in this report€¦ · 03/09/2013 · waste (includes waste heat, msw, black liquor, blast furnace...
TRANSCRIPT
In this report: Combined Heat and Power
Issue 51 • September 3, 2013
• Technologies and Applications
• Vendors and Products
• Policies and Regulations
• Q&A with Montefiore Medical Center
Photo: ©iStockphoto.com/fotofjodor
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EL Insights: Combined Heat and Power
CHP at a Glance
Combined heat and power (CHP), also called cogeneration, refers to the process of generating thermal
energy and electric or mechanical power from a single source.
Traditionally electric and thermal energy are generated separately, and often in different ways. Most
electricity is generated at central power plants, using natural gas, coal or other sources, and is then sent
to users via a transmission and distribution system. Building heat tends to be produced on-site.
But this set-up is inefficient, since electricity generation produces heat as a byproduct. CHP therefore
often represents a more efficient way of sourcing both types of energy – it can reach 80 percent
efficiency, compared to about 45 percent efficiency for centralized electricity generation paired with on-
site heat generation.1,2
Most commercial and industrial CHP is on-site, which can further increase efficiencies as energy is not
lost during the transmission process (about 9 percent of net electricity generation is lost during T&D).3
Utilities can also run central CHP plants. They can distribute the heat via district heating systems. But
more commonly, utilities will arrange for nearby industrial facilities to use their waste heat.
1 http://www.c2es.org/technology/factsheet/CogenerationCHP
2 McKinsey & Company, Unlocking Energy Efficiency in the U.S. Economy, July 2009.
http://www.mckinsey.com/client_service/electric_power_and_natural_gas/latest_thinking/unlocking_energy_efficiency_in_the_us_economy
3 International Energy Agency, Combined Heat and Power: Evaluating the Benefits of Greater Global Investment. 2008.
http://wadecanada.ca/documents/reporto_iea_chpwademodel.pdf
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Technologies and Applications
Fuels
The most common fuels used for CHP systems are:
Natural gas or propane: 69.5 percent
Coal: 15.2 percent
Waste (includes waste heat, MSW, black liquor, blast furnace gas, petroleum coke, process gas): 9
percent
Biomass (includes landfill gas, digester gas, bagasse): 2.5 percent
Wood and wood waste: 1.6 percent
Oil (includes distillate fuel oil, jet fuel, kerosene, RFO): 1.4 percent
Other: 0.8 percent.4
Types of systems
A company’s choice of CHP technology depends on what fuel it plans to use and how much generating
capacity it needs. It also depends on what kind of thermal outputs the company wants. CHP plants usually
4 CHP Installation Database, ICF International, July 2013. http://www.eea-inc.com/chpdata/index.html
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produce steam, but can also create chilled air or water using an adsorption chiller, or dehumidify air using
a desiccant dehumidifier.5
On a basic level there are two types of CHP:
Topping cycle: This is the most common type, where fuel is used first to generate electric or mechanical
energy, and then waste heat provides thermal energy.6
Bottoming cycle: This is the reverse – fuel combustion or another chemical reaction is first used to
produce heat for a manufacturing process, and then heat is recovered to generate electricity. Also called
“waste heat to power” (WTP), bottoming cycle CHP is a largely untapped resource.
We will now go into these two types of CHP in more detail.
Topping Cycle
Topping cycle systems can be further broken down into the following, categorized according to their
“prime movers” (heat engines):
Gas combustion turbines: Used in larger systems,7 gas turbines burn natural gas to turn turbine blades
and spin an electric generator. These typically have capacities between 500 kW and 250 MW and are
very reliable. They are cost-effective for power demand between a few MWe and 25 MWe. Gas turbines
perform best at full power. Their exhaust heat can be used for steam generation (high or low pressure) or
5 http://www.eia.gov/todayinenergy/detail.cfm?id=8250
6 http://www.c2es.org/technology/factsheet/CogenerationCHP
7 http://www.eia.gov/todayinenergy/detail.cfm?id=8250
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hot water, or the thermal energy can be converted into chilled water using single- or double-effect
absorption chillers.8
Gas and steam turbines are the best types of CHP for industrial processes because of their large capacity
and ability to produce the temperature of steam most needed by these processes.9 Gas turbines may also
be used for district heating, but generally combined-cycles are better for this purpose because of their
superior energy efficiency. The technical lifetime for gas turbines is 25 years, with an economical lifetime
of up to 20 years.10
Steam turbines: These use any number of fuels, such as natural gas, coal, solid waste, wood, wood
waste or agricultural by-products; have capacities between about 50 kW and 250 MW and are very
reliable. In a steam turbine, fuel is burned to heat water, creating steam that turns a turbine, and then
exiting steam can provide thermal energy.
Again, these are well suited for industrial processes, as well as institutions. Ideal facilities include those
with high thermal loads and readily available fuel, such as waste.11
8 Combined Heat and Power. International Energy Agency, Energy Technology Systems Analysis Programme. Technology Brief E04, May
2010. http://www.iea-etsap.org/web/e-techds/pdf/e04-chp-gs-gct_adfinal.pdf
9 http://www.c2es.org/technology/factsheet/CogenerationCHP
10 Combined Heat and Power. International Energy Agency, Energy Technology Systems Analysis Programme. Technology Brief E04, May
2010. http://www.iea-etsap.org/web/e-techds/pdf/e04-chp-gs-gct_adfinal.pdf
11 http://www.c2es.org/technology/factsheet/CogenerationCHP
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Combined-cycle systems: These consist of a gas turbine, a heat recovery steam generator, and a
steam turbine with back pressure or a steam extraction system.12 Combined-cycle systems are used in
12 Combined Heat and Power. International Energy Agency, Energy Technology Systems Analysis Programme. Technology Brief E04, May
2010. http://www.iea-etsap.org/web/e-techds/pdf/e04-chp-gs-gct_adfinal.pdf
41,182
27,640
10,442
2,274 699 72 68 65
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
Combined Cycle Boiler/Steam Turbine
Combustion Turbine
Reciprocating Engine
Waste Heat to Power
Microturbine Fuel Cell Other
CHP Prime Movers, Installed Capacity
(MW)
Source: CHP Installation Database, ICF International, July 2013 (http://www.eea-inc.com/chpdata/index.html).
