Applying combined heat and power systems

Cogeneration systems, often referred to as combined heat and power (CHP) systems, generate both electricity and thermal energy. As they become more common in the United States, engineers must understand the nuances and design strategies for successful application.
By Rodney V. Oathout, PE, CEM, LEED AP, DLR Group, Overland Park, Kan. June 28, 2016

This article is peer-reviewed.Learning objectives:

  • Explain combined heat and power (CHP) and how it can be applied in commercial buildings.
  • Develop a strategy for applying CHP equipment in the built environment.
  • Evaluate and calculate the energy efficiency of the CHP system.

Combined heat and power (CHP) systems are being applied in commercial facilities because of energy efficiency, reliability, and return on investment (ROI). CHP equipment can be a key element in a microgrid for a facility or group of buildings in close proximity. The characteristics of a microgrid system include energy-generating equipment directly serving consuming equipment through an onsite electrical distribution system. The robust nature of the onsite generating equipment typically determines if supplemental energy from a grid source is required.

Other examples of energy-generating equipment found in microgrids include generators, fuel cells, batteries, and renewables. The increasing use of microgrids in the built environment can be attributed to the advancement of cogenerating technologies like CHP. The onsite energy generation reduces the reliance on electricity from the grid, adding resiliency against power outages, brownout, and other disruptions.

The most common type of CHP technology applicable for commercial projects is the topping cycle, where fuel is first used to generate electricity or mechanical energy at the facility and a portion of the waste heat from power generation is then used to provide useful thermal energy. The main components of a CHP module include a prime mover, generator, heat recovery, and electrical interconnection. The term "prime mover" is a generic description used in this application for the device that consumes the fuel and powers the generator to produce electricity. The prime mover also produces thermal energy that can be captured and used for other onsite processes that use steam or hot water. There are several commercially available prime movers including turbines, microturbines, reciprocating engines, and fuel cells.

Figure 1: The new Marriott AC Hotel in downtown San Jose, Calif., is a 7-story, 210-room lifestyle-branded hotel, situated within walking distance from the famed HP Pavilion. The hotel will include various hospitality amenities on the first level, such as

CHP systems are available in many sizes and design variations, but the premise among these variations is the same. A fuel source, most commonly natural gas, is consumed by the CHP equipment, which produces electricity and thermal energy.

A strategy for maximizing the ROI of energy-efficient equipment is finding applications that allow continuous operation at the peak-efficiency point and the ability to consume all of the thermal energy generated by the CHP. Energy efficiency for CHP systems is generated in two ways: production of two energy sources with one fuel and the added efficiency associated with producing electricity onsite to avoid transmission losses.

One of the defining characteristics of CHP systems is that thermal energy produced can be up to five times greater than the electricity generated. Other CHP technologies have different thermal-to-electric ratios. For instance, a natural gas drive engine produces about the same of amount of thermal and electric energy. CHP systems based on combustion turbine technology generally produce twice as much thermal energy than electricity. Therefore, facilities with significant and continuous hot-water demands would be good choices for applying CHP systems. The design challenge is selecting the CHP equipment with characteristics most suitable for the requirements of the facility and providing the necessary auxiliary equipment to maintain operation as hot-water demands naturally fluctuate.

Building applications

A specific facility type and equipment performance are used to provide a basis for the discussion. The process for application will remain as generic as possible to ensure this technique may be applied with other design parameters. Hospitality occupancy will be used as the model for applying CHP equipment in the built environment. Other facility types that also may be good choices for applying this technology include multifamily housing, prisons/jails, health care, and industrial applications with continuous hot-water demands. The project under consideration is a 210-room full-service hotel with onsite commercial laundry, three restaurants, and a lounge. This example will study only how the CHP can supplement the domestic hot-water service. Clearly, there is an application for a CHP system to serve as a hydronic heating system. Heating systems pose an added complication to the analysis due to climate and system operation issues.

The energy flow through the micro-CHP system includes 100% fuel coming into the system, with 75% thermal energy, 20% electricity, and 5% exhaust exiting the system. These values are based on the higher heating value of the fuel. The performance characteristics of this equipment are smaller than most CHP systems, thus, the term micro-CHP is used to describe this unit. The micro-CHP equipment is usually applied as multiple units to maximize operating time near the highest performance levels.

