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May 18

Is CHP A Realistic Option For My Facility?

By: Patti Dinneen


Combined Heat and Power generation (CHP) is a power generation technology, which supports a facilities sustainable energy conservation efforts, while saving money and power. CHP involves the production of electricity and heat from a single fuel source, whether it be natural gas, biomass, biogas, coal, waste heat, or oil. While cogeneration is an integrated energy system that is flexible enough to be tailored to your unique needs, it is wise to consider whether or not your facility is an ideal candidate for this technology. If your company is looking for ways to increase your bottom line while supporting a sustainable energy philosophy, continue reading to learn if CHP is a realistic option for your facility.

Factors Supporting CHP Use

The short and mid-term outlook for small scale CHP is favorable. Development of CHP in the United States has been revitalized by the improving economy, cheap natural gas, Federal/State incentives and client site’s desire for resilient on-site power have all been influential in the uptick of CHP development.

Spark Spread: Specific areas in the United States currently feature “spark spreads that support CHP and on-site power generation. In case you didn’t know, spark spread refers to the difference in price between the costs of retail electricity (what you pay for grid power) versus the cost of on-site generation.

State Programs: States have a several methods for promoting CHP development and on-site generation. First, many states include CHP as part of their RPS (Renewable Portfolio Standard)), creating a financial mechanism to support these types of energy producing projects. If you are operating out of MA, CT, NY, or NJ, you have access to direct incentive programs, which provide direct financing assistance.

Aging Infrastructure: Utility-scale power generation infrastructure is rapidly aging, facing unfavorable comparisons with new technological developments. This trend will continue to place upward pricing pressure on retail electric pricing. Even within the last decade, there has been very few new utility generation plants built to meet new demands.

Also, the historical utility approach is being challenged by environmental and safety concerns. For example, MACT laws are causing several coal plants to be de-commissioned ahead of schedule.  An overall more restrictive environmental and permitting view by many New England states has hampered investment/construction by traditional utility companies into new generation facilities.

While the de-regulation of electrical power initially promoted new generation, it subsequently has severely limited new construction of utility scale fossil-fueled and nuclear generation.  You can protect your facility by investing in a CHP system.

Feasibility Study

Even if on-site power is not core business, the minimization of risk, cost control and need for reliable power are certainly core requirements.  If your organization fits this example, then the next step would be exploring the technical and financial side of CHP.

If you are interested in switching from utility power to CHP, it is beneficial to evaluate your facility in order to determine if your facility is a fit for CHP. Typically, we do this through a feasibility study. Our feasibility study examines your energy usage and compares it with your yearly usage. For instance, consider an office building, which has high usage Monday through Friday during working hours, compared with a manufacturing facility that may have 24/7 usage.

This cost and usage evaluation will be used to determine the type of engine (prime mover) as well as the size of the engine.  In general, if your facility has high thermal requirements (steam, hot water, chilled water) you may be a good fit for a gas turbine; however, if your thermal energy usage is lower, you may be a better candidate for a reciprocating engine.

Kinsley Energy Systems

We are a top energy solutions supplier with a 50-year legacy of sales, rental and service top quality energy systems.  CHP systems help to reduce global warming emissions, while achieving decent paybacks on their own and do not rely extensively on massive government incentives and tax benefits, like some other “green” measures do. Kinsley systems are an efficient and responsible investment of taxpayer and institutional dollars. If you are still uncertain if your facility would be a good fit for CHP, feel free to download our e-book, "Is My Facility A Good Candidate For CHP?” or call (860) 844-6100.

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