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larger systems13 and largely for industrial cogeneration, especially process industries, because of their
high electrical efficiency and power range, which varies from 20 MWe up to hundreds of MWe. The plant’s
steam may be fully utilized for industrial use, with the system achieving a minimum 40 percent electrical
efficiency, based on a gas turbine simple cycle efficiency. Or the plant may be used in condensing mode,
in which case the maximum efficiency of commercial combined cycles can top 57 percent. Lifetime for
combined-cycle systems is the same as for gas turbine systems.14
By far the greatest majority of combustion capacity comes from a combination of gas-fired combustion
turbines and combined cycle systems. 15
Reciprocating internal combustion engines: These are widely used in small-to-medium applications
(under 10 MW), so are well-suited for commercial as well as light-industrial situations.16 They start quickly,
have good efficiencies and are generally reliable.
The most common type is spark ignition engines, which run up to 5 MW, usually running on natural gas
(though propane, landfill and biogas are other possibilities). Nearly half of all cogeneration sites use
reciprocating engines.17
Microturbines: These compact, light turbines typically run from 30 to 300 kW18 but potentially up to 500
kW. They are a good choice for sites with space limitations.19 They combust a variety of fuels and
13 http://www.eia.gov/todayinenergy/detail.cfm?id=8250
14 Combined Heat and Power. International Energy Agency, Energy Technology Systems Analysis Programme. Technology Brief E04, May
2010. http://www.iea-etsap.org/web/e-techds/pdf/e04-chp-gs-gct_adfinal.pdf
15 http://www.c2es.org/technology/factsheet/CogenerationCHP
16 http://www.eia.gov/todayinenergy/detail.cfm?id=8250
17 http://www.c2es.org/technology/factsheet/CogenerationCHP
18 http://www.c2es.org/technology/factsheet/CogenerationCHP
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produce hot water or low-pressure steam, suitable for water, space or process heating; absorption
cooling; dessicant dehumidification; and other uses.20
Fluidiized-bed combustion: This technology mixes solid fuel with sand, ash or limestone, which allows
the fuel particles to be well dispersed, to quickly heat to the ignition temperature, and to store significant
amounts of thermal energy. The technology has a lower combustion temperature than conventional plants
such as pulverized coal-fired boilers. Coal can be used in fluidized-bed combustion, as can low-quality
fuels with high mineral or moisture contents, including bark, saw dust and wood chips. The plants can use
multiple fuels (co-firing). They can be used for industrial steam demands or district heating. Technical
lifetimes for FBC systems may be 40 years or more, with economical lifetimes of about 25 years.21
Fuel cells: These are the only technology listed in this section that does not directly combust fuel.
Instead, fuel cells use an electrochemical process to convert hydrogen into water and electricity. The
hydrogen can come from a number of feedstocks, including natural gas, coal and biomass. Fuel cells are
highly efficient, have low GHG emissions and emit low noise levels. But the technology is still relatively
immature, creating risks, and capital costs are high.22 For more information please see EL Insights issue
22, Stationary Fuel Cells.
19 http://www1.eere.energy.gov/manufacturing/distributedenergy/microturbines.html
20 http://www.c2es.org/technology/factsheet/CogenerationCHP
21 Combined Heat and Power. International Energy Agency, Energy Technology Systems Analysis Programme. Technology Brief E04, May
2010. http://www.iea-etsap.org/web/e-techds/pdf/e04-chp-gs-gct_adfinal.pdf
22 http://www.c2es.org/technology/factsheet/CogenerationCHP
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Bottoming Cycle
This type of CHP is most common in process industries, such as glass or steel, that depend on high-
temperature furnaces. Other energy-intensive sectors that could benefit include refineries and cement
kilns.23
The key benefit of these systems is that they use heat for existing processes, which would otherwise go to
waste. About a third of energy consumed by industry is discharged as thermal losses, either to cooling
systems or directly to the atmosphere. But most of the waste energy is of low quality – that is, it is
dissipated as radiation heat loss or it is contained in waste streams with temperatures below 300 F –
meaning it is uneconomical to recover. Waste heat to power is economical mostly from waste heat
sources over 500 F. But emerging technologies are beginning to lower this limit.24
Types of bottoming cycle (WTP) systems include:
Steam Rankine Cycle (SRC) – This is the most common type of WTP system. It uses waste heat to
generate steam in a boiler, which drives a steam turbine. Water is pumped to elevated pressure before it
enters a heat recovery boiler. It is vaporized by hot exhaust and expanded to lower temperature and
pressure in the turbine, which generates the mechanical power to drive the generator. Low-pressure
steam is then exhausted to a condenser, where heat is removed, and the condensed steam – now liquid –