The CHP equipment considered for this case study is based on a Stirling cycle that uses natural gas as the fuel to produce 6 kW of electricity and 35 kW (120 kBtu/h) thermal energy at design conditions. At these design conditions, the equipment is rated at 95% efficiency and the supply-water temperature for the thermal energy is 160°F. The electricity production can vary by manufacturer. The electricity produced in the example is minimal as compared with the thermal energy and will be completely absorbed within the facility, so utility interconnection is a minor issue. There are other examples of cogenerating equipment where the electrical production has a much greater role in the overall design decisions. The electricity generated by onsite sources like CHP equipment play an important role in the energy efficiency story for this system.

Domestic hot-water use was profiled for the facility. A majority of the morning and evening hot-water use is by occupants in the guestrooms. The laundry and restaurants are primary hot-water users during the daytime. There are other small energy losses included in the hot-water calculation, such as in the recirculation pump and piping.

There are several assumptions included in this hot-water-use profile, such as average hotel occupancy, hot-water consumption by guests, restaurant occupancy, and laundry equipment performance. These values can vary drastically depending on the application, so it is important for the engineer to identify the quantity and use patterns for a particular application when preparing the design calculation.

Figure 2: This simplified diagram shows how CHP equipment can be integrated into a domestic hot-water heating system. Courtesy: DLR GroupDesign strategy

The value of a CHP system in this application is the electricity that is produced along with the thermal energy. The efficiency of hot-water production in CHP systems nearly approaches most condensing-type water heaters. Maximizing the electricity production and consuming all of the thermal energy is the value proposition for this system. The criteria for electricity production include maximum operating of the CHP equipment at the highest efficiency point.

There are a couple of obvious conclusions when analyzing the thermal requirements of the facility and the hot-water production of the CHP equipment. First, the thermal production of one CHP unit is not large enough to meet the thermal requirement of the facility. An approach for organizing the system may be installing enough CHP capacity to meet the maximum thermal demand of the facility. This approach would result in a large initial investment and extended periods when a large part of the installed capacity is dormant.

A second approach is to undersize the CHP equipment as compared with the thermal requirement, resulting in maximum operating time but missing out on additional thermal and electric production. The solution to be investigated uses some type of thermal storage equipment that can be used to satisfy the thermal peaks and prolong CHP equipment operation.

Figure 2 shows a simple diagram of how CHP equipment supplementing a domestic hot-water system can be organized. The calculation to be solved as part of this system design is the optimization of the storage tank size, output of the CHP equipment, and consumption of the domestic hot water by the facility. The financial viability of the design requires the CHP to operate at the most efficient point for the maximum duration possible while consuming all of the energy produced.

The CHP system is a closed loop that preheats the domestic hot water through a heat exchanger and thermal storage tank. The discharge of the thermal storage tank serves the domestic hot-water system. Project specifics may require additional storage tanks, conventional hot-water generation, thermostat mixing valves, and other traditional components.

Figure 3: This figure highlights the expected thermal storage tank temperature at full-load operation of one, two, and three micro-CHP modules. Courtesy: DLR GroupThe starting point for the system design simulation was using a thermal storage tank with a capacity approximate to the size of the hot storage tank required by the traditional calculation for the domestic hot-water system. This seemed like a reasonable point to reduce or eliminate the need for any additional hot-water storage. The final size of the thermal storage tank will eventually be affected by heat-exchanger performance, number of CHP modules, and facility requirements.

Figure 3 shows the calculated thermal storage-tank temperature with one, two, and three CHP modules operating at 100% performance using a 3,000-gallon tank size. The optimized hot-water temperature for the CHP equipment is 130°F, and assumed approach temperature of the heat exchanger is 4°F. Therefore, the realistic setpoint temperature of the thermal storage tank is 135°F. Figure 3 predicts tank values greater than 135°F. Using those assumptions, the CHP would modulate its output as a response to achieving setpoint temperature in the thermal storage tank.

