The Benefits of Combined Heat and Power (CHP) aka Cogeneration

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Posted on February 17, 2016

cogeneration power plant sale, decommissioning, and relocation

52 MW Cogeneration Plant & Central Energy Facility @ Stanford University

By definition, Combined Heat and Power (CHP), also known as Cogeneration, is the sequential production of electricity and useful thermal energy from a single fuel source. This means that a fuel source such as natural gas or biomass is used to generate electricity and then the waste heat resulting from the generation process is used for a useful purpose such as production of process steam, hot air or chilled water.

A properly sized and configured CHP plant can have an overall cycle efficiency of 70 – 80%. This can be compared to the efficiency of a typical utility power plant of 35 – 40% where the remaining 60 – 65% of the input fuel’s energy is wasted through radiation, equipment cooling, and the plant’s exhaust. In a CHP plant this effectively “free” waste energy is captured and used for a useful purpose. This can avoid or reduce the use of additional fuel in a separate thermal process (e.g., steam production, hot air generation, chilled water production, etc.).


Cogeneration power plant at a pulp and paper mill.

Looking at CHP economically, a properly sized and configured CHP plant can lower overall energy costs because the total costs with CHP which include capital carrying costs, fuel costs and operations and maintenance (O&M) costs can be less than the sum the costs for electricity purchased from the local utility, the fuel costs for the thermal production (e.g., fuel for a boiler or dryer), and the associated O&M costs for the thermal production equipment. These cost savings can be enhanced by use of pre-owned, refurbished power generation equipment that lowers initial capital costs. Also, from a budget perspective, CHP often offers the ability to control and budget long-term costs better than separate utility purchased electricity and fuel for thermal uses. Because long-term contracts can be obtained for natural gas (and other fuels) used with CHP, the cost of the electricity produced by the CHP plant can be controlled and forecast, something often difficult with utility rates.

CHP has environmental advantages that can provide an overall reduction in greenhouse gas emissions when compared to the utility generated and supplied power and the associated transmission losses, and separate thermal energy production. Biomass and renewable fuel based CHP projects can provide zero net carbon (except for biomass transportation emissions) solutions.

From a technical perspective, on-site generation, and especially CHP can provide security of supply during grid outages. On-site generation can also be used to improve facility power factor and power quality.