23 Waste Heat to Power Systems. EPA, Combined Heat & Power Partnership, May 30, 2012.
http://www.epa.gov/chp/documents/waste_heat_power.pdf
24 Waste Heat to Power Systems. EPA, Combined Heat & Power Partnership, May 30, 2012.
http://www.epa.gov/chp/documents/waste_heat_power.pdf
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is returned to the pump. SRCs are generally more economically viable where the source heat temperature
is over 800 F.25
Organic Rankine Cycles (ORC) – These systems use working fluids other than water, which offer better
efficiencies at lower heat source temperature. The fluids have lower boiling points, higher vapor pressure,
higher molecular mass, and higher mass flow compared to water. This allows higher turbine efficiencies
than in the SRC, allowing ORCs to be used with waste heat sources as low as 300 F. ORC plants can be
economic even in small, sub-megawatt packages.26
Kalina Cycle: This is another Rankine cycle, this time using a mix of water and ammonia as the working
fluid. Kalina cycle plants can accept waste heat at temperatures from 200 to 1000 F, and are 15-25
percent more efficient than ORCs at the same temperature level. Kalina systems have the highest
theoretical efficiencies, but because of their complexity they are suitable generally for larger power
systems, of several megawatts or more.27 In addition to their use in industrial waste heat-to-power, ORCs
and Kalina cycle plants are also used in geothermal power plants (see EL Insights issue 47, Geothermal
Energy.).
25 Waste Heat to Power Systems. EPA, Combined Heat & Power Partnership, May 30, 2012.
http://www.epa.gov/chp/documents/waste_heat_power.pdf
26 Waste Heat to Power Systems. EPA, Combined Heat & Power Partnership, May 30, 2012.
http://www.epa.gov/chp/documents/waste_heat_power.pdf
27 Waste Heat to Power Systems. EPA, Combined Heat & Power Partnership, May 30, 2012.
http://www.epa.gov/chp/documents/waste_heat_power.pdf
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In addition to these, there are a number of advanced technologies in the research and development
stage, including include thermoelectric, piezoelectric, thermionic, and thermo-photovoltaic (thermo-PV)
devices.28
Applications
Industrial: Cogeneration systems can provide not just electric power, but also mechanical – for example,
to drive rotating equipment like compressors, pumps and fans. The thermal energy can be used for
steam, hot water, process heating, cooling, refrigeration and dehumification.29
Power sector: Utilities and other energy companies with CHP plants will typically arrange for a
neighboring industrial facility to buy the waste heat.30 Three of the biggest such facilities are the Deer
Park Energy Center, whose steam is used by a nearby Shell Chemical plant; Channelview Cogeneration,
which supplies its steam to Equistar Chemical; and Sweeny Cogen, whose steam is used at a
ConocoPhillips refinery.31
28 Waste Heat to Power Systems. EPA, Combined Heat & Power Partnership, May 30, 2012.
http://www.epa.gov/chp/documents/waste_heat_power.pdf
29 http://www.c2es.org/technology/factsheet/CogenerationCHP
30 http://www.eia.gov/todayinenergy/detail.cfm?id=8250
31 http://www.eia.gov/todayinenergy/detail.cfm?id=8250
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Commercial and residential sectors: These are burgeoning areas for CHP technology. CHP has made
inroads into large commercial facilities requiring uninterrupted power, such as data centers, hospitals and
universities. But CHP is also moving into smaller-scale applications.32
District heating and cooling (district energy): In this process, the thermal energy from a central plant –
often from CHP – is moved via steam, hot water or chilled water through insulated pipes to supply a large
number of buildings, where it is used for space heating, hot water or air conditioning. Utilities can run
district heating to supply a given district, or institutions such as colleges, hospitals, airports and military
bases can use district heating for their own needs.33 In the US, there are about 2,500 district heating
systems in all 50 states. The technology is more popular in Europe and the Middle East.34
Vendors and Products
In general, large facilities use customized systems, and smaller facilities can go for pre-packaged
products.35
As of August 2013 there were about 75 CHP equipment manufacturers that were partners in the EPA’s
Combined Heat and Power Partnership.36 Some manufacturers of note are:
32 http://www.c2es.org/technology/factsheet/CogenerationCHP
33 http://districtenergy.org/assets/pdfs/White-Papers/What-IsDistrictEnergyEESI092311.pdf
34 http://hpac.com/heating/why-district-energy-not-more-prevalent-us?NL=HPAC-02&Issue=HPAC-02_20130619_HPAC-
02_864&[email protected]&YM_MID=1403573&sfvc4enews=42
35 http://www.c2es.org/technology/factsheet/CogenerationCHP
36 http://www.epa.gov/chp/partnership/partners.html
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2G Cenergy Power Systems Technologies: Manufactures modular CHP power plants that generate from
natural gas, biogas, landfill gas, sewage gas, coal mine gas, and other specialty gaseous fuels.
AESI: Offers turn-key CHP systems using its biomass gasification boilers.
Bloom Energy: Makes solid oxide fuel cells providing 200 kW of power.
Calnetix Power Solutions: Manufactures microturbine power generation and waste heat recovery electric
generation equipment, both available in 100 kW units.
Capstone Turbine Corporation: Has shipped more than 2,400 microturbine systems, with nearly 40
percent employed in CHP service. Focuses on commercial and industrial CHP applications, ranging from
a few kW to a few MW.
ClearEdge Power: The company makes fuel cell systems. The Model 5 system generates 5 kW of
electrical power plus 21,000 Btu/hour of heat output. The Model 400 generates 400 kW of electricity plus
1.5 million Btu/hour of heat.
CleaverBrooks: Sells heat recovery steam generators, waste heat boilers, burners, economizers and
related equipment.
Dresser-Rand: Designs, manufactures, installs, and maintains a wide range of CHP systems for
commercial, industrial and municipal clients, including the Aircogen line of CHP products.
Ebner Vyncke: Makes biomass boilers from 3 to 300 MMBtu, which produce hot gas and water, steam,
superheated steam, and thermal oil. The boilers can burn wood waste, rice husks and other agricultural
wastes. Globally, Ebner Vyncke's partner company, Vyncke, has installed more than 4,000 CHP
installations producing up to 15 MW.
