CHP and Microgrids—A Profitable Pair


Often, two technologies emerge more or less simultaneously, and then reinforce each other as mutually compatible technologies. In doing so, they can create a kind of synergy together and make one another more efficient, more cost-effective, more profitable, and more useful—like a pair of horses working together to pull a load. Two such energy delivery technologies are microgrids and combined heat and power (CHP).

Microgrids are small-scale power distribution networks that operate over a relatively small geographical area and provide power to a group of users. A series of microgrids can augment or even replace a traditional regional utility grid. CHP systems are retrofitted onto existing power generation plants and are used to harvest the waste heat created by these power generators.

The recovered waste heat is then turned into useful energy either in the form of additional electrical power or space heating of an adjacent building. Both types of systems have been increasing during the past decade. So, it was inevitable that these two technologies would be brought together. The question is, what makes this combination so effective? What cost savings are incurred when they work together? What can be expected of this partnership in the future?

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Four cogen units at the John Muir Medical Center provide all the power and heat for the hospital. The payback period was roughly 2.17 years. They only use grid power as a backup and for doing maintenance on the engines. The Caterpillar engines have over 60,000 operating hours each. The combined power generation is 900 kW for all four modules.

Combined Heat and Power
The first horse is waste heat recovery via combined heat and power. Due to the three laws of thermodynamics, no mechanical system can ever hope to be 100% efficient. Some of the energy produced is always lost in the form of waste heat due to friction or other inescapable inefficiencies. In most energy producing systems (engines, turbines, etc.) the waste energy is radiated off in the form of waste heat. CHP systems are designed to capture this waste heat and use it to once again perform useful work.

How is this done? There are several methods available to capture and recycle waste heat. A CHP system is typically retrofitted onto an existing power generation system. The extraction of waste heat also serves to cool the main energy production unit. As such, the relationship of a CHP system to the main energy source is mutually beneficial. Once in place, CHP becomes a single integrated system capable of generating additional heat energy and/or electricity.

At the very small scale, micro-CHP, these systems operate in energy regimes less than 5 kilowatts (kW). This power range includes small-scale internal combustion engines and rooftop solar arrays up to about 400 square feet. Each of these arrays generating 5 kW of direct current (DC) power can produce approximately 350 kilowatt-hours (kWh) of alternating current (AC) power per month, assuming an average of at least five hours per day of sunshine with a south-facing orientation. A micro-CHP system would capture waste heat from individual home power systems and convert it into heat and electricity. The heat can be used to reduce a home’s overall heating bill, and the electricity can be sold back to the grid. Either way, it saves the homeowner or business owner money.

As a secondary financial benefit, the resultant cost savings and money earned from micro-CHP systems can help defray the cost of the entire system. This makes the entire system far more economical than it would be otherwise. As such, the lower net costs make expanding these systems far more attractive financially. The additional money can be used to install even more solar cell arrays.

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De1806 12 2In addition to cogeneration, there is trigeneration. Trigeneration takes cogeneration a step further by utilizing an absorption chiller to further reduce waste heat and cool the overall energy producing system. Cooling solar cells makes them far more efficient. Studies have shown that when solar panels are operated under cooling conditions, the temperature dropped by up to 40°C, resulting in an increase in cell efficiency by 12%. So, trigeneration combines a renewable energy solar power system, heat production, and coolant by refrigerators.

Larger-scale grids that service larger business and industrial facilities, large neighborhoods, and small towns can also benefit from CHP applications. But these tend to be more traditional steam pipe systems that have been common in major cities for over half a century (over 2,000 buildings in downtown New York receive their heat via cogeneration steam heating plants that utilize over 105 miles of pressurized steam pipes that deliver heat through tunnels under the city’s streets). Versions of local- and regional-scale CHP systems capturing waste heat from renewable sources are increasing in both number and extent as larger-scale renewable energy systems operating at the commercial and utility scales become more common.

The second horse in the team is the small-scale microgrid powered by either renewable energy sources or small engines and microturbines.

Microgrids are typically linked to a regional power grid and operate in conjunction with the main power supplier. A CHP system linked with a microgrid allows the microgrid’s customer to be serviced by heat and/or additional power supplied from the waste heat produced by the microgrid’s power generation system. The resultant use of otherwise waste heat energy can greatly improve overall system efficiency (especially in the consumption of the fuel feeding the microgrid’s power generator) and reduce net operating costs. Within the microgrid service area, the energy provided by the CHP can help with load leveling or add to energy being stored for later use if the microgrid relies on renewable energy sources whose output varies during a typical work day.

