Intelligent software: Key to unlocking value for CHP plants

Combined heat and power (CHP) plants, or cogeneration, provide a highly efficient way to generate on-site electricity and heat – but add intelligent software to the management process and plant owners and operators can realise opportunities to increase efficiencies and generate new revenue that may have not existed before.

For public sector organisations, improving CHP efficiency helps reduce emissions for those on a journey to net-zero, while additional revenue can be invested in services or new low-carbon projects.

CHP fundamentals

Typically, CHPs consist of a ‘prime mover’; an engine or turbine connected to an alternator to generate baseload electricity, and a heat recovery mechanism to capture heat from the engine that would otherwise go to waste. The heat recovery unit produces hot water or steam that contributes to the site’s thermal needs.

Like most distributed generation plants, power generated for use locally is immune to faults in the larger grid system. This helps to achieve good efficiency and also reduces emissions. But specifying the power output to accurately meet a site’s demands can make further significant improvements to efficiency.

Early adopters of cogeneration include manufacturing sites that operate continuous processes with a need for constant baseload power. Sectors that match this user profile include food, chemical and cement manufacturing. However, university campuses and hospitals also see value in having efficient on-site generation, especially when there is also demand for hot water or heating.

Finance and fuel flexibility

Installing a CHP unit doesn’t necessarily require a capital outlay. Alternative options to finance cogeneration projects include buying the generated power through a power purchase agreement for a fixed term or contracting with an energy service company (ESCO). ESCOs typically offer a range of finance models, including financing through shared energy savings. Some governments also offer tax incentives, which can make the financial case for CHP even more compelling.

Most CHP units operate by combusting fuel or feedstock to create steam in a boiler that drives a turbine, which generates power. The exhaust gases pass through a heat recovery unit to reclaim the heat. Fuel options include gas and carbon-neutral fuels such as biogas from anaerobic digesters, wood chips, agricultural residues and other forms of biomass feedstock. Some CHP manufacturers are now looking at the possibility of using hydrogen as a fuel, which will further improve the low-carbon credentials for on-site baseload generation.

Achieving high efficiency

It is feasible to achieve efficiency levels of 80-90% with modern CHP plants. Typically, supplying a CHP with 100 units of fuel would yield about 35 units of electricity and 45 units of hot water. By comparison, separate engine and heating systems require 148 units of fuel to achieve a similar output of electricity and heat.

While the primary motive for installing a CHP is often to save money on energy bills, it’s not the only benefit. Investing in on-site generation removes exposure to energy market price volatility, making forecasting energy spend more predictable. CHPs also improve resilience for a site by protecting it from exposure to any grid issues, such as blackouts.