11.2 Combined Heat and Power (CHP) / Cogeneration: Thermal Efficiency and System Sizing

Combined Heat and Power (CHP), also known as cogeneration, is the concurrent production of electricity or mechanical power and useful thermal energy (heating and/or cooling) from a single source of energy. Rather than purchasing electricity from the grid and burning fuel in an on-site boiler to create heat, a facility uses a single prime mover (like a gas turbine, reciprocating engine, or fuel cell) to generate electricity, and then captures the waste heat from the exhaust and cooling systems for process heating, space heating, or domestic hot water.

The Efficiency Advantage of CHP

In conventional separate generation, the centralized power plant converts fuel into electricity at an efficiency of roughly 33% to 40%. The remaining 60% to 67% of the energy is lost as waste heat to the atmosphere or bodies of water. The electricity then suffers additional transmission and distribution losses (typically around 5%) before reaching the customer. Meanwhile, the customer burns natural gas in an on-site boiler at 80% efficiency to make steam or hot water.

A properly designed CHP system changes this dynamic. By locating the generation asset on-site, transmission losses are eliminated. More importantly, the waste heat from electricity generation is captured and utilized. This brings the overall system efficiency up to 65% to 85%, significantly reducing total fuel consumption and greenhouse gas emissions.

Evaluating CHP Efficiency

For the CEM exam, you must be comfortable calculating the efficiency of a CHP system. There are two primary ways to express this: Total Efficiency and Fuel Utilization Efficiency (FUE), though they are often used interchangeably in general practice.

CHP Total Efficiency = (Electric Output + Useful Thermal Output) / Fuel Input

Note on Fuel Heating Values: When performing these calculations, it is critical to ensure all energy units match (e.g., all in BTUs or all in kWh) and to specify whether you are using the Higher Heating Value (HHV) or Lower Heating Value (LHV) of the fuel. In the US, HHV is the standard for billing and most regulatory calculations.

To standardize the units, remember:

• 1 kWh = 3,412 BTUs
• 1 MMBtu = 1,000,000 BTUs
• 1 Therm = 100,000 BTUs

Worked Example: An industrial facility operates a natural gas reciprocating engine for CHP. In one hour, the engine consumes 10 MMBtu of natural gas (HHV). The engine generator produces 1,000 kWh of electricity. The heat recovery steam generator (HRSG) captures waste heat and produces 3.5 MMBtu of useful steam. What is the total efficiency of the CHP system?

First, convert the electricity into BTUs so all units match:

• Electric Output = 1,000 kWh * 3,412 BTU/kWh = 3,412,000 BTUs = 3.412 MMBtu

Next, sum the useful outputs and divide by the input:

• Total Useful Output = 3.412 MMBtu (electric) + 3.5 MMBtu (thermal) = 6.912 MMBtu
• Fuel Input = 10.0 MMBtu
• Total Efficiency = 6.912 / 10.0 = 0.6912 or 69.1%

Prime Mover Technologies

Different prime movers have different ratios of electrical output to thermal output (Power-to-Heat ratio). Selecting the right prime mover depends on the facility's specific load profile.

• Reciprocating Engines: High electrical efficiency, lower temperature waste heat (hot water or low-pressure steam). Excellent for hospitals, universities, and commercial buildings.
• Gas Turbines: High temperature exhaust, excellent for producing high-pressure steam. Best for heavy industrial processes and large district heating networks.
• Microturbines: Smaller scale, highly reliable, lower electrical efficiency but good heat recovery. Suitable for commercial buildings and small manufacturing.
• Fuel Cells: Uses an electrochemical process rather than combustion. Very high electrical efficiency and low emissions, but currently higher capital cost.

System Sizing and Load Profiles

The most critical aspect of CHP design is sizing the system correctly. A poorly sized CHP system will waste capital, dump unused heat to the atmosphere, and ruin project economics.

Thermal Base Loading (The Golden Rule of CHP Sizing): In almost all cases, a CHP system should be sized to meet the facility's minimum continuous thermal load (baseload).

If the system is sized to meet the peak electrical load, it will produce far more heat than the facility can use for most of the year. The excess heat must be dumped via radiators or cooling towers. When heat is dumped, the system is no longer operating in cogeneration mode—it is just an expensive, inefficient on-site power plant.

By sizing to the thermal baseload, the facility ensures that nearly 100% of the recovered heat is utilized year-round, maximizing the FUE and economic return. Any electrical demand above what the CHP system produces is simply purchased from the utility grid.

The Spark Spread

The economic viability of a CHP system is heavily influenced by the "Spark Spread." The spark spread is the theoretical gross margin of a gas-fired power plant from selling a unit of electricity, having bought the fuel required to produce this unit of electricity. In facility management, it represents the price difference between purchased electricity and purchased natural gas. A wide spark spread (expensive electricity, cheap natural gas) creates favorable economics for CHP. A narrow spark spread makes the payback period much longer.