Cogeneration Systems

Evaluating Cogeneration for Your Facility

Cogeneration, also known as Combined Heat and Power (CHP), is the on-site production of two kinds of energy - usually electricity and heat - from a single source of fuel. Cogeneration often replaces the traditional method of acquiring multiple forms of energy such as purchasing electricity from the power grid and separately burning natural gas or oil in a furnace to produce heat or steam. While the traditional method of purchasing electric energy from the grid is convenient, it is very inefficient and wastes more than two-thirds of the energy in the original fuel due to production and transportation losses. Utility customers, of course, pay for those losses in their electric rates - and always have.

On-site cogeneration systems not only generate electricity more efficiently than central power stations (40% efficient vs. less than 30% efficient), they capture and use nearly all of the heat that is normally wasted by central power stations. Depending on the application, the integration of power and heat production into one on-site cogeneration system can often produce savings of up to 35% on total energy expenditures. If your facility is a big energy user, those kinds of savings can pay for installing a cogeneration system in less than ten years.

The principles of cogeneration have long been known and put to use in a wide variety of applications - from Thomas Edison's first electric generating plant in 1882, to modern chemical processing facilities, to municipal utilities supplying power and district heating. In the past, economies of scale favored large, complex projects or special situations. Today, however, advances in diesel and lean-burn gas reciprocating engine technology, microturbines, heat exchangers and digital systems controls, make cogeneration both practical and economical for applications as small as 30 kW. This is causing many more types of facilities - large and small - to take a fresh look at cogeneration as a way to improve productivity and reduce costs.

While only 9% of the electricity used in the U.S. today is produced by cogeneration systems, the Department of Energy (DOE) has established a goal of doubling installed cogeneration capacity by 2010. The European Commission has established a similar target. Switzerland, where cogeneration accounts for 77% of the country's electricity and Denmark (40%), are already well ahead of the curve.

A cogeneration system normally consists of a prime mover turning an alternator to produce electricity, and a waste heat recovery system to capture heat from the exhaust and cooling water jacket. The prime mover can be a diesel engine, a lean-burn natural gas reciprocating engine, a gas turbine, microturbine, or a fuel cell. While the ratio of heat to electricity production differs between reciprocating engine systems and gas turbine systems, nearly 90% of the energy in the original fuel is put to productive use in a typical CHP system.

The first step in deciding whether a cogeneration system is right for your facility is to perform a brief analysis of your energy use. This analysis can be reduced to a few simple questions. If you answer "yes" to all the questions, then you may be a good candidate for a more comprehensive analysis
  1. Have you taken all reasonable steps to reduce both electric and heat energy consumption at your facility? Obviously, if you can make improvements in the way you use energy in your facility, these will translate into lower operating costs and perhaps reduce the size of the cogeneration system needed and your investment.
  2. Is the average electric load at your facility greater than 150 kW/mo, 78,000 kWh/mo and heat load greater than 4,100 therms? While CHP systems incorporating smaller generators are available, facilities with larger energy needs can generate proportionately larger savings and a shorter pay-back period. To make sure your CHP system is running at full capacity most of the time, only plan on generating a portion of your total electric and thermal needs. You'll still need a utility connection to supply some portion of your load and an on-site boiler to handle peaks in your thermal demand.
  3. Is the average thermal load at your facility equivalent to 1 million Btu/hr or more? This could take the form of low-pressure steam, hot water, an absorption chiller load - or a combination of all three. Facilities with a greater thermal load than an electrical one, may find that a bank of microturbines or a single large gas turbine offer a better ratio of heat output to fuel input than reciprocating engine-driven generators. On the other hand, excess electrical power is a salable commodity that can often be fed back into the grid for additional savings. Heat production is necessarily restricted to on-site or district heating use. Excess heat is usually released as waste heat, lowering overall efficiency.
  4. Is the duration of your simultaneous need for heat and electric power greater than 4, 000 hours per year? While some applications are feasible when simultaneous electric and thermal demand is around 2,000 hours per year, economics favor systems that operate about half the year. Thermal processing loads tend to be rather constant, whereas space heating or space cooling loads tend to be alternately seasonal. Facilities with substantial space heating needs in the winter and space cooling needs in the summer are generally good candidates for CHP systems.
  5. Are local electric rates high in relation to the local cost and availability of natural gas? Known as the "spark-spread," the greater the differential between the price of electricity and the price of natural gas (on an equivalent Btu basis), the greater the likelihood that a CHP system will provide substantial savings. Also, if you envision installing an on-site generator capable of producing more electric power than can be consumed on premises, it helps to be serviced by a utility that buys excess power fed back into the grid.
  6. Is your physical site suitable for the installation of a CHP system? You'll need sufficient space to house the generators, heat-exchangers, switchgear and control systems. Small systems can be located outdoors in special drop-over or ISO-type containers, however, larger systems may need their own room or free standing building. There should also be a supply of natural gas to the facility; or, in the case of diesel engine driven systems, sufficient fuel storage capacity on-site. Environmental factors should also be considered such as state and local air quality standards, and noise ordinances relating to engine exhaust and cooling fans.
  7. Is electric service reliability a major economic concern? Many businesses today need electric service with reliability nearing 99.9999% - the so-called Six Sigma goal. In many areas of the country, utilities are incapable of delivering that kind of reliability on a regular basis. In contrast, on-site CHP systems, when designed with sufficient redundancy, standby generators and Uninterruptible Power Supply (UPS) systems, offer significantly better reliability than local utilities. They are less vulnerable to storm damage, transformer or transmission line failures, and with proper maintenance, will offer decades of reliable operation.
If your answers to the above questions are affirmative, then your facility is a likely candidate for a CHP system. The next step in determining the viability of a CHP system for your facility is to do a simple cost analysis and calculate the number of years for such a system to pay for itself.

