Cogeneration
Explained
Cogeneration
now produces almost 10% of our nation's electricity, saves its customers
up to 40% on their energy expenses, and provides even greater savings to our
environment.
Cogeneration,
also known as “combined heat and power” (CHP), cogen, district energy, total energy, and combined cycle,
is the simultaneous
production of heat (usually in the form of hot water and/or steam) and power, utilizing one primary fuel. Cogeneration
technology is not the latest industry buzz-word being touted as the solution to
our nation's energy woes. Cogeneration is a proven technology that has
been around for over 100 years. Our nation's first
commercial power plant was a cogeneration plant that was designed and built
by Thomas Edison in 1882 in New York.
Primary
fuels commonly used in cogeneration include natural gas, oil, diesel fuel,
propane, coal, wood,
wood-waste and
bio-mass. These "primary" fuels are used to make electricity, a
"secondary" fuel. This is why electricity, when compared on
a btu to btu basis, is typically 3-4 times more expensive than primary
fuels such as natural gas.
An
example of a cogeneration process would be the automobile in which the primary
fuel (gasoline) is burned in an internal combustion engine - this produces
both mechanical and electrical energy (cogeneration). These combined energies,
derived from the combustion process of the car's engine, operate the various
systems of the automobile, including the drive-train or transmission (mechanical
power), lights (electrical power), air conditioning (mechanical and electrical
power), and heating of the car's interior when heat is required to keep the
car's occupants
warm. This heat, which is manufactured by the engine during the
combustion process, was “captured” from the engine and then re-directed to the passenger
compartment.
Due
to competitive pressures to cut costs and reduce emissions of air pollutants and
greenhouse gasses, owners and operators of industrial and commercial facilities
are actively looking for ways to use energy more efficiently. One option is
cogeneration, also known as combined heat and power (CHP). Cogeneration/CHP is
the simultaneous production of electricity and useful heat from the same fuel or
energy. Facilities with cogeneration systems use them to produce their own
electricity, and use the unused excess (waste) heat for process steam, hot water
heating, space heating, and other thermal needs. They may also use excess
process heat to produce steam for electricity production. Cogeneration currently
coexists with a regulated industry that is going through major structural
changes that may limit or expand its application.
Regulatory
Issues
The
concept of cogeneration is not new. Early in this century, before there was an
extensive network of power lines, many industries had cogeneration plants. As
utilities became established and grew, most states began to regulate them in
order to limit their pricing power. The Public Utilities Holding Act of 1935 (PUHCA),
together with amendments to the Federal Power Act (also in 1935), were the final
steps in protecting utility companies from competition. These laws created
vertically integrated utilities with responsibility for the production,
transmission, and distribution of power. In exchange for their exclusive
franchises (territories) and guaranteed revenues, utilities agreed to government
regulation of rates and service. Under these rules, more investments in
infrastructure and more sales meant more profits. As the network of power lines
grew and electricity from utilities became more economical, industrial
facilities bought more of their electricity from utilities. However, many
industries still had to generate process heat on-site. The economies of scale
that the utilities were able to obtain at that time, as well as the availability
of low-priced process heat from cheap oil and gas, removed incentives to retain
cogeneration equipment.
In
the past three decades, however, the long-term trend of energy prices generally
moved upward. Building more and more large power plants no longer provided
economies of scale. This was a major factor in the increasing use of
cogeneration by commercial and industrial facilities.
The
Public Utilities Regulatory Policies Act of 1978 (PURPA) provided further
encouragement for developers of cogeneration plants. Section 210 required
utilities to purchase excess electricity generated by "qualified
facilities" (QFs) and to provide backup power at a reasonable cost. QFs
included plants that used renewable resources and/or cogeneration technologies
to produce electricity. PURPA cogenerators must use at least 5% of their thermal
output for process or space heating (10% for facilities that burn oil or natural
gas). In many cases, this forced independent cogenerators to accept very low
rates for their steam production in order to become a qualified facility under
PURPA. Another problem is the rate at which utilities purchase a cogenerator’s
excess power production.
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Regulatory
Issues
(continued