Energy Systems
Install a Combined Heat & Power (CHP) System
What Is It?
Veolia
A combined heat and power (CHP) system, also known as a cogen, simultaneously creates heat and electricity from a single fuel source. CHP systems are highly efficient and cost-effective if the heat generated from power production is utilized on-site, as the use of on-site power reduces the loss of electricity through transmission. Overall efficiency can reach 80-85%, compared to the 35-40% electric efficiency in central power plants (including transmission and distribution). Other benefits of using CHP include increased reliability, reduced greenhouse gas emissions, and, if installed, backup capability to ensure continuous functionality during blackouts. Backup requirements include a battery powered startup system, a synchronous generator, and switchgear. With automatic/seamless backup controls installed, a CHP system can respond to a blackout in seconds.
A number of technologies can be utilized for CHP, including reciprocating engines (the cheapest), gas turbines, microturbines, and fuel cells (the most expensive). Regardless of the technology used, the upfront costs for CHP are high will only be a cost-effective investment if the heat generated is properly utilized. CHP is ideal for large commercial, institutional, and industrial buildings and can be used in some multifamily residential applications. CHP can be cost-effective, and payback periods range from 5.2 to 6.8 years. Payback period will be reduced, depending on annual power outage time.
Benefits
- High efficiency and reliability. Can operate as backup power during extended power outages
- Reduced energy costs and emissions
Drawbacks
- High upfront costs. Can be mitigated by using available incentives.
- In flood-prone areas, CHP generator and attached systems must be floodproofed or located above the flood zone, increasing capital costs.
Regulatory Impacts and Requirements
Potential regulatory touchpoints in Boston and Massachusetts include:
- Fire Department
- Boston Public Works Department
Financing Options, Incentives, and Rebates
CHP is eligible for a number of federal and Massachusetts incentives. Some of these incentives include:
- MassSAVE Utility Energy Efficiency Program – Retrofitted CHP projects that pass a Benefit Cost Ratio test are eligible for an incentive of anywhere from $750 to $1200 per kW for systems of up to 150 kW, depending on the conditions met for each tier. CHP used in new construction is eligible for the first tier ($750/kW)
- Business Energy Investment Tax Credit – Fuel cells, micro-turbines, and CHP are eligible for tax credits of 10-30% of expenditures.
- Modified Accelerated Cost-Recovery System (MACRS) – Qualifying CHP equipment can be depreciated using the 5-year modified accelerated recovery system.
- Massachusetts Alternative Energy Portfolio Standard – CHP is an eligible technology for the Massachusetts Alternative Energy Portfolio standard. Tradeable AEC credits for generation can be sold and traded.
NEWS
- “New Turbine to Be Placed in Eastern Michigan's Heating Plant,” US News & World Report, June 7, 2017
- “Is Combined Heat and Power Part of Your Vision for the Modern Grid?,” The Energy Collective, June 2, 2017
- "Union College Constructing Cogeneration Plant to Produce Majority of School's Power Needs," Albany Business Review, November 2014
- "The Future of Cogeneration Is Green," Environmental Protection, October 2013
- “CHP Project Announced for Boston Quincy Marriott” Aegis Energy Services, March 25, 2015
- “Boston Hospitals Reducing Energy Intensity Through CHP” Cogeneration & On-site Power Magazine, January 28, 2015
- "Cambridge Project Taps Excess Steam to Heat Buildings" Boston Globe, May 19, 2014
RESOURCES
- American Council for an Energy-Efficient Economy: Combined Heat and Power (CHP)
- US Office of Energy Efficiency and Renewable Energy: Combined Heat and Power Basics
- US EPA: Combined Heat and Power (CHP) Partnership