A cost analysis is best done with the help of a representative from a system manufacturer or a consulting engineer familiar with CHP systems, such as IPSI. However, the factors that go into the calculation are: 1) average retail electricity costs per kWh; 2) cost of natural gas (or diesel) per million Btu; 3) number of anticipated hours of operation per year, and; 4) installed cost of the CHP system per kW of capacity (electrical and thermal). Typical installed costs for single unit projects is $1,000/kW, multiple unit projects is $850/kW, multiple unit projects with absorption cooling is $1,3900/kw and for multiple unit distributed generation (no thermal) projects is $650/kW.Based on various formulas, these numbers combine to yield an annual cost savings and pay-back period.

Whether the prime mover in your CHP system is a diesel engine, a reciprocating natural gas engine, a gas turbine, or a fuel cell, each technology has characteristics that may make one or another better suited to your particular application. In general, systems based on reciprocating engines offer the greatest electrical output per Btu of input energy and the highest overall efficiency. Both the reliability and availability of CHP systems are in the range of 90 - 95%. Here are some characteristics of typical CHP systems.

Diesel generator CHP system - Diesel engines represent the prime mover with the lowest installed cost, very high reliability, minimal maintenance and excellent electric load-following characteristics. However, unless the installation includes diesel catalytic exhaust systems and particulate traps, local air quality standards may limit the system's use to less than 300 hours per year. Diesel CHP systems are suitable for applications in the range of 300 kW to 10 MW electrical output and 1.5 MBtu to 45.2 MBtu thermal output. These systems require on-site fuel storage.

Lean-burn gas engine generator CHP systems - Recent advances in natural gas engine combustion technology have created a reciprocating engine generator system with excellent performance and very low emissions. Lean-burn engine generators feature emissions of less than 0.85 grams of NOx per brake horsepower-hour. Without exhaust aftertreatment, these generators are suitable for high-hour use in most geographic areas of the US. With catalytic exhaust aftertreatment, these systems are suitable for even the most environmentally sensitive areas of the country - such as California's south coast. These systems also feature fast availability and installed costs that are about one-half that of CHP systems based on gas turbines. Practical systems range in size from 300 kW to 10 MW or more electrical, and 1.5 MBtu to 45.2 MBtu thermal output.

Gas turbine generator CHP systems - Systems based on microturbines or larger gas turbines have the advantage of greater thermal output per Btu of input. Although costing considerably more per kW of capacity, and having somewhat lower overall efficiency than reciprocating engine-based CHP systems, turbine-based systems have slightly higher availability and lower maintenance. Gas turbines have been favored for very large CHP systems where high-quality heat or high-pressure steam is a required output for industrial processing. Microturbines have been favored for their compact size, low noise, clean operation and where fuel may be of low or variable quality. The size of gas turbine systems ranges from 30 kW to hundreds of megawatts. Emissions are similar to that of a lean-burn gas engine generator CHP system.

Fuel cell CHP systems - Fuel cells convert a fuel (usually natural gas) directly into electricity and heat without going through a typical combustion process. The main byproduct is water. While fuel cells are very clean and reliable, they are the most expensive to purchase of all available CHP technologies. Most installations to date have been small or demonstration projects.

Greater use of natural-gas based CHP systems would have the effect of reducing the demand for electricity from the nation's power grid. Since the lion's share of this power is produced by older coal-fired power plants, a reduction in electric demand would reduce carbon dioxide, nitrogen oxides, particulates and other noxious emissions by a similar amount. In this way, CHP is a technology that reduces pollution by preventing pollution. In addition, because CHP systems allow commercial and industrial users to operate at higher energy efficiencies, costs are reduced and natural resources are conserved.

Advancing technology has made CHP systems suitable for a much wider range of applications than in the past. Some of the typical applications include:
  • Hospitals 
  • Greenhouses 
  • Hotels
  • Industrial/chemical plants 
  • Manufacturing
  • Commercial facilities 
  • Government facilities
  • Colleges and universities
  • Food processing
  • Health clubs
  • Swimming pools
  • Nursing homes
  • District heating
  • Landfills and sewage treatment plants
  • Coal mining and oil fields
CHP systems that produce both electricity and heat from the same fuel offer energy savings of up to 35% for a wide range of facilities that can make use of both forms of energy. The potential for large savings in energy expenditures is the main reason to consider CHP. Whether you choose a system based on a reciprocating engine-driven generator or a gas turbine-driven generator depends on the size of the application and the proportion and quality of energy you need as heat. For more information, contact your consulting engineering firm, IPSI or your local power generation representative.