ElectraTherm: The company describes its Green Machine as the world's first commercially viable waste
heat generator. The device uses Organic Rankine Cycle technology.
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Elite Energy Systems: The company designs CHP for the commercial and industrial sectors using
Caterpillar engines, fueled by natural gas, diesel, or biogas.
Elliott Company: Designs, manufactures, and services steam turbines that are used in both mechanical
drive and power generator applications. The company says the steam turbine products in its industrial
products division are ideally suited in CHP applications from 50 kW to 7,000 kW.
Enercon Engineering: The company has built CHP packaged systems since 1981 and its systems
currently operate in over 80 countries. The company also makes generator housing, generator switchgear
for low and medium voltage applications through 15 KV, and accessories including battery racks and
exhaust silencers.
GDT Tek: Manufactures a waste heat to electricity system that captures thermal energy from landfill-
generated methane. The company says its system is scalable from 150 kWh to 5,000 kWh.
GE Energy: The diversified power and energy giant makes the Jenbacher CHP system.
I Power Energy Systems LLC: A manufacturer of factory packaged combined CHP units of 20 to 365 kW,
designed for operation on natural gas, biogas, and propane. Factory packaged units up to 1 MW are
available through special orders.
Intelligen Power Systems: Makes pre-packaged cogeneration equipment. Also provides turn-key projects.
Kinsley Energy Systems: Provides CHP of up to 4 MW per package.
Kraft Power Corporation Provides pre-packaged CHP systems from 50 KW to 1.3 MW and higher with
multiple units. The company's equipment can be specified for operation with natural gas, biogas, landfill
gas, and biodiesel.
Langson Energy: The company’s Gas Letdown Generator produces baseload power by harnessing
wasted natural gas or steam letdown pressure. The Gas Letdown Generator also co-generates cooling as
a byproduct.
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Leva Energy: Sells CHP burners that the company says have a fuel-to-electricity efficiency of 90 percent.
Marathon Engine Systems: Manufactures a small-scale CHP system, trademarked ecopower.
Mayekawa: Designs and manufactures pre-packaged and pre-engineered CHP systems.
Mitsubishi Power Systems Americas: Produces reciprocating engines with CHP options to capture waste
heat from cooling water, lube oil, and cooling and exhaust gas systems. This can generate saturated
steam for use in heating or absorptive chilling.
MWM of America: The company supplies systems based on reciprocating spark ignited engines, using
natural gas or biogas.
Natures Group: Installs units that consume biowaste as fuel to create electricity and hot fluids.
Owl Power Company: Manufactures, installs and operates Vegawatt cogeneration systems that generate
electricity and hot water from waste vegetable oil and grease.
Siemens Energy, Inc.: The Siemens AG subsidiary’s range of gas turbines include eight models ranging
from 4-45 megawatts.
Solar Turbines Incorporated: This Caterpillar subsidiary supplies 1-49 MW power systems, serving
applications including CHP, combined cycle, and fixed/mobile peakers.
Spark Energy: The company’s products include Microspark (CHP units from 10 to 50 kW); Bluespark:
(CHP units from 65 to 4,000 kW) and Biospark (biogas-powered CHP units and gas treatment systems
from 50 kW to 4,000 kW). The company also offers diesel CHP units.
Steam Power LLC: Offers CHP systems, heat recovery systems, wood biomass to energy systems,
steam turbine generator sets for backpressure and condensing service, and gas turbines of 50 MW.
Steam Power’s boilers and gas turbines can use fuel including landfill gas, biogas, and syn gas.
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Systecon: Manufacturer of modular CHP systems, consisting of generators, heat recovery, chiller, pumps,
cooling towers, and controls.
Tecogen: Makes natural gas-fueled modular CHP systems, which have been placed in over 800
installations. Its cogeneration modules range from 60 to 75 kW, use a natural gas-fired internal
combustion engine and use recovered exhaust heat to provide hot water.
TEDOM: The Czech company designs, makes and sells engines for CHP and district heating, available in
three output ranges: 8-55 kW, up to 300 kW, and up to 10,000 kW. These are fuelled by natural gas,
landfill gas, agricultural biogas or wastewater treatment biogas.
Vericor: Provides CHP products in the 0.5-15 MW range.
Yanmar America Corporation: Makes and operates power generation systems, including 10KW units in
the U.S.37
Benefits and Challenges
Benefits
Savings: CHP may deliver 15-30 percent energy savings compared to the separate production of heat
and power, although initial investment costs may be higher.38
37 http://www.epa.gov/chp/partnership/partners.html
38 Combined Heat and Power. International Energy Agency, Energy Technology Systems Analysis Programme. Technology Brief E04, May
2010. http://www.iea-etsap.org/web/e-techds/pdf/e04-chp-gs-gct_adfinal.pdf
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GHG reduction: By reducing the total amount of fuel that must be burnt to produce thermal and electric
heat, CHP also cuts greenhouse gas emissions. CHP installations in the US avoid about 248 million
metric tons of CO2 a year.39 Gas turbine and gas engine systems emit about 450-550 kg GHGs per MWh;
CCGT systems 400-500 kg; FBC systems 675-750.40
Cutting other air pollutants: CHP systems can cut emissions of other pollutants including SO2, NOx
and mercury. For example, gas turbine systems typically emit about 50 grams of NOx per MWh; CCGT
systems, 30 grams.41
Energy security: Companies using CHP have a steady dependable source of electricity that doesn’t
depend on utilities or the grid. 42 During major blackouts and storms, several institutions have found their
CHP highly valuable – see Companies Adopting and Q&A.
