Clean Distributed Generation Library
This online resource page was developed in partnership with Endurant Energy LLC as part of the New York Clean Distributed Generation (Clean DG) Working Group, a multi-year (2007-2009) outreach and education initiative sponsored by the New York State Energy Research and Development Authority (NYSERDA). The campaign included a series of seminars and presentations aimed at NYECC’s core constituents, New York’s large energy consumers, focusing largely on the benefits of the high-efficiency Clean DG technologies known as Combined Heat and Power (CHP), or cogeneration. Links to federal, state and DG/CHP industry online resources are provided below, along with downloadable copies of the presentations delivered at Clean DG Working Group seminars.
CHP (Combined Heat and Power) is a generic term used to describe the generation of useful thermal (heat) and electric (power) energy at a single site. The term is often used synonymously with cogeneration (the generation of two or more types of energy at a single site) and refers to the use of a wide range of technologies. When this type of generation is done outside of the traditional electric utility, it is termed distributed generation.
The idea behind CHP is simple. During the process of generating electricity, an enormous amount (up to 65% of the energy content of the original input fuel) of waste heat is produced. Typically, this heat goes unutilized and is vented into the atmosphere (particularly at the utility level). A CHP system captures this waste heat and converts it into useful thermal energy which can be used to create air conditioning, heating and domestic hot water. Capturing this heat at the source of generation is the most efficient way for it to be utilized, thus distributed generation CHP systems are commonly installed in the facility that will be the chief beneficiary of its output. This in turn increases efficiency because of losses associated with the transmission of electricity over long distances. In a typical utility scenario, anywhere from 5-10% of electricity produced is lost in the process of distributing that electricity to far-flung end-users. When the losses attributed to unutilized waste heat and transmission are taken into account, a utility will generally manage generation efficiencies no higher than 25-30%.
CHP works in two stages. Input fuel (in most cases natural gas) is fed into a generator. The generator combusts the fuel to produce electricity. The electricity produced contains approximately 30% of the total energy of the original input fuel. For the engine to operate properly, its temperature must be regulated. This is where the second stage begins. Water is used for this purpose and is contained in a jacket around the engine. Heat from the engine is transferred to the water which can then be used to create domestic hot water, or steam to power air conditioning and heating. Additionally, the engine produces exhaust at extremely high temperatures and this exhaust can be used for the same purposes. Between the jacket water and the exhaust, the CHP system can utilize from 30-40% of the total energy of the input fuel. Combined with the electricity generated in the first stage, CHP systems can attain efficiencies of 60-70%, more than double the efficiency of the utility.
The Economics of Distributed Generation
The economic model of distributed generation operates under the standard principles of production. For production to be profitable, the cost of input materials and operations must be lower than the sale price of the final product. In electricity generation, this cost differential is called the spark spread. In distributed generation, this spark spread is determined by calculating the difference between the final sale price of electricity and thermal output (steam/hot water) and the cost of fuel (typically natural gas) as well as the marginal costs of operation, including maintenance and personnel. This is how utilities make their money and this is also what makes distributed generation profitable.
The key to maintaining a profitable spark spread is ensuring that the production cost of generated electricity is lower than the price the same electricity can be purchased from the utility. In New York City, utility electricity is sold in two tiers: on-peak and off-peak. Because more electricity is consumed during the day (on-peak), prices are necessarily higher than during evening hours. Typical distributed generation systems can compete with off-peak pricing, but because the margin is so small, off-peak generation is usually discouraged. However, distributed generation has a large cost advantage over on-peak electricity prices, which leads most DG owners to operate their systems only during day-time business hours. This is known as peak-coincident distributed generation.
In New York City, utility electricity is obtained through a wide array of resources, including hydro-electric, nuclear, coal, oil and natural gas. During off-peak generation, the cheaper, cleaner resources (hydro/nuclear) are sufficient to cover the base electrical load. However, during on-peak generation, more expensive, dirtier resources (coal, oil, natural gas) are used to meet the larger demand. Natural gas-fired generation is the largest contributor of electricity for this additional load. Because of the use of natural gas during peak operation, utility on-peak electricity prices historically correlate directly with the price of natural gas; thus natural-gas fired distributed generation and on-peak utility generation maintain constant and similar spark spreads.
The Environmental Impact
With rapidly depleting resources and a degrading environmental outlook, individuals, businesses and governments are looking increasingly at reducing the amount of carbon pumped into the atmosphere. The amount of carbon generated by a particular entity is commonly known as its carbon footprint. Electricity production is one of the leading causes of carbon pollution. Reduction in electricity-generated carbon can be attained in two ways: reducing the overall usage of electricity (demand-side) and producing the same amount of electricity using fewer resources (supply-side). On-peak coincident distributed generation falls into the second scenario. Because distributed generation is more efficient than utility generation (utilizing waste heat to create useful thermal energy), any given amount of energy output can be generated using less input fuel. Thus if a building is running a CHP system during on-peak hours and off-setting less-efficient, dirtier utility generation, the building can dramatically reduce its carbon footprint. Two federal programs, EnergyStar and LEED, recognize buildings for their environmental leadership with financial incentives. A building is rewarded EnergyStar points when it reduces its overall electrical consumption from the local utility. Once a building receives 63 EnergyStar points, it is eligible for further recognition under the LEED program. A typical cogeneration system can increase a building’s EnergyStar rating by 6-8 points, and its LEED rating by 1-3 points, all of which can help contribute to the project’s financial benefits.
Endurant Energy, in partnership with the New York Energy Consumer’s Council, has created this resource center to provide information related to clean distributed generation.
Below, you’ll find a brief description of and link to each resource:
DOE Information Resources: The Department of Energy’s homepage for all CHP-related information.
US CHPA Market Studies: The United States Clean Heat and Power Association’s resource center for market studies relating to CHP.
EPA CHP Partnership: The Environmental Protection Agency’s homepage for information on combined heat and power.
NYSERDA’s CHP Information Page: The New York State Energy Research and Development Authority’s homepage for information on combined heat and power.
NYC CHP Market Primer: This report provides a brief study on the existing conditions in the New York City energy market that make CHP advantageous.
Conventional Utility Generation Compared with CHP: These two diagrams provide a comparison of standard utility generation when compared with CHP generation.
How CHP Effects EnergyStar: A brief presentation outlining the impact of CHP on a building’s EnergyStar rating.
CHP Effects on Vornado’s Carbon Footprint: A brief exploration of how CHP, if implemented in Vornado Realty Trust’s portfolio, could lower the company’s overall carbon footprint.
CHP As a Win-Win: A 2007 presentation given by the Northeast CHP Application Center and Pace University highlighting the benefits of CHP.
Interconnecting A DG System: A 2007 presentation given by Con Edison providing an overview of the interconnection process for distributed generation systems.
Technology Spotlight: Microturbines: A 2005 overview, by Endurant’s John Kelly, on microturbines.