The first point of the analysis is determining a reasonable combination of CHP units, thermal storage tanks, and heat exchangers that result in a stable operating condition. Once the stable combinations are determined, the lifecycle cost analysis can be performed to select the best course for the project. The equipment combination identified with the optimal cost of ownership can be compared with a traditional domestic hot-water system to determine the ROI.

Table 1 shows the power production for the CHP module performance shown in Figure 3. The values in Table 1 are theoretical electrical production values that allow the thermal storage tank to naturally fluctuate.

Figure 4: This diagram highlights the expected thermal storage tank temperature using one micro-CHP module at maximum capacity and varying the occupancy rate of the facility. Courtesy: DLR GroupFigure 4 shows how the thermal storage tank temperature varies based on hotel occupancy. Figure 4 shows the calculated thermal storage tank temperature with varying hotel occupancy using one CHP module operating at 100% performance using a 3,000-gallon tank size. An important strategy when considering design strategies for a CHP system intended to supplement a domestic hot-water system is the impact of hotel occupancy. Figure 4 suggests that using one CHP module for lower hotel occupancy rates is a good match because the electricity production is maximized and the temperature of the thermal storage tank remains reasonable.

There are several conclusions that can be drawn from the data presented in these figures. Based on the hot-water load assumed, one CHP module could operate 24/7 to supplement the domestic hot-water system. The data also suggests that three CHP modules operating at 100% capacity produce more hot water than necessary. This conclusion is based on the very high temperatures produced at 5 a.m. and that the temperature of the tank at hour 23 is much greater than hour 0, indicating an anomaly in the modeling and suggesting an unstable operating condition. The overheating of the thermal storage observed in the three-module option could be managed through modulation of the system, but the small performance increase available during peak periods is overshadowed by the longer periods of reduced operation. Therefore, it appears that the two-module option with some modulation in performance may be the optimum selection for this application.

Table 1: This table shows the electricity production from one, two, and three micro-CHP modules assuming the modules are operating at maximum capacity. Courtesy: DLR Group

The heat exchanger and thermal storage tank have a lower price point than the CHP equipment. Architectural and structural limitations aside, there may be a temptation to oversize the thermal storage tank and heat exchanger so the CHP equipment can operate at maximum performance. This approach could be problematic because of the long periods where the water temperature in the thermal storage tank would be in the range known to promote Legionella (Legionnaires’ disease). There are many factors associated with the growth of Legionella bacteria including water temperature between 90° to 120°F. The approach recommended is to slightly oversize the CHP equipment as compared with the thermal storage tank to ensure the water temperature in the thermal storage tank can be controlled at setpoint with minimal, short-lived, temperature variation.

The daily power production for the two-CHP-module option with a fixed thermal storage tank temperature of 135°F is 85,410 kWh. This results in 28,470 kWh (33%) more electric production per day as compared with the single-CHP-module operation. The two-module option provides additional benefits of CHP equipment redundancy and less reliance on the traditional equipment for domestic hot-water production. Additionally, this power production is important to the operation of the facility, but is not large enough to be concerned about returning power to the grid. Exporting electricity to the utility grid can be complicated and highly regulated in many parts of the United States. The price paid for the exported power is often greatly discounted from the purchase price, which adds to the importance of consuming all of the electricity produced by the CHP onsite.

Energy efficiency

The analysis presented is a very specific example and provides a methodology for the calculations necessary to apply CHP to a commercial building project. The technology considered has a large thermal-to-electric energy ratio. Therefore, the best opportunities for application of this technology are projects with consistent hot-water requirements (either domestic water heating, hydronic water heating, or both).

There are other technologies—fuel cells, for instance—where the thermal-to-electric-energy ratio are comparable with or dominated by electricity production. The approach for applying other cogeneration technologies is similar but has some distinct differences. The dependence on large hot-water use may not be as important with cogeneration system types with smaller thermal-energy production. Interconnection agreements and net metering will be more important with cogeneration systems that have higher electricity production.

One of the key benefits of using CHP or other cogeneration equipment is the value of making electricity onsite. Gaining a greater understanding of site and source energy and leveraging the benefits is gaining popularity among high-performance building designers. The full definition of site and source energy can be found in many locations including U.S. Environmental Protection Agency’s (EPA) Portfolio Manager website.