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The control room at the John Muir Medical Center

Microgrids go hand-in-hand with renewable energy sources. The synergy comes from the fact that renewable energy easily integrates to small-scale grids. So, the increase in microgrids can be tracked to the expansion of renewable energy sources.

Consisting of multiple small power supply systems, a patchwork of microgrids is more flexible and resilient than a single large grid. If there is a power outage caused by a storm or mechanical problems, a single microgrid out of a patchwork of microgrids won’t affect an entire service region like a similar problem would on a single large utility-scale grid. Being small also tends to make microgrids less vulnerable to damage from storms, outages, and weak spots in the first place. And if damaged, a microgrid can be brought back online much sooner, with less effort. Resilience, flexibility, and ease of repair are all important characteristics for systems that serve critical facilities such as hospitals, police stations, sewer treatment facilities, and stormwater flood control pump systems. Integration of these microgrids with larger utility grids is being promoted at both the state and federal level.

Microgrids utilize a wide variety of power sources and not all of them are renewable. For example, microturbines utilizing alternate fuels such as biogas could be classified as both. Other microgrids exclusively use smaller generators (reciprocating engines or turbines) using standard diesel or natural gas fuel. Some are exclusively for emergency situations, relying on stored battery power to its local users in response to outages. But for the most part, newer microgrids are associated with renewable energy sources.

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Cogen units at the John Muir Medical Center—the absorption chiller provides 250 tons of cooling in the summer.

CHP and Microgrids—Working Together as a Profitable Team
Several factors affect the layout, connections, and integration of new microgrids into existing power supply infrastructure. This, in turn, requires planners to factor in the presence of existing utility lines and their potential for interfering with the new microgrid system. In addition to the general layout of the power grid, the locations of the customers in relation to the CHP system and the number of customers as well as their energy and heat needs must be factored in.

Then there are the non-physical service features of the systems. Demand loads for an area serviced by a dedicated microgrid may have a totally different demand cycle than its neighbor across the street. This is especially true for service areas that work on different operating schedules and require emergency power supplies. With different demand loads comes differing billing arrangements, service contracts, and operating budgets. Not only can each customer’s load demand vary according to different times of day, but the total energy required can also vary greatly.

And so, the economics of microgrids and associated CHP systems (capital costs, operating costs, profitability, taxes, debt servicing, etc.) are governed by the physical capabilities and operational factors of the systems in question. The heat producing or electricity generating capacity of the CHP system (measured in kW) will economically determine if it is worth installing. If the CHP system’s capacity is too large relative to the microgrid capacity, the additional money spent on the large system will be wasted and result in an inefficient operating system. If the CHP system is too small, it will essentially be leaving money on the table and not efficiently tap the microgrid system to its fullest extent for recoverable waste heat. Demand also plays a role. Even if a microgrid was large enough to provide enough waste heat to operationally justify a larger CHP system, if the demand for power and heat from the buildings being serviced is less than this larger capacity, the investment in the larger CHP system will be a waste of money.

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E3 NV designed, built, and installed four EnviroGen Cogeneration Energy Modules at the John Muir Medical Center (JMMC) six years ago,
reducing the costs of heating and cooling, and providing electricity to run equipment. JMMC also chose an absorption chiller option for cooling. E3 continues to monitor these units with its proprietary GenView software, alerting JMMC when maintenance is needed in an effort to
ensure that the units are operating at peak efficiency.

The basic economic analysis for CHP system installation is the determination of the payback period, or return on investment (ROI). This analysis compares the upfront capital costs of the system’s net installation costs (materials and labor costs, less tax rebates, etc.) with the additional revenue generated by the sale of the heat or electricity produced by the CHP (less the concurrent CHP system operating costs, loan and interest payments, lease payments, depreciation, etc.). A typical payback period is measured in years, as in the following example:

UNH self-financed their CHP system at an estimated cost of $28 million. The University’s system went online in 2006. In 2009, UNH launched the EcoLine project and partnered with Waste Management of New Hampshire to pipe purified gas from WM’s Rochester landfill to use as the primary fuel for the CHP plant. The project cost an estimated $49 million, which was internally funded, and has an expected payback of 10 years. UNH is the first university in the country to use landfill gas as its primary fuel source. The University sells renewable energy credits (RECs) from EcoLine’s generation to help finance the capital cost of the project and to invest in additional energy efficiency projects on campus.

