What are the benefits of cogeneration (CHP) systems

What are the benefits of Cogeneration systems (CHP)?

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Cogeneration – a sustainable energy solution with many benefits

Cogeneration or Combined Heat and Power (CHP) is a sustainable energy solution that provides numerous benefits to a variety of stakeholders, including increased energy efficiency, lower emissions, attractive economic returns, and increased power system resiliency. The technology is a low carbon intensity and high-efficiency solution for the simultaneous generation of electricity and thermal energy. It is a proven, cost-effective, and readily available technology. (Cogen Europe, 2010). The adoption of cogeneration systems for industries that have combined demand for heat and power is envisaged to improve energy efficiency and security of power supply while reducing emissions/pollution, in addition to many other benefits as described in the following sections.

Conventional system – separate generation of heat and power

Separate generation of heat and power for industrial process usage.
Conventional system – Separate generation of heat and power for industrial process usage.

In the traditional or conventional system of power generation, industrial plants which require both electrical power and thermal energy will import electricity from the power grid and generate heat on-site using boilers. This arrangement is suboptimal because there are considerable energy losses associated with the power grid, and the combined generation efficiency of imported power and self-generated heat is considerably less than that of a cogeneration plant.

Cogeneration (CHP) system – simultaneous generation of heat and power

Conceptual Schematic of a Gas Turbine Cogeneration System
Conceptual Schematic of a Gas Turbine Cogeneration System

Cogeneration is defined as the simultaneous generation of two useful forms of energy (usually electricity and thermal energy) from a single source of primary energy. It is a proven strategy for increasing the efficiency of electricity and thermal energy generation. The technology utilizes waste heat recovery devices, such as waste heat boilers, to generate useful thermal energy from the exhaust gas of the prime movers. Such an arrangement substantially improves the primary energy efficiency of the system. Consequently, cogeneration plants consume less fuel to generate the same amount of useful energy. A lower fuel consumption per unit of energy generated also results in a substantial reduction in the emission of greenhouse gases (CO2) and other pollutants such as dust, SOx, and NOx.

How efficient is the cogeneration (CHP) system compared to the conventional system (separate generation of heat and power)?

Comparison of Primary Energy Efficiency of Cogeneration (CHP) System against Conventional System (Separate generation of heat and power)
Comparison of Primary Energy Efficiency of Cogeneration (CHP) System against Conventional System (Separate generation of heat and power)

The diagram above demonstrates the lower primary energy consumption of a cogeneration (CHP) system as compared to that of the conventional system (Separate generation of heat and power). In this case, the cogeneration system is a gas-fired combustion turbine generator coupled to a waste heat boiler. The data is referenced from the US EPA.

For an industrial process that consumes 75 units of energy, comprising 30 units of electricity and 45 units of useful heat, the conventional system imports 30 units of electricity from the power grid and generates 45 units of heat on-site using boilers. The boiler consumes 56 units of primary energy, while the power grid consumes 91 units, for a total primary energy input of 147 units. In contrast, the cogeneration system only requires 100 units of primary energy to provide the same 75 units of energy output to the industrial process, resulting in 32% savings of primary energy input when compared to the conventional system.

Conventional SystemCogeneration System
Primary Energy Inputunits of energy147100
Heat Outputunits of energy4545
Power Outputunits of energy3030
Total Power Outputunits of energy7575
Waste Energyunits of energy7225
Primary Energy Efficiency%51.0%75.0%
Summary Table: Conventional system (Separate generation of heat and power) against cogeneration system (combined heat and power)

The above table shows the higher primary energy efficiency of the cogeneration plant. The conventional system has a primary energy efficiency of 51% with 49% of the primary energy being lost as waste heat. In contrast, the cogeneration system offers primary energy efficiency of 75%, losing only 25% of the primary energy input as waste heat. Hence, the energy efficiency of a cogeneration system is 47% higher than that of a conventional system.

Comparing the greenhouse gas (CO2) emissions of the cogeneration system and conventional system

Greenhouse Gas (CO2) emissions - Cogeneration system vs separate generation of heat and power
Greenhouse Gas (CO2) emissions – Cogeneration system vs separate generation of heat and power

The diagram above shows the lower greenhouse gas emissions of a cogeneration plant compared to the conventional system. In this case, the cogeneration system under consideration is a gas-fired combustion turbine generator coupled to a waste heat boiler. The data is referenced from the US EPA.

For an industrial process that consumes 87,500 MWh of energy per annum, consisting of 35,000 MWh of electricity and 52,500 MWh of useful heat, the conventional system imports 35,000 MWh of electricity from the power grid and generates 52,500 MWh of heat on-site using boilers. In the process, the boiler emits 13,000 tons of CO2 per annum, while the centralized power plants emit 32,000 tons of CO2, for total CO2 emissions of 45,000 tons per annum. In contrast, the cogeneration system only emits 23,000 tons of CO2 per year to provide the same 87,500 MWh of energy output to the industrial process. The cogeneration system can potentially reduce annual CO2 emissions by 48.9% compared to the conventional system.

Conventional SystemCogeneration System
Primary Energy InputMWh171569116667
Heat OutputMWh5250052500
Power OutputMWh3500035000
Total Power OutputMWh8750087500
Primary Energy Efficiency%51.0%75.0%
Total CO2 Emissionstons of CO24500023000
Carbon Dioxide Emissions Factortons/MWh0.5140.263
Comparing Greenhouse gas (CO2) emissions of cogeneration system vs conventional system

The summary table above shows the lower CO2 emissions factor of the cogeneration system. For an annual power output of 87,500MWh, the conventional system emits 45,000 tons of CO2 while the cogeneration (CHP) system emits 23,000 tons of CO2. The resulting carbon dioxide emissions factor for both systems are 0.514 tons/MWh and 0.263 tons/MWh, respectively. Hence, the cogeneration system has a CDE factor that is 48.9% lower than that of the conventional system.

What are the benefits of the cogeneration (CHP) system to different stakeholders?

The numerous benefits of cogeneration are as follows:

Benefits to industrial owners of cogeneration systems.

  1. Higher primary energy efficiency compared to separate heat and power generation.
    • Higher efficiency results in lower energy costs, which is a major cost component of industrial production.
    • Lower energy costs result in lower production costs, which improves business efficiency and profitability.
  2. Improved reliability and availability of power supply (Carlson & Hedman)
    • An on-site cogeneration plant usually operates in parallel with the power grid, with a certain amount of electricity being imported to supplement the power generation of the prime mover.
    • The power grid serves as a backup power supply when the cogeneration unit is under maintenance.
    • The plant can also be sized to allow it to operate on island mode in the event of a grid blackout.
    • Hence, the cogeneration system helps to improve the reliability of the power supply to an industrial facility.
  3. Lower carbon footprint and higher Environmental KPI
    • Lower emission of greenhouse gases and other pollutants reduce the carbon intensity of an industrial facility.
    • Reduction in carbon footprint is an important part of an organization’s decarbonization strategy to contribute to environmental protection.
    • Helps a corporation to meet Environmental goals and KPIs and improve ESG (Environmental, Social and Governance) ratings.
  4. High Return on Investment – A cogeneration system can provide attractive economic returns over its useful life due to the following factors:
    • Capital investment in cogeneration can be offset by avoiding capital expenditure on traditional system components such as boiler plants and lowering the cost of electrical equipment required for grid interconnection.
    • Cost savings from lower electrical capacity charges as a result of lower peak electricity imported from the grid.
    • Cost savings from lower electrical energy charges as a result of lower grid electricity imported.
    • Cost savings due to lower costs of producing steam/thermal energy.
    • Economic value derived from a protected revenue stream as a result of avoiding production interruption due to power grid blackouts and brownouts.

Benefits to the nation and society

  1. Improved national energy utilization efficiency
    • The adoption of cogeneration plants with higher primary energy efficiencies will help to improve the nation’s primary energy utilization efficiency.
  2. Reduced power grid transmission losses
    • An on-site cogeneration plant avoids transmission and distribution losses of the power grid.
  3. Improved economic growth
    • Creation of high-value-added engineering and technical jobs.
    • Creation of new business opportunities in the energy supply sector.
    • The growth of the cogeneration industry contributes to the nation’s economic growth.
  4. Improved economic competitiveness
    • Improved primary energy efficiency lowers industrial production costs and enhances industry cost-efficiency.
    • Improved business operation and continuity as a result of avoiding production interruption due to power grid blackouts and brownouts.
  5. More reliable and efficient Power Grid Infrastructure
    • An on-site cogeneration plant reduces the maximum power demand on the power grid. This reduces the congestion on the power grid during peak hours and helps to relieve the capacity constraints in high-density industrial zones and cities.
    • The reduced peak demand also allows the deferment of capital investment in additional grid infrastructure and power generation assets.
  6. Greener Environment
  7. Improved national fuel security
    • Cogeneration systems utilize natural gas as the primary fuel source. In a nation that is blessed with abundant natural gas supply such as Malaysia, cogeneration systems can help reduce the nation’s dependency on thermal power plants which utilize imported oil or coal.
    • Cogeneration systems, with higher primary fuel efficiency, help to reduce the fuel required for each unit of power generated and helps to conserve the nation’s valuable natural resource.
  8. Health benefits of a cleaner and greener environment
    • Power plants are a source of pollutants such as dust, SOx, and NOx which have been proven to be detrimental to the health of the general population. Cogeneration systems, with their lower emission of greenhouse gas and other pollutants such as dust, SOx, and NOx will help improve air quality and bring about health benefits to the populace.

Environmental Benefits

  1. Reduced greenhouse gas (CO2)emissions compared to separate generation of electricity and thermal energy (US Environmental Protection Agency – Environmental Benefits)
  2. Reduced SOx and NOx gas emissions compared to separate generation of electricity and thermal energy (US Environmental Protection Agency – Environmental Benefits)
  3. Cleaner fuel contributes to a greener environment
    • Natural gas-fired prime movers commonly used in cogeneration systems, such as combustion turbines and reciprocating engines, utilize the cleanest form of fossil fuel.
    • According to the US Energy Information Administration (EIA):
      • Burning natural gas for energy results in fewer emissions of nearly all types of air pollutants and carbon dioxide (CO2) than burning coal or petroleum products to produce an equal amount of energy.

Summary and Conclusion

The preceding discussion has clearly demonstrated the numerous benefits of cogeneration technology to a variety of stakeholders.

From the macro perspective, cogeneration can help to achieve policies and goals in national fuel security, improve power grid efficiency and resiliency, boost job creation, increase economic growth and competitiveness, and promote environmental protection and sustainable development.

At the micro-level, individual corporations can benefit from cogeneration technology through lower production costs, improved power supply reliability, a lower carbon footprint, and an attractive return on investment.

Given the many benefits offered by cogeneration technology, it is not surprising that the technology has gained widespread acceptance and adoption.

Footnotes:

  1. Carlson, A., & Hedman, B. (2004). Assessing the Benefits of On-Site Combined Heat and Power during the August 14, 2003 Blackout. Oak Ridge National Laboratories.
  2. Cogen Europe. (2010). Cogeneration as the foundation of Europe’s 2050 low carbon policy. Cogen Europe.
  3. US Environmental Protection Agency – Efficiency Benefits.
  4. US Environmental Protection Agency – Environmental Benefits.