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Monday, October 26, 2015

Clean Power Plan and Combined Heat and Power

CHP Houston Facility

CHP installation at the hospital improves energy security, reliability and emergency preparedness.

Written by Gavin Dillingham, Research Scientist, Clean Energy Policy

Combined heat and power (CHP) is a distributed generation source that can provide significant benefits to end-users and the community by reducing operating costs, lowering overall air emissions and improving power resilience. CHP’s benefits comes from it being an on-site power generation system that captures the waste heat from the generator. This waste heat can be used for additional purposes including generating hot water or steam for industrial processes, as well as producing additional power that can be used onsite or exported to the grid. By capturing and using this waste heat additional combustion using boilers, is decreased, reducing the overall consumption and combustion of a fuel source. CHP system are typically powered by natural gas turbines, boiler steam turbines or reciprocating engines with the primary fuel source being natural gas or biomass. The primary fuel source is largely determined by geography. The most common applications for CHP is with chemical, refining and pulp and paper applications. However, there is a growing amount of CHP at universities, food processing and healthcare facilities, as well as a growing interest by state and local agencies responsible for critical infrastructure operations. There has been some interest by the commercial office sector for CHP, particularly due to the resilience benefit of CHP, however, in many cases, these facilities do not operate around the clock and the opportunities for using the waste heat are limited. Yet, some commercial property types, particularly data centers that operate 24/7 are increasingly deploying CHP due to its power quality and resilience benefits.

As demonstrated by the performance of CHP during Superstorm Sandy in 2012, the resilience benefits of CHP should be strongly consider when end-users are deciding whether to deploy CHP. That being said, the energy efficiency and subsequent environmental benefits of these systems is also significant. With the introduction of EPA’s Clean Power Plan (CPP) in August of this year, states are responsible for identifying strategies to meet specific greenhouse gas reduction goals. As the CPP is written, there will be significant opportunity for the deployment of CHP.

For the CPP, states have several options to choose from to be in compliance. Some of these options will be “inside the fence” where they can improve operations of existing plants and some can be “outside of the fence,” where they can deploy distributed generation and energy efficiency to meet CPP goals. Based on interpretation of the Clean Air Act, there is some debate as to the extent to which states can use outside the fence applications for compliance. However, at this time EPA has indicated it will provide broad flexibility for compliance, and if a state so chooses, it can use outside the fence applications, such as CHP for compliance. There is also the question of whether a state will comply with a mass-based or rate-based approach. Fortunately, CHP is able to provide benefit regardless of the approach.

If states decide to consider CHP as part of its compliance path, there are significant emission benefits it can provide due to its greater efficiency over centralized generation sources. A CHP system has an efficiency of around 75% versus conventional generation with an efficiency of approximately 51%1. The reason for such a difference is that a CHP system does not suffer from the inefficiencies of a centralized plan, which include the inability to capture and use the waste heat efficiently, as well as the power grid loss that occurs when transmitting the power from the generation source to its end-use. The outcome is that it takes more fuel, and subsequently greater emissions, to generate and provide one kW from a centralized system than it takes to generate and provide a kW through an on-site CHP system.

To date, the US has installed over 83 GW of CHP. President Obama, through a 2012 Executive Order2 intends on increasing that amount by an additional 40 GW by 2020. The Gulf Coast and Texas, have some of the greatest potential to help reach that goal. If is projected that this region has a CHP technical capacity of 27 GW3. Fortunate for CHP, the CPP has been written in a way that will allow states to potentially take full advantage of this CHP technical potential and significantly increase the deployment of this efficient technology. The outcome could be not only lower emissions but improved community resilience.