Source energy is defined as the energy consumed at the site plus all of the losses in transmission and distribution of the energy between the site and where the energy is ultimately created, referred to as the source.

For natural gas, the difference between site and source energy is very small, less than 5%, due to the modest losses between the well head and the final consumption location. The reality for electricity is much different. The disparity between source and site energy varies throughout the United States and is caused by many factors, including how the electricity is generated. The ratio between site and source energy can be smaller in areas where electricity is produced by technologies different than combustion of fossil fuels. Typically, the source energy for electricity can be as high as 300% more than site energy.

The EPA’s Portfolio Manager website provides information on how these values are calculated and used in Energy Star analysis. Using the example presented previously, the 85,410 kWh of electricity generated at the facility would require approximately 256,230 kWh of capacity if generated by a utility source offsite. By creating the electricity onsite, there is an opportunity to positively affect the overall efficiency of electricity consumed, reduce the load on the grid, and reduce the pollution created by generating the power.

Table 2: This summarizes the return on investment for a micro-CHP system with two modules based on a series of fuel costs, construction costs, maintenance costs, and incentives. “WH savings” is the anticipated savings in construction cost caused by reduciThe ROI calculation for most equipment is filled with assumptions on important factors like fuel costs, equipment costs, available incentives, and financial matrices. The following assumptions are intended to show the process and order of magnitude for the ROI on the installation. This calculation is based on a simple payback analysis with two micro-CHP modules, 3,000 gal of thermal storage, pumps, piping, heat exchangers, electrical provisions, and other controls to form a complete system.

This type of onsite power generation qualifies for incentives in some areas of the United States. Many government agencies use incentives in the form of rebates and favorable tax provisions to promote the use of emerging technologies. Table 2 provides the calculations with and without incentives.

Table 2 includes many assumptions that may not be valid in some parts of the U.S. Of course, utility rates routinely fluctuate and maintenance costs can vary based on equipment, service rates, and other factors. The life expectancy is commonly manufacturer-specific, but assuming 20 years of useful life and the assumptions provided in Table 2, CHP equipment to supplement domestic hot water, heating water, and electricity production can be beneficial.

So far, this analysis assumes that the CHP system would be supplemental to the traditional full-sized domestic hot-water system. The performance and reliability of this equipment suggest that the CHP system could be a major contributor to the domestic hot-water production for the facility, justifying smaller traditional domestic hot-water-generating equipment. The ROI could be significantly improved if the cost difference between the full-sized domestic hot-water system and a complimentary-sized system is included in the calculation. The right column in Table 2 shows how the savings in traditional water-heating equipment affects the analysis and ROI.

Cogeneration systems that include equipment like CHP modules can be a viable part of a high-performance building design. This equipment can supplement (or even provide all of) the domestic hot-water requirements of the facility. They also can be used to satisfy the heating-water component of a building. Facilities with significant and continuous hot-water or heating consumption are good candidates for applying cogeneration systems. The efficiency for producing hot water is comparable with traditional hot-water-generating equipment, such as condensing boilers. The tangible benefit of a CHP system is the electricity generated simultaneously with the hot water. The ROI for the system is maximized when the CHP modules and accessories are optimized for prolonged electricity generation that can be completely consumed onsite at the highest efficiency level.

How to apply CHP equipment

The following is a summary of an approach recommended to apply combined heat and power (CHP) technology to a commercial facility. Step-by-step guide for applying CHP equipment:

  1. Model the performance of the thermal energy systems.
  2. Model the thermal and electric performance of the CHP equipment.
  3. Prepare a flow diagram and sequence of operation for the thermal system in the facility.
  4. Prepare integrated system design with CHP and traditional hot-water-generating equipment.
  5. Prepare a one-line diagram of the electrical design.
  6. Confirm emission regulation and electrical interconnection requirements.
  7. Test combinations of CHP equipment to maximize return on investment of other design criteria.
  8. Finalize the design.
  9. Train the user.

Rodney V. Oathout is the energy and engineering leader and principal at DLR Group’s Overland Park, Kan., office. He is a champion for integrated design, energy efficiency, and human engagement in high-performance building design. He is a member of the Consulting-Specifying Engineer editorial advisory board.