(Source: University of New Hampshire, Cogeneration & EcoLine [Landfill Gas],

Note that since the UNH project was internally financed, a long payback period (usually defined as 5 to 10 years) was considered acceptable. For outside investors, shorter payback periods are usually required to justify an investment; typically, this is a duration of less than five years with two-year payback periods typically being required. However, there is no standard approach to design and installation of most CHP projects. As a result, each CHP installation is defined by site-specific details and unique project requirements. Furthermore, the financing requirements, economics, and payback periods for each project will be unique and widely variable. The resultant payback period may determine the type of financing (direct ownership utilizing debt financing or internal funding versus third-party ownership relying on leasing or contract financing) that will be made available to pay for the CHP system.

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Ariel Tea Tanks

Putting the Two Together—Promises, Challenges, and Future Opportunities
CHP plus microgrid equals the resilient and renewable energy infrastructure demanded by industry, commerce, small towns, and large cities. The use of CHP boosts the overall efficiency of the energy system, making it far more attractive to a wider variety of customers. And this is a potential that has been barely tapped in an industry in which two-thirds of the energy produced at a US power plant is lost up the stack and in the cooling ponds as waste heat. This situation is more than just low-hanging fruit; it is an opportunity that demands action. And cities are responding by promoting smaller, local power plants.

This is not exactly a new idea. The use of standard district energy distribution systems like steam pipe heating networks can allow cities to double the overall efficiency of their energy systems. And this practice can be applied to the smaller scale microgrids coming online. Piggybacking off of the inherent resiliency of microgrids in the face of storms and operational demands, the use of CHP for microgrid systems ensures that energy supply system’s overall efficiency is maximized to its fullest extent. In other words, there is no need to sacrifice the increased efficiency from waste heat recovery when transitioning to smaller microgrids, local power sources, or renewable energy.

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A biogas cogen site installed at Brasil Dairy

By themselves, smaller turbines operate at about 30% to 40% efficiency. By using CHP, the overall system using these smaller turbines can achieve operational efficiencies between 70% and 90%. The installation of such smaller/regional energy supply systems, used in aggregate with existing centralized/regional power systems, does represent additional capital costs. But the use of CHP in conjunction with these new microgrids can greatly reduce overall operating costs, allowing for a quicker payoff and reduced breakeven prices. And so, these highly integrated microgrid systems continue to expand.

Reliability and resilience, and even efficiency and profitability, are not the only considerations shaping the development of CHP microgrid applications. There are equally important social and environmental issues concerning sustainability and climate. Indirect benefits include sustainability, workforce development and an increased number of jobs, and environmental sustainability. Sometimes the choice to use microgrids augmented by CHP systems is no choice at all. Microgrids servicing key installations in an emergency may need the additional revenue or cost savings to make such a project economically viable. An emphasis on renewable energy presents the challenge of managing its variable power output, and CHP systems can go a long way to achieve the necessary load leveling for its customers. By allowing for more efficient and effective use of renewable energy, CHP systems help achieve indirect goals for mitigating climate change, reduction of pollution, and improving the health and environment of the region being serviced.

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A cogeneration system at The Cooper Union has helped the facility achieve LEED Platinum status.

Major Suppliers
Advanced Cooling Technologies provides passive, heat pipe heat exchangers for energy recovery and enhanced dehumidification in heating, cooling, and ventilation systems. This approach is often underestimated as a source of recoverable waste heat. A well-designed HVAC system can be outfitted with heat pipe heat exchangers that provide efficient energy recovery year-round in any season. Advanced Cooling Technologies Inc. offers a variety of innovative and customized heat pipe HVAC heat exchangers that can greatly reduce overall energy usage/costs. Their systems typically achieve energy cost savings with ROI of one to two years. Side benefits include enhanced dehumidification/latent cooling performance and a simple, totally passive system without moving parts requiring little or no maintenance. Units also help level energy use loads by eliminating over-cooling and reheating, and an efficient, compact, and flexible design that makes for easy installation. Specifically, their ACT-HP-WAHX Enhanced Passive Dehumidification with Wrap-Around Heat Pipe Heat Exchangers enhance performance while increasing efficiency and greatly reducing the system’s overall energy costs.