Flexibility: CHP can provide operational flexibility to meet a company’s changing needs, including
varying power-to-heat-demand ratios.43
39 http://www.c2es.org/technology/factsheet/CogenerationCHP
40 Combined Heat and Power. International Energy Agency, Energy Technology Systems Analysis Programme. Technology Brief E04, May
2010. http://www.iea-etsap.org/web/e-techds/pdf/e04-chp-gs-gct_adfinal.pdf
41 Combined Heat and Power. International Energy Agency, Energy Technology Systems Analysis Programme. Technology Brief E04, May
2010. http://www.iea-etsap.org/web/e-techds/pdf/e04-chp-gs-gct_adfinal.pdf
42 http://www.c2es.org/technology/factsheet/CogenerationCHP
43 Combined Heat and Power. International Energy Agency, Energy Technology Systems Analysis Programme. Technology Brief E04, May
2010. http://www.iea-etsap.org/web/e-techds/pdf/e04-chp-gs-gct_adfinal.pdf
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Challenges
Costs: CHP systems are significant capital investments and incur sizeable operating expenses.
Investment costs are generally expected to fall, however. Some typical and expected costs are as follows:
1100
2200
970
3000
6500
0
1000
2000
3000
4000
5000
6000
7000
Steam
turbine*
Recip. engine Gas turbine** Microturbine Fuel Cell
Range of Typical Installed Costs,
by CHP Technology ($/kWe)
430
5000
2400
1300 1100
0
0.009
0.004
0.012
0.032
0.005
0.022
0.011
0.025
0.038
0
0.005
0.01
0.015
0.02
0.025
0.03
0.035
0.04
Steam
turbine*
Recip. engine Gas turbine Microturbine Fuel Cell
Range of Typical O&M Costs,
by CHP Technology ($/kWhe)
Note: Data are illustrative values for typically available systems. All costs are in 2007 dollars.
* For steam turbine, not entire boiler package.** 5-40 MW
Source: EPA Combined Heat and Power Partnership, Catalog of CHP Technologies, December 2008.
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According to McKinsey, a typical 10 MW gas turbine system costs $10 million to $13 million to install (so
$1000 to $1300 per kW), and $200,000 to $700,000 a year to run and maintain, not including fuel.44
The IEA gives a slightly different figure, ranging from $900/kWe to $1500/kWe, with a typical cost of about
$1000/kWe and O&M costs ranging from $35/kWe to $55/kWe per year. Gas-turbine plants should see
modest cost reductions to $950/kWe in 2020 and $900/kWe in 2030.
For a combined-cycle CHP plant, investment costs range from $1100 to $1800 per kWe, with a typical
cost figure of $1300, and annual O&M costs of about $50/kWe. Typical combined cycle costs are
expected to fall to $1200/kWe in 2020 and $1100/kWe in 2030.
For fluidised-bed combustion based on coal, capital costs range from $3000 to $4000 per kWe and more,
with typical costs of $3250 and annual O&M of about $100/kWe. FBC costs are projected to fall to
$3000/kWe in 2020 and $2850/kWe in 2030.45
For gas-engine CHP plants, meanwhile, typical installation costs are in the range of $850 to $1,950 per
kWe, typically about $1,150, with O&M of about $250/kWe. The IEA projects a price decline to
$1050/kWe in 2020 and to $1000/kWe in 2030.
If the system uses biogas from anaerobic digestion in combination with a gas engine, costs for digestion
and gas cleaning equipment must be added to the costs outlined above.46
44 McKinsey & Company, Unlocking Energy Efficiency in the U.S. Economy, July 2009.
http://www.mckinsey.com/client_service/electric_power_and_natural_gas/latest_thinking/unlocking_energy_efficiency_in_the_us_economy
45 Combined Heat and Power. International Energy Agency, Energy Technology Systems Analysis Programme. Technology Brief E04, May
2010. http://www.iea-etsap.org/web/e-techds/pdf/e04-chp-gs-gct_adfinal.pdf
46 Combined Heat and Power. International Energy Agency, Energy Technology Systems Analysis Programme. Technology Brief E04, May
2010. http://www.iea-etsap.org/web/e-techds/pdf/e04-chp-gs-gct_adfinal.pdf
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Installed costs for waste heat to power are about $2,000 to $4,000 per kW, with O&M costs of $0.005 -
$0.020 per kWh.47
Companies must also consider the costs of manufacturing downtime and utility charges for standby and
backup services – often a point of contention with the utility – and CHP users may be charged a fee if they
choose to leave the grid.48
Siting, permitting: Some environmental regulations – the Clean Air Act New Source Review, for example
– present hurdles to CHP installation, despite the technology’s benefits. 49
Interconnection: To be economically viable for most customers, cogeneration systems must connect
with the grid. The technical specifications, processes and fees of interconnection vary by geographic area,
which can complicate installation and make it more expensive.50
Risk: Besides permitting challenges, uncertainties include installation overruns, system integration
challenges, margin losses due to system shutdowns, gas price volatility, power price uncertainty, and
environmental emissions exposure. Companies moving to a single source of power will also be more
exposed to commodity and disruption risk.51
47 Waste Heat to Power Systems. EPA, Combined Heat & Power Partnership, May 30, 2012.
http://www.epa.gov/chp/documents/waste_heat_power.pdf
48 McKinsey & Company, Unlocking Energy Efficiency in the U.S. Economy, July 2009.
http://www.mckinsey.com/client_service/electric_power_and_natural_gas/latest_thinking/unlocking_energy_efficiency_in_the_us_economy
