Combined Heat & Power (CHP) Basics

Combined Heat and Power CHP
Combined Heat & Power (CHP) Basics

Energy costs can be reduced by as much as 50% with an onsite CHP system.

The concept of combined heat and power or cogeneration is simple: Why use two fuels when you can use one? Combined heat and power is the simultaneous production of electrical and thermal energy from a single fuel source. It is sometimes referred to as cogen, waste heat recovery, or C.H.P. All CHP applications involve recovering heat that would otherwise be wasted while generating electricity. The captured heat is utilized as useful thermal energy instead of being allowed to dissipate in the surrounding environment.


Separate production of electricity and heat efficiency: (36+80)/200 = 58%


Cogeneration efficiency: (30+50)/100 = 85%

The U.S. Environmental Protection Agency (EPA) views cogeneration as a “proven, effective and underutilized near-term energy solution to help the United States enhance energy efficiency, improve environmental quality, promote economic growth and maintain a robust energy infrastructure.”

In the U.S., there are over 3,700 industrial and commercial facilities using onsite CHP which make up the United States’ 8% of total generating capacity. The Obama Administration is supporting a national goal to achieve a 50% increase in CHP generating capacity by the end of the year 2020. Yet even if the U.S. achieves this goal, the nation will still be lagging far behind countries such as Denmark, Finland and the Netherlands, which already boast a 30% CHP generating capacity.

Cogeneration is often used in large industrial installations that require a constant stream of electricity and heat to operate. However, CHP can also be used in hotels, hospitals, nursing homes and any other type of facility that needs both electricity and heating & cooling.

What does a CHP system look like?

CHP systems can be as small as a typical office desk, or as large as an entire power plant. Though a combined heat and power  system is sometimes difficult to explain, anyone who has ever been in a car in cold weather has experienced cogeneration first-hand. A car’s engine essentially becomes a CHP plant when the waste heat from the engine is captured and used to help warm the vehicle’s interior; concurrent with the gas powering the drivetrain and making electricity through the alternator.

The most common CHP system configurations include heat recovery units used in conjunction with gas turbines, reciprocating internal combustion engines, or steam boilers with steam turbines. Reciprocating engine CHP systems are suitable for use in places such as universities, hospitals, water treatment facilities, commercial and residential buildings, with consistently high demand for electricity, heating & cooling and hot water.

A steam turbine CHP system uses waste heat for electricity generation, mechanical drives, district heating and cooling systems or combined cycle power plants. Steam turbine CHP systems are often used in paper mills, chemical plants and other industrial applications where there is a variety of waste fuels available.

CHP Benefits

Kolanowski writes, “…A reciprocating engine CHP system designed to produce 120 kilowatts of electricity and 5.62 therms of thermal energy (hot water) has a fuel-usage efficiency of more than 90%…

…A customer buying electricity from a central station utility AND heating water in his on-site water heaters will purchase 817,666 Btu’s more fuel to gain the same useful energy than if he were cogenerating on site. And that is for every hour he needs that energy! A facility open seven days a week for 16 hours a day will buy 47,751 more therms of energy per year than the same facility using on-site cogeneration. At an average street cost of $0.75 per therm, that’s $35,813 more dollars spent just in fuel costs alone… “

…the amortization of on-site cogeneration ( i.e. the time to recoup the capital costs of the system), is an average of three years or less, even after accounting for operating and maintenance costs of the system.”

In addition to the improvements to efficiency, cost-savings and lower greenhouse gas emissions, one of the biggest advantages of CHP is the enhanced reliability benefit. A CHP system can be set up to provide on-site electricity generation and thermal heat to a facility, even in the event of a power grid failure. CHP can reduce the risk of brownouts or blackouts interfering with sensitive industrial equipment.

Obtaining a CHP System

Determining which type of combined heat and power system would be a suitable fit is easy. To begin, an energy consultant simply needs to assess the energy needs of the facility. This involves rules and regulations designed to discourage decentralized power generation, including CHP and solar. Cogeneration options include purchase, lease, and a Power Purchase Agreement (PPA) where the customer only buys the energy at a discount with no investment.

To help navigate through all the complexities of getting a combined heat and power system installed in your facility, EE Reports offers comprehensive cogeneration consultation services and project oversight.