Introduction to CHP

Combined Heat and Power (CHP) has captured the interest of policymakers at the federal and state/provincial level, potential users and developers, and is entering into the business strategies of many utilities, unregulated energy service providers, and customers. CHP has the potential to dramatically change the existing structure of electricity generation and distribution and redefine how electric services are delivered to the customer. At the same time, CHP faces the difficulties of introducing new technologies and practices to the market, an uncertain and changing regulatory environment, and high expectations. Combined Heat and Power, also called cogeneration, is a distributed generation application that, can significantly increase the efficiency of energy utilization, reduce emissions of criteria pollutants and CO 2 , and lower a user’s operating costs.

Potential benefits of CHP to energy users include lower energy costs, increased reliability, improved power quality, enhanced energy management through options such as peak shaving, ability to arbitrage gas and electric costs, and the ability to economically provide both power and heat. Historically CHP applications across North America were located in the larger commercial and industrial market. Over the years CHP has worked its way into the small to medium sized commercial and industrial markets. The largest potential growth markets for CHP will be the small commercial and residential markets in the future as new smaller sized CHP products enter the North American Market.

A key element of CHP’s promise is the emergence of small, modular natural gas generating technologies with relatively high efficiencies and low emissions. These technologies will enable local distribution companies (both gas and electric), energy service companies and customers to respond to changing energy markets with increased flexibility and with cost effective alternatives to the traditional utility infrastructure. In most cases, natural gas will be the fuel of choice for CHP, creating new loads and new business opportunities for local distribution companies. The Energy Solutions Center (ESC) and its members in partnership with other trade allies play an important role in facilitating the commercialization and deployment of CHP into the market by helping to increase the awareness of CHP options among customers and by working to overcome critical market, technology application, regulatory and institutional barriers to widen market acceptance.

To facilitate this effort, the ESC has formed the CHP Consortium, supported by twenty-six utility members and several manufacturers, to create print and electronic marketing and sales collateral designed to help educate the potential end user on the benefits of CHP.

1.1 Objectives of Application Guide

This guide for replicable innovative CHP applications is intended to assist gas companies and potential customers to better understand the related benefits, barriers, technologies, and issues related to the practical application of CHP. This comprehensive document provides valuable information needed to understand the CHP market and implement projects. While each potential CHP project requires its own detailed analysis which must incorporate unique site-specific considerations, this guide provides the tools for initial assessment of CHP market opportunities, identification of applicable CHP technologies, and initial technical and economic feasibility of CHP project opportunities.

The guide presents an overview of CHP technologies, applications, and project assessment approaches.

This guide covers the following topics:

CHP Basics
CHP Market
CHP Technologies
Integration of CHP into Industrial Processes
CHP Assessment, Design, and Installation Issues
Economic Evaluation of CHP Projects

1.2 Use of Application Guide

This guide allows those pursuing specific CHP project opportunities to become familiar with traditional applications of CHP, current performance of primary CHP prime movers, and the steps to take to ensure fair and reasonable evaluation of specific project opportunities.

The guide can be broken down into four basic components: CHP markets, CHP technology, CHP project assessment and development, and CHP implementation. Chapters 2 and 3 provide background information and insights into the current state of the CHP market. Chapters 4 look at the technical aspects of generation equipment and Chapter 5 integrates CHP into industrial processes. Chapters 6 and 7 provide the process for assessing and implementing a CHP project.

2.1 Benefits of CHP