49 http://www.c2es.org/technology/factsheet/CogenerationCHP
50 http://www.c2es.org/technology/factsheet/CogenerationCHP
51 McKinsey & Company, Unlocking Energy Efficiency in the U.S. Economy, July 2009.
http://www.mckinsey.com/client_service/electric_power_and_natural_gas/latest_thinking/unlocking_energy_efficiency_in_the_us_economy
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Lack of expertise: Many companies do not have the in-house expertise to manage and operate CHP
systems.52
Waste heat hurdles: WHP faces some special technical challenges. Waste heat sources can be difficult
to capture, if they are dispersed or from non-continuous processes. Chemical and mechanical
contaminants can reduce efficiency and increase costs. Limitations on space or equipment configurations
can make WHP implementation difficult or impossible.53
Policies and Programs
Federal
On a federal level, the Energy Improvement and Extension Act of 2008 and the American Recovery and
Reinvestment Act of 2009 provide an investment tax credit, accelerated depreciation and other funding for
specific CHP projects.54
However, some other federal regulations appear to be holding back the sector. Under Federal Energy
Regulatory Commission rules, authorized by the Energy Policy Act of 2005, utilities are no longer required
to buy electricity from larger qualified facilities, if the facilities have access to competitive electricity
markets. Starting in 1978, these purchases had been required, and helped to grow CHP substantially.
Also the Clean Air Act’s New Source Review requires large stationary sources to install best available
52 McKinsey & Company, Unlocking Energy Efficiency in the U.S. Economy, July 2009.
http://www.mckinsey.com/client_service/electric_power_and_natural_gas/latest_thinking/unlocking_energy_efficiency_in_the_us_economy
53 Waste Heat to Power Systems. EPA, Combined Heat & Power Partnership, May 30, 2012.
http://www.epa.gov/chp/documents/waste_heat_power.pdf
54 http://www.c2es.org/technology/factsheet/CogenerationCHP
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pollution control equipment during their construction, or during major modifications that increase
emissions.55
States – Renewable Portfolio Standards
As of October 2012, 23 states recognized CHP contributions in their Renewable Portfolio Standards,
which specify how much of the state’s electricity must come from renewable sources; or Energy Efficiency
Resource Standards, which establish long-term energy savings targets that must be met through
customer energy efficiency programs.56,57 These states include Arizona, Connecticut, Hawaii, Indiana,
Maine, Massachusetts, Michigan, Minnesota, New Hampshire, New York, North Carolina, Ohio,
Pennsylvania, South Dakota (although this is a voluntary goal, not a mandatory standard), Utah (again,
more of a voluntary goal), Washington, West Virginia (voluntary) and Wisconsin.
In many cases the rules name CHP as an eligible resource but don’t make any specific allowances or
requirements for it. Some exceptions are:
Arizona: CHP only counts if its source fuel is an eligible renewable resource.58
Connecticut: The RPS requires each electric supplier to derive at least 4 percent of its retail load from
CHP and energy efficiency by 2010.59
55 http://www.c2es.org/technology/factsheet/CogenerationCHP
56 http://www.eia.gov/todayinenergy/detail.cfm?id=8250
57 http://aceee.org/topics/eers
58 http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=AZ03R&re=1&ee=1
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Massachusetts: The state’s Alternative Energy Portfolio Standard requires meeting 3% of the state’s
electric load with “alternative energy” by 2013, 3.5 percent by 2014 and 5 by 2020. Sources include CHP,
gasification with capture and permanent sequestration of carbon dioxide, flywheel energy storage, paper-
derived fuel sources, and energy efficient steam technology. In 2009 and 2010, about 99% of compliance
was met using efficient CHP technologies.60
Minnesota: The state’s Energy Efficiency Resource Standard requires electric utilities to invest 1.5
percent of their revenue in energy conservation improvements, including waste heat recovery. For electric
utilities that operate nuclear plants, the requirement is 2 percent, and for natural gas utilities it is 0.5
percent.
New York: The state’s Renewable Portfolio Standard customer-sited program offers regular competitive
solicitations to CHP systems of 50 kW or larger, as well as fuel cells, PV and anaerobic digesters.61
North Carolina: The state’s Renewable Energy and Energy Efficiency Portfolio Standard requires
investor-owned utilities, by 2021, to supply 12.5 percent of retail electric sales from eligible standards,
which can include CHP using waste heat from renewables. In addition, up to 25 percent of the
requirement may be met through energy efficiency, including CHP fueled by non-renewables. For
municipal utilities and electric cooperatives, the target is 10 percent by 2018.62
Ohio: The state’s alternative energy performance standard allows cogeneration and waste heat recovery
system technologies that meet certain requirements. A waste heat recovery or cogeneration system may
59http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=CT15R&re=1&ee=1
60http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=MA21R&re=1&ee=1
61http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=NY03R&re=1&ee=1
62http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=NC09R&re=1&ee=1
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qualify for either the state’s Renewable Energy Resource Standard or its Energy Efficiency Portfolio
Standard.63
States – Other Policies
There are hundreds of state and city-level incentives taking a wide variety of forms, from bonds, PACE
programs, loans and grants to feed-in tariffs, tax incentives, rebates and production incentives. Just a
sampling:
Bonds: Ohio, New Mexico, Hawaii, Utah, Idaho
Commercial PACE/loan programs: Include, but are not limited to, Connecticut, D.C., Los Angeles
County; and the cities of Ann Arbor, Milwaukee and San Francisco.
Feed-in tariffs: California, Rhode Island.
Grant programs: Alaska, Connecticut, Illinois, Indiana, Massachusetts, Minnesota, New Hampshire, New
Jersey, Oregon, Pennsylvania, Rhode Island.
63http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=OH14R&re=1&ee=1
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Interconnection standards and net metering policies also play a role in encouraging or discouraging CHP,
and these vary widely from state to state.