Cleaver-Brooks provides a series of customized, packaged heat-recovery steam generators (HRSG) that captures waste heat from gas turbines or large reciprocating engines. The Cleaver-Brooks product offering ranges from smaller, unfired waste heat boilers to highly fired waterwall furnace and modular heat-recovery steam generators. Its Max-Fire Series HRSG utilizes an integral water-cooled furnace with membrane wall construction in a shop-fabricated unit so that firing temperatures up to 2,800°F can be utilized. This design significantly increases the steam production capability of the HRSG for applications where steam demand is critical to the project’s economics. This boiler design also includes a vertical or horizontal flue gas outlet to meet tight space requirements. All Cleaver-Brooks HRSG systems can be designed to include selective catalytic reduction (SCR) and CO catalyst to meet the lowest possible emission requirements. In-house CFD modeling is critical to ensure that NOx emission levels as low as 2 ppm can be achieved. Finally, for many microgrid applications, the HRSG will be combined with a duct burner and fresh air fan to provide supplemental firing of the combustion turbine exhaust as well as to generate steam when the combustion gas turbine is offline.

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A cogeneration system at The Cooper Union

E3 NV LLC emphasizes efficiency and ease of use when it comes to CHP applications. These are self-contained miniature power plants that deliver highly consistent levels of ultra-clean combined heat power with minimal noise and emissions. E3 NV’s EnviroGen Energy Modules utilized in CHP applications are self-contained miniature power plants that deliver highly consistent levels of ultra-clean combined heat power with minimal noise and emissions. Though packaged to eliminate exposure to outside elements, these modules are designed for easy access when service or maintenance is needed. When deployed as one module, their unique skid delivery system allows E3 NV to place multiple units on one platform. This maximizes performance while minimizing space requirements. Their cogeneration systems can be configured to provide power only to designated property or operate in sync with the utility companies and sell excess electricity back to the grid. These systems are designed to run at all times, with little to no maintenance, eliminating power downtimes. These can also replace backup or standby generator systems with far more reliable continuous cogeneration. Cogeneration can also be used at data centers where the utility cannot supply enough power or where cooling needs cannot be met economically due to a lack of water for evaporative or adiabatic cooling. E3 NV cogeneration EnviroGen Energy Module design features include: 1/4-inch steel plate construction, seismic isolation and secondary containment basin, Caterpillar engine and Marathon generator, ultra-low emissions combined with high energy efficiency (greater than 85%), 4-inch mineral wool insulation, and 2 pounds/square foot foam/decoupled vinyl barrier. Its modular design allows for the use of multi-unit configurations with power outputs ranging from 100 kW to 2 MW per module. This is a multi-purpose system that both supports microgrids and allows for optional integration with solar and energy storage.

De1806 19 2“E3 NV designed, built, and installed four EnviroGen Cogeneration Energy Modules at the John Muir Medical Center (JMMC) six years ago, reducing the costs of heating and cooling, and providing electricity to run equipment,” explains Bob Brolliar, Chief Engineer at JMMC-CC. “JMMC also chose an absorption chiller option for cooling. E3 continues to monitor these units with its proprietary GenView software, alerting JMMC when maintenance is needed, in an effort to ensure the units are operating at peak efficiency.”

In addition to medical facilities, the company’s experience extends to educational and business campuses such as the Cooper Union for the Advancement of Science and Art in New York. E3 NV designed and managed the installation, startup, and commissioning of the cogeneration plant for this facility and continues to provide remote monitoring performance reporting and other operation functions required by the New York State Research and Development Authority.

“Cooper Union’s 41 Cooper Square academic building, where the E3 cogen system is installed, is a LEED Platinum-certified building,” explains Melody Baglione, Ph.D. Associate Professor and George Clark Chair of Mechanical Engineering. “E3 designed a 250-kilowatt cogeneration system with an absorption chiller and heat recovery on pre-manufactured skids that were craned onto the roof. In addition, E3 designed the building integration as well as permits and approvals for the electrical interconnection with Con Edison, air permitting, and other specialized aspects of the cogeneration system. This project received incentives from NYSERDA that required E3 to design and implement a software interface to provide five-minute performance uploads to the NYSERDA CHP tracking database. Cooper Union has realized energy savings for this project and we are continually working with E3 to further optimize the system’s performance. Another benefit from the system, albeit less tangible, is that it has been used as a teaching tool for the mechanical engineering students in understanding onsite cogeneration as an energy efficiency technology.” De Bug Web

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