How it works/Economics

Combined Heat and Power (CHP) is
the simultaneous generation of two or more forms of energy from a single fuel source.* By recycling valuable heat from the combustion process, CHP results in far greater efficiencies than centralized power generation. The recovered thermal energy may be used for industrial processes, space heating and refrigeration, or space cooling through an absorption chiller. CHP is considered the most viable and economical use of distributed generation (DG) when implemented at or near the point of use. DG offers many benefits to energy consumers choosing to adopt this technology including:  

• Modern equipment is environmentally friendly
• Uses available heat (thermal energy) to increases fuel-use efficiency
• Diversifies electric supplies to the end-user and enhances energy security
• On-site generation alleviates geographical transmission and distribution load constraints

CHP systems are well suited to employ a wide array of fuels in order to generate power. Natural gas is by far the most commonly used fuel, but opportunity fuels such as biogas from an anaerobic digester, landfill gas, or industrial waste may be obtained from appropriate sources and implemented in a CHP system.

CHP systems provide a significant environmental benefit over centralized power generation. Increasing fuel use efficiency results in decreased emissions of CO2, SOx and NOx. These pollutants have been linked to global climate change, acid rain, and other forms of environmental damage. Distributed generation also provides increased efficiencies over centralized generation because CHP prevents the inefficiency and line losses involved in transmitting power over large distances.

CHP systems can be operated in “economic dispatch” mode, where the system owners operate the systems during the times of day when they can produce electricity themselves, cheaper than they can buy from the grid. This is typically throughout the day during weekdays. In this mode, the operator shuts-down the CHP systems and buys electricity from the grid when the grid prices are cheapest, typically, nights and weekends.  This “make vs. buy” decision can be complex and is affected by a multitude of site-specific conditions.

With rising concerns over energy prices, energy security, environmental damage and blackouts, brownouts, and other power disruptions, energy consumers are increasingly turning to CHP to meet their energy needs.

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*Examples of two or more energy forms could be a) mechanical power from an engine (such as might be used to drive an air compressor) plus recovered heat from the engine’s exhaust; or b) electrical power from an engine-generator set plus recovered heat from the engine’s exhaust. Due to the particular challenges associated with integrating self-produced electricity into a facility, NYSERDA’s CHP programs have evolved to exclusively address electric-producing CHP systems.

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