their technology, modern absorption chillers perform efficiently in a wide range of applications and are now a good fit for many different building types. By using absorption chillers, buildings that might not have considered CHP before — like those with large cooling loads or thermal demands that vary between heating and cooling throughout the year — become good candidates for cost-effective CHP.

Reducing Carbon Emissions with CHP

Because CHP systems offer considerable environmental benefits when compared to purchased electricity and thermal energy generated on site, CHP can be a key component of an organization’s sustainability strategy. By capturing and utilizing heat that would otherwise be wasted when electricity is produced, CHP systems require less fuel than equivalent separate heat and power systems to produce the same amount of energy. Because less fuel is combusted, emissions of greenhouse gases and other air pollutants are reduced.

EPA’s Energy Star CHP Award recognizes highly efficient CHP systems with a track record of superior performance. This July, EPA recognized three facilities with the Energy Star CHP Award:

  • Bowdoin College, Brunswick, Maine
  • Pepco Energy Systems, Atlantic City, New Jersey
  • Thermal Energy Corporation (TECO), Houston, Texas

These CHP systems achieved operating efficiencies of 68 to 87 percent, which is much higher than the efficiency of separate production of electricity and thermal energy. Learn more about these award-winning CHP systems.

Gary McNeil is the communications director for the US Environmental Protection Agency’s Combined Heat and Power Partnership. He has managed non-regulatory pollution prevention programs at the EPA since 1992. He joined the staff of EPA’s Combined Heat and Power Partnership in June 2010. Previously, he implemented projects in Asia and Latin American to reduce emissions of refrigerants from automotive air-conditioning systems, and from 1997 to 2008 managed a program of international cooperation between the ENERGY STAR program and similar programs in Brazil and China to promote voluntary measures to improve energy efficiency in commercial buildings, office equipment,and consumer products. He holds a bachelor’s degree in economics and a master of business administration degree from the University of Washington. He also holds a master’s degree in public administration from the Harvard Kennedy School.

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