Reducing your energy costs through combined heat and power
06 September 2017
Combined Heat and Power (CHP) is long established as one of the most efficient ways to utilise a primary energy source. Correctly sized and installed, CHP offers significant advantages to all sectors which have a simultaneous thermal and electrical load. The main advantages of having CHP are substantial financial savings on utility costs, large carbon reduction and increased security of supply.
CHP uses a fuel source, e.g. natural gas at extremely high efficiencies, typically in the order of 85% – 90% when compared to conventional means of taking electrical energy from the grid and thermal energy from on-site boilers, which may be up to 40% less efficient.
Facilities with 24hr/7 day load profiles can maximise savings with CHP, as longer run hours produce more savings and improve payback times. However, CHP is also suitable for applications with lower operational hours, typical 15 hours per day for 5-7 days a week.
Once it has been established that a process or a building has a significant simultaneous thermal and electrical load, then CHP is a viable solution to reduce energy consumption. The main driver of the economics behind CHP is the difference in cost of the unit price of the CHP fuel versus the cost of unit price of electricity. This is known as the ‘spark gap’ within the CHP industry. Typically, we would like to see this at around a ratio of 3, with the electrical cost being the higher.
Example savings generated by CHP in the Pharmaceutical sector
This example is based on comparing the equivalent energy produced by a single Edina supplied, installed and maintained MWM manufactured TCG 2020 V12 CHP natural gas engine rated at 1.2MWe / 1.2MWth. The facility runs 24/7 and currently pays on average 9.1c/kWhr for electricity and 3.05c/kWhr for natural gas, so in this instance the ‘spark gap’ is 2.98. Budgetary costs for the project are in the order of €1.5M.
As can be seen in the above chart, the CHP installation will save over €350,000 per year. In addition to this, once the CHP can be verified as a High Efficient CHP (HECHP) under the EU directive
2004//8/EC, further savings can be achieved via a rebate on the carbon tax element of the fuel costs. In this case study, the carbon tax rebate is worth an additional €70,000 per year, potentially saving over €420,000 per annum in energy costs.
To achieve verification of HECHP – the CHP needs to be sized so that the majority of the energy supplied by the CHP plant will be utilised within the load, and Edina can help with this.
CHP is usually sized against the thermal load and once the CHP has been selected on this basis, it is then compared against the electrical load. If the selected units output is equal to, or below the electrical base load, then it is correctly sized. If it’s above the electrical base load, then the CHP must be sized on the electrical load, with the knowledge that the corresponding thermal load will be absorbed by the site load.
High quality energy meters are required on the electrical output, gas input and heat used. Post commissioning, the plant is audited and verified as HECHP, with a certificate being issued enabling the end user to apply for the tax rebate. This process is carried out on a yearly basis, and encourages the end user to ensure the CHP plant is always optimised.
Currently, we are seeing market energy prices showing a favourable spark gap for CHP. In addition to substantial financial savings and security of the supply, CHP will also make a significant contribution to reducing a business’s carbon footprint. CHP is a well proven technology, it’s reliable, efficient and robust, and provides a good return on investment. Put simply – it works!
The below charts shows the carbon savings and primary energy savings which will be achieved per annum. The carbon savings, again, can be traded, providing another valuable revenue stream.
Through the application of CHP, the pharmaceutical plant from our case study will save 2,689 tonnes of CO2 per annum, and is seen as a major step change in meeting the company’s green targets and achieving their environmental strategy.
Some corporate companies and customers will only do business with a green company – that is a company who is continually working to reduce their global carbon footprint. Being seen as green is becoming a sales tool to ensure product ends up in the right retailers and on the most desired location on a product display. Being green also serves to strengthen brand awareness and is considered as a unique selling point.
CHP provides primary energy savings in the region of 35% per annum, on like-for-like basis. It’s through this high efficient use of energy that contributes to the financial and carbon savings.
To summarise, CHP is a major contributor to managing increasing energy costs. CHP significantly reduces carbon emissions, offers diversity and security of supply, and reduces the reliance on one source of power to run a facility. Furthermore, sized and installed correctly, CHP installations can provide a typical returns on investment of between 2.8 – 4.5 years, again depending on a favourable ‘spark gap’.
As a leading supplier, installer and maintenance provider for CHP and gas solutions in Ireland and the UK, Edina can carry out a high level feasibility study to evaluate whether CHP is a viable solution for your business. Regardless of what the business is, once there is a simultaneous demand for electricity and heat (or cooling), then exploring CHP may the beginning of the process of reducing operational costs at your business.
For more information about Edina, and to reduce your energy costs through CHP, visit us at www.edina.eu/reducing-your-energy-costs-through-chp or contact us on +353 (0)1 882 4800 for your free feasibility study.http://www.engineersjournal.ie/2017/09/06/reducing-energy-costs-combined-heat-power/http://www.engineersjournal.ie/wp-content/uploads/2017/09/chp-plant.pnghttp://www.engineersjournal.ie/wp-content/uploads/2017/09/chp-plant-300x300.pngSponsoredenergy,facilities management