Overview of Combined Heat and Power (CHP)

Combined Heat and Power (CHP) refers to thermal electricity generation with use of the resulting heat emission rather than rejecting it to atmosphere. The fuel for CHP may be fossil fuel (e.g. natural gas or coal) or biomass, in which case it would be renewable energy. The use of the heat is generally either for heating buildings or for providing process heat. The heat is generally distributed in the form of hot water or steam. An indicative comparison of CHP and electricity generation without heat recovery is shown below.

Indicative comparison of gas CHP with centralised thermal power plant

Indicative comparison of gas CHP with centralised thermal power plant

The waste heat from CHP may also be used in conjunction with an absorption chiller to provide cooling. An absorption chiller is a device that uses heat in conjunction with a catalyst to provide cooling. Whether this is preferable economically or environmentally to alternative means of cooling depends on a number of factors including:

  • Fuel type
  • Mix of generation supplying electricity grid
  • Scale
  • Cooling demand profile.

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Environmental benefits

CHP can give more efficient use of fossil fuels resulting in lower carbon dioxide emissions and when using biomass has even greater impact. In the figure above, the systems may be compared by considering the carbon dioxide emissions of the input fuel required to provide equivalent amounts of heat and electricity.

For the power stations generating electricity only, assumptions need to be made about the typical means of heating in order to compare with CHP – in the UK this is typically natural gas-fired boilers, but a comparison may also be made with air source heat pumps, in which there is increasing interest. For biomass, increased efficiency of fuel use through CHP may allow conservation of this constrained resource.

In line with the energy hierarchy, which prioritises energy demand reduction over low carbon supply, energy conservation and efficiency measures should be applied to a building before CHP is introduced. If however the heat demand is reduced significantly, this can affect the commercial case for CHP. Sometimes a commercial rather than environmental decision is taken to supply energy from CHP instead of introducing demand reduction measures when this is cheaper.

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Technical considerations

CHP has to be carefully sized so that there is good utilisation of plant and also good utilisation of the energy generated by the plant. The plant should be operated to give minimum dumping of heat to atmosphere; if there is extensive dumping of heat then CHP becomes a less efficient use of fuel than a centralised power plant generating electricity only.

In order to size CHP and predict its operation, it is important to understand the variation in heat and electrical demand – the demand profiles.  This way it can be ensured that the CHP will generate heat and electricity only when it is needed or when it is cost-effective. The running of CHP may be optimised by the inclusion of a thermal store to buffer the differential between instantaneous heat supply and demand.

This is generally in the form of a large water tank, so space needs to be allowed for this in the plant layout. It may be commercially advantageous in certain cases for CHP plant to follow electrical load rather than thermal load, but the amount of heat dumped should be minimised to ensure compliance with requirements for good quality CHP.

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Commercial case

  • The differential between the cost of the input fuel and electricity (the spark spread)
  • The heat load concentration and the extent of heat distribution network required
  • The level of utilisation of the generation plant, which to a large extent will depend on the energy demand profiles.

The return on investment from a CHP plant is determined through consideration of the balance of:

  • Capital cost
  • Maintenance cost
  • Fuel cost
  • Effective revenue/savings from energy generation and supply.

Revenue can be maximised through operation of the CHP plant at times of peak demand when prices are typically higher.

Plants may be owned or operated by the owner of the facility or development that the plant serves or by a third party, for example an energy service company (ESCo). The choice between each ownership and operation model will depend on the available capital, system knowledge and appetite for risk of the facility/development owner.

To ensure that a CHP system may be projected to be commercially robust and also offer environmental improvements over alternatives, strategies may be considered for future adaptation of the system to accommodate biomass and also different generation technology (for example advanced thermal conversion such as pyrolysis and gasification).

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