What Is Cogeneration?

Cogeneration, also known as combined heat and power or CHP, and total energy, is a very efficient, clean, and reliable approach to generating power and thermal energy from a single fuel source such as natural gas or biomethane. Cogeneration plants recover the “waste heat” that is otherwise discarded from conventional power generation to produce thermal energy.

This energy is used to provide cooling or heating for industrial facilities, district energy systems, and commercial buildings. Through “waste heat recovery,” cogeneration power plants achieve typical effective electric efficiencies of 70% to 90% — a dramatic improvement over the average 33% efficiency of conventional fossil-fueled power plants.

Cogeneration power plants’ superior energy efficiencies significantly reduces air emissions including; carbon emissions and greenhouse gas emissions, as well as emissions ofnitrous oxides, sulfur dioxide, mercury, particulate matter. Carbon dioxide emissions from the burning of fossil fuels is recognized as the leading greenhouse gas associated with climate change.

Cogeneration now produces almost 17% of our nation’s electricity, saves its customers around 50% on their energy expenses, and provides even greater savings to our environment.

Cogeneration, as previously described above, is also known as “combined heat and power” (CHP), cogen, district energy, total energy, and combined cycle, is the simultaneous production of heat (usually in the form of hot water and/or steam) and power, utilizing one primary fuel.

Cogeneration technology is not the latest industry buzz-word being touted as the solution to our nation’s energy woes. Cogeneration is a proven technology that has been around for over 100 years. Our nation’s first commercial power plant was a cogeneration plant that was designed and built by Thomas Edison in 1882 in New York. Primary fuels commonly used in cogeneration include natural gas, oil, diesel fuel, propane, coal, wood, wood-waste and bio-mass. These “primary” fuels are used to make electricity, a “secondary” fuel. This is why electricity, when compared on a btu to btu basis, is typically 3-5 times more expensive than primary fuels such as natural gas.

An example of a cogeneration process would be the automobile in which the primary fuel (gasoline) is burned in an internal combustion engine – this produces both mechanical and electrical energy (cogeneration). These combined energies, derived from the combustion process of the car’s engine, operate the various systems of the automobile, including the drive-train or transmission (mechanical power), lights (electrical power), air conditioning (mechanical and electrical power), and heating of the car’s interior when heat is required to keep the car’s occupants warm. This heat, which is manufactured by the engine during the combustion process, was “captured” from the engine and then re-directed to the passenger compartment.

Due to competitive pressures to cut costs and reduce emissions of air pollutants and greenhouse gasses, owners and operators of industrial and commercial facilities are actively looking for ways to use energy more efficiently. One option is cogeneration, also known as combined heat and power (CHP). Cogeneration/CHP is the simultaneous production of electricity and useful heat from the same fuel or energy. Facilities with cogeneration systems use them to produce their own electricity, and use the unused excess (waste) heat for process steam, hot water heating, space heating, and other thermal needs. They may also use excess process heat to produce steam for electricity production. Cogeneration currently coexists with a regulated industry that is going through major structural changes that may limit or expand its application.

Regulatory Issues

The concept of cogeneration is not new. Early in this century, before there was an extensive network of power lines, many industries had cogeneration plants. As utilities became established and grew, most states began to regulate them in order to limit their pricing power.

The Public Utilities Holding Act of 1935 (PUHCA), together with amendments to the Federal Power Act (also in 1935), were the final steps in protecting utility companies from competition. These laws created vertically integrated utilities with responsibility for the production, transmission, and distribution of power. In exchange for their exclusive franchises (territories) and guaranteed revenues, utilities agreed to government regulation of rates and service. Under these rules, more investments in infrastructure and more sales meant more profits. As the network of power lines grew and electricity from utilities became more economical, industrial facilities bought more of their electricity from utilities. However, many industries still had to generate process heat on-site. The economies of scale that the utilities were able to obtain at that time, as well as the availability of low-priced process heat from cheap oil and gas, removed incentives to retain cogeneration equipment.