17,524
8,757
6,918
5,554
3,380 3,303 3,217 3,165 2,932 2,812 2,267
1,732 1,582 1,570 1,541 1,307 1,271 1,231 1,220 953
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
TX CA LA NY FL PA AL MI NJ OR IN VA MA WI NC WA IL GA SC ME
Top 20 States by Installed CHP
(MW)
Source: CHP Installation Database, ICF International, July 2013 (http://www.eea-inc.com/chpdata/index.html).
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Two useful directories of CHP are:
Database of State Incentives for Renewables & Efficiency – run by North Carolina State University.
(http://www.dsireusa.org/incentives/index.cfm?EE=1&RE=1&SPV=0&ST=0§or=Commercial&searcht
ype=Loan&technology=combined_heat_power&sh=1)
CHP Policies and Incentives Database – run by the EPA. (http://www.epa.gov/chp/policies/database.html)
Latest Developments in CHP
US and Global Markets
Energy Information Administration data shows that in 2011, there was just under 70 GW of CHP capacity,
which represents almost 7 percent of total US capacity, and 4 percent of electric generating capacity in
the power sector. Of the CHP in that year, looking by ownership, 25 GW was in the industrial sector, 2
GW in the commercial sector, and 43 GW in the electric power sector.64 But looking by applications tells a
different story – since the electric power sector’s heat is almost entirely used by industry, almost all CHP
use in the US is actually industrial, commercial or institutional.
Looking across sectors by capacity installed, CHP is popular with companies that have high demand for
heat or steam, and those with constant thermal and electricity demands. The technology works well in
energy-intensive manufacturing industries, especially those with combustible byproducts. For this reason,
there is a large concentration of CHP on the Gulf Coast, near refineries and chemical plants. There are a
number of smaller CHP plants located by pulp and paper mills, using the wood waste byproducts as fuel –
64 http://www.eia.gov/todayinenergy/detail.cfm?id=8250
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these cluster in the south, northern Wisconsin and in Maine. Food and primary metals manufacturers
make up much of the remaining capacity.65
Comparing the application of CHP in various sectors by sheer number of installations, chemicals still
come tops with 278 projects. That’s followed by a catch-all for “other or unknown” applications (277), then
by colleges/universities (261) and schools (250).66
Geographically, beyond the industry hotspots listed above, CHP is also popular in those states, such as
California and New York, where utility regulation has been favorable towards the technology.67
Demark, the Netherlands and Finland lead in their CHP installation as a fraction of national electricity
generation. In China, CHP accounts for about 13 percent of electricity generation capacity.68
65 http://www.eia.gov/todayinenergy/detail.cfm?id=8250
66 CHP Installation Database, ICF International, July 2013. http://www.eea-inc.com/chpdata/index.html
67 http://www.eia.gov/todayinenergy/detail.cfm?id=8250
68 http://www.c2es.org/technology/factsheet/CogenerationCHP
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CHP growth has followed the patterns of the wider electric power industry, peaking in the early 2000s. But
while electric generation at non-CHP plants increased 4.8 percent from 2004 to 2011, electric generation
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
US CHP Installations, By Year
(MW)
Capacity (MW)
Source: CHP Installation Database, ICF International, July 2013
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at CHP plants fell by 11.2 percent over the same period. CHP was hard hit by the recession, and this was
felt especially in the industrial sector.69
Adoption by Businesses
Montefiore Medical Center: See Q&A.
Dow Chemical: The company uses the nation’s first- and third-biggest CHP plants, both natural-gas fired
combined-cycle systems: the 1,572 MW Plaquemine Project (together with AEP) in Louisiana, and the
1,229 MW Energy Systems and Technical Services project in Texas.70
Texas A&M University: Runs a 45 MW CHP system which produces electricity, space cooling, space
heating and hot water. The system allowed the university to provide emergency housing for people during
Hurricanes Katrina and Rita.71
SC Johnson: The company installed a 3.2 MW landfill gas-fired Solar Centaur 40TM combustion turbine
at its Waxdale plant in Racine, Wisconsin, and later added another of the same turbine, but fueled
primarily by natural gas.72
Johnson & Johnson: The company spent $4 million to install two 1.1 MW reciprocating natural gas
engines, for its La Jolla, Calif., research lab. The system provides over 90 percent of the facility’s electric
power and much of its heating and cooling needs.73
69 http://www.eia.gov/todayinenergy/detail.cfm?id=8250
70 http://www.eea-inc.com/chpdata/
71 http://epa.gov/chp/partnership/current_winners.html
72 http://www.midwestcleanenergy.org/profiles/ProjectProfiles/SCJohnson.pdf
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BMW: The automaker’s manufacturing plant in Spartanburg, SC uses landfill gas from Waste
Management’s Palmetto Landfill. The gas travels through a 9.5 mile pipeline to get to the plant. The 11
MW system has two gas-fired combustion turbines, and heat is used for process steam. The installation
produces 30 percent of the plant’s electrical needs and 60 percent of its thermal needs.74
The Future of CHP
Projections
More than 3,700 MW of new CHP generation is proposed for 2013-6.75
In 2009, McKinsey projected that about 50.4 GW of CHP could be economically deployed in the US by
2020, at a cost of $56 billion, providing then-present value savings of $77 billion. It noted that the potential
varied markedly by region, with most potential in the south (mostly industrial) and east (mostly
commercial). The biggest opportunities are in chemicals, iron and steel. The biggest potential among
73 http://www.pacificcleanenergy.org/PROJECTPROFILES/pdf/JohnsonJohnson.pdf
74 http://www.southeastcleanenergy.org/profiles/se_profiles/BMW_Case_Study.pdf
75 http://www.eia.gov/todayinenergy/detail.cfm?id=8250
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38.6 40.8
43.3 45.8
48.6
53.2
57.5
62.4
67.6
73.5
79.5
18.9 19.1 19.3 19.6 20.0 20.5 21.0 21.7 22.4
23.4
24.5
13.5 14.1 14.5
15.2 15.8
16.1 16.3
16.8 17.1 17.8 18.5
5.1 6.3
7.9 8.9 10.3
13.4 16.3 19.3
23.0
26.7
30.2
1.1 1.3 1.6 2.1 2.5 3.1 3.8 4.7 5.1 5.6 6.3 0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Commercial CHP Installed Capacity by Region,
2012-2022 (GW)
Total Europe North America Asia Pacific Latin America, Middle East, Africa
Source: Navigant Research
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small-scale installations is for large office buildings, healthcare facilities and universities. Costs will have
to come down substantially to create a broader market in other commercial settings or in residential.
McKinsey noted that potential for CHP depends on local power prices, space conditioning loads and
primary fuel cost and availability.76
In 2008, the IEA projected that industrial CHP would double from 2005 to 2020 under a “business as
usual” scenario, but if countries work together to aggressively tackle GHG emissions, industrial CHP
would quadruple.77
CHP: What Does All This Mean?
CHP offers inherent efficiency advantages.
It is available as a wide array of technologies using a variety of feedstocks, allowing companies to choose
a system that meets their process needs and environmental goals.
Capital costs are high but are likely to come down.
Permitting and interconnection can present challenges, and CHP’s viability will depend on the costs of
competing technologies and of power generally.
76 McKinsey & Company, Unlocking Energy Efficiency in the U.S. Economy, July 2009.
http://www.mckinsey.com/client_service/electric_power_and_natural_gas/latest_thinking/unlocking_energy_efficiency_in_the_us_economy
77 http://www.c2es.org/technology/factsheet/CogenerationCHP
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Q&A
Edward Pfleging, P.E., vice president, Engineering and Facilities, Montefiore Medical Center, Bronx, NY
When did you install your CHP system?
A 5.5 MW diesel plant was installed in 1994, and we added another 5 MW plant in 2002 with 4 MW stand
by power.
Why did you decide to install CHP?
Changes in tariffs which mandated utilities to provide backup services to cogenerations allowed for the
consideration of this technology in a hospital, coupled with board interest, energy conservation, savings
and independence from utility.
Who supplied your CHP system?
The first plant was designed by Braun Engineering and installed by Turner Construction. The expansion
plant was a design build by Keyspan Energy Management.
What type of CHP system do you use, and what fuel does it employ?
In the first plant, Fairbanks Morse duel fuel opposed piston diesel engines are the prime movers and
exhaust is ducted into 80,000 lb/hr boiler for heat recovery. In the expanded plant, a 4.8MW solar gas
turbine is connected to a 60k lb/hr HRSG for waste heat and 2 - 2MW diesel engines are standby.
What were the installation costs?
Total costs were $20,000,000.
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What are the yearly running costs?
$9,000,000.
Did you receive any grants?
We received a small DOE grant in 1994 and a commissioning grant from NYSERDA on expansion. Both
plants were financed through tax-exempt Federal Housing Administration financing.
How did the cogen plant help during the 2003 blackout and recent hurricanes?
The hospital did not lose power despite the problems Con Ed had with their distribution system during
these events. All electrical power at the Moses campus remained fully functional due to the Cogen Plant.
We were the shining star in the Bronx during the August 2003 blackout, providing refuge to the elderly in
our air-conditioned lobbies and cafeteria. During Sandy we continued to operate and take patients from
hospitals less fortunate and in flood areas.
What have the other benefits been to your organization?
Tons GHGs prevented – 17,900 tons per year of CO2 emissions
Improvement in energy efficiency – adding VFDs to all HVAC equipment where applicable throughout the
campus
Money saved - $3,000,000 annually with CoGen. The overall savings to the hospital is about $3M
annually after accounting for all Cogen Plant related expenses, depreciation and interest on mortgage.
Qualitative benefits – Additional level of redundancy for our power needs. Even if Con Ed has a problem,
the CoGen plant will keep the hospital supplied with electricity.
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What challenges have you encountered in installing and using your CHP system?
Retrofitting new equipment into existing buildings, space and access.
Did you have any difficulties with your utility?
Con Ed works with us when they need to perform maintenance on their system.
What difficulties did the hospital face in getting the necessary permits to achieve its grid
connection?
Con Ed does have programs that allow self generators to connect to the grid. Our design engineers and
consultants worked closely with Con Ed to ensure we installed the necessary switching and metering
equipment so that the final installation was safe and functional. There are many technical requirements
and testing and maintenance protocols in dealing with a Con Edison interconnect. One major difficulty we
experienced was that the interconnect was not a redundant service and when the feeder failed, which
happens, there was no backup and it was very difficult to be dependent on a service that was not reliable
or redundant. After almost 20 years of operating like this, Con Edison offered us another service as a
backup if we chose to pay for the installation, which we of course did.
What challenges did the hospital face in negotiating an acceptable feed-in tariff for the energy it
generates?
Con Ed has set programs and rates in place that define the appropriate fees and tariffs. Basically there is
no advantage to sell real time to the market since Con Edison will only pay the average daily market price
for the month. Any opportunities are typically averaged down by the end of the month. I believe there are
tariffs under consideration where power exported to the grid will be able to credit electric accounts at other
properties, allowing to wheel power across to other Montefiore sites. That would be a nice opportunity.
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Did zoning and permitting present any challenges?
Yes. The DEC and EPA emissions permitting process is challenging.
How do you expect your CHP use to change, if at all, in the next few years?
By adding newer technology we hope to increase the efficiency and reliability of the plant.