Newsletters

2016 – summer Issue

Making Sense of Cogeneration

Cogeneration is the sequential production of electricity and useful thermal energy from a single fuel source. To put it simply, fuel is burned in order to generate electricity, and then the ?waste? heat is used for other purposes within the facility. It is also referred to as Combined Heat & Power (CHP). The incentive for implementing this methodology is energy efficiency. CHP uses less fuel than separate heat and power systems to produce the same amount of total energy. The typical gas turbine is roughly 35-45% efficient while just generating electricity. A gas-fired steam boiler will operate around 65-75% efficiency while just generating steam. By combining these processes and capturing the waste heat that exits the turbine and converting it into a useful thermal energy such as steam, another 30-50% of the fuel?s energy can be utilized on top of the base turbine efficiency. The total CHP process efficiency for a gas turbine setup often runs in the 80-90% range.

Hot gas turbines, such as those manufactured by Solar Turbines, represent over 80% of the generation equipment used for CHP systems. Recent advances in the size and efficiency, as well as a reduction in cost due to economies of scale, have made hot gas turbines the popular choice. In addition, the high exhaust gas temperatures of a gas turbine generator are ideal for capturing to make steam. It is important to note that the selection and sizing of generation equipment is usually determined by the facility?s use for the captured heat, not necessarily by the electrical usage needs.

As natural gas prices have fallen and electrical rates have risen, both of which are occurring in the Midwest, the appeal of CHP projects is growing. The main point to consider when determining the feasibility of a CHP project is the comparison of electrical and natural gas utility rates, referred to as the purchased heat rate. To calculate the purchased heat rate, take the electricity cost per kilowatt hour (kWh) divided by the natural gas cost per dekatherm (Dth). Using the examples of $0.08/kWh and $8.00/ Dth the equation looks like this:

Purchased heat rate = (($0.08/kWh) / ($8.00/Dth)) x 1,000,000 = 10,000Btus/kWh.

The general heat rate of a CHP process using a gas turbine is approximately 6,000 Btus/kWh. As a rule of thumb, if the average electrical rate is above $0.05/kwh, then a project should be considered. If the average electrical rate is above $0.07/kwh, then a project may pay for itself over a fairly short term. Other factors such as system size, utility rebates/incentives, and utility interconnection agreements also come into play in the final analysis. Power source redundancy is also a consideration, as the CHP system can supply electrical power to the facility even when utility power is no longer present (referred to as islanding). Payback from a Combined Heat & Power project is dependent on utility costs mentioned above. Typically the payback timeframe, using all new equipment, is around 7-10 years. However, utilizing existing and/or third party used equipment can significantly reduce the payback timeframe down to 2-5 years. This is an alternative that many industrial processing facilities are strongly considering.