In the past three decades, however, the long-term trend of energy prices generally moved upward. Building more and more large power plants no longer provided economies of scale. This was a major factor in the increasing use of cogeneration by commercial and industrial facilities.

The Public Utilities Regulatory Policies Act of 1978 (PURPA) provided further encouragement for developers of cogeneration plants. Section 210 requires utilities to purchase excess electricity generated by “qualifying facilities” (QFs) and to provide backup power at a reasonable cost. QFs included plants that used renewable resources and/or cogeneration technologies to produce electricity. PURPA cogenerators must use at least 5% of their thermal output for process or space heating (10% for facilities that burn oil or natural gas). In many cases, this forced independent cogenerators to accept very low rates for their steam production in order to become a qualifying facility under PURPA. Another problem is the rate at which utilities purchase a cogenerator’s excess power production.

Most states set the price at “avoided cost,” or the cost to the utility of producing that extra power. Utilities with excess power generation capacity are often allowed to have extremely low avoided costs. This practice has created artificial barriers to cogeneration as well as to independent power generators.

The Energy Policy Act of 1992 (EPAct) tried to create a more competitive marketplace for electricity generation. It created a new class of power generators known as Exempt Wholesale Generators (EWGs). These are exempt from PUHCA regulation and can sell power competitively to wholesale customers. A cogeneration facility can be (but does not have to be) a QF under PURPA and an EWG under EPAct. This happens when the facility is in the exclusive business of wholesale power sales, and makes no retail power sales to its “steam host” (customer).

Cogeneration Technologies

A typical cogeneration system consists of an engine, steam turbine, or combustion turbine that drives an electrical generator. A waste heat exchanger recovers waste heat from the engine and/or exhaust gas to produce hot water or steam. Cogeneration produces a given amount of electric power and process heat with 10% to 30% less fuel than it takes to produce the electricity and process heat separately.

There are two main types of cogeneration techniques: “Topping Cycle” plants, and “Bottoming Cycle” plants.

A topping cycle plant generates electricity or mechanical power first. Facilities that generate electrical power may produce the electricity for their own use, and then sell any excess power to a utility. There are four types of topping cycle cogeneration systems. The first type burns fuel in a gas turbine or diesel engine to produce electrical or mechanical power. The exhaust provides process heat, or goes to a heat recovery boiler to create steam to drive a secondary steam turbine. This is a combined-cycle topping system. The second type of system burns fuel (any type) to produce high-pressure steam that then passes through a steam turbine to produce power. The exhaust provides low-pressure process steam. This is a steam-turbine topping system. A third type burns a fuel such as natural gas, diesel, wood, gasified coal, or landfill gas. The hot water from the engine jacket cooling system flows to a heat recovery boiler, where it is converted to process steam and hot water for space heating. The fourth type is a gas-turbine topping system. A natural gas turbine drives a generator. The exhaust gas goes to a heat recovery boiler that makes process steam and process heat. A topping cycle cogeneration plant always uses some additional fuel, beyond what is needed for manufacturing, so there is an operating cost associated with the power production.

Bottoming cycle plants are much less common than topping cycle plants. These plants exist in heavy industries such as glass or metals manufacturing where very high temperature furnaces are used. A waste heat recovery boiler recaptures waste heat from a manufacturing heating process. This waste heat is then used to produce steam that drives a steam turbine to produce electricity. Since fuel is burned first in the production process, no extra fuel is required to produce electricity.

An emerging technology that has cogeneration possibilities is the fuel cell. A fuel cell is a device that converts hydrogen to electricity without combustion. Heat is also produced. Most fuel cells use natural gas (composed mainly of methane) as the source of hydrogen. The first commercial availability of fuel cell technology was the phosphoric acid fuel cell, which has been on the market for a few years. Molten carbonate fuel cells are also in widespread use. There are about 150 now installed and operating in the United States. Most are in cogeneration mode, but newer installations are in trigeneration mode, where air-conditioning is also generated in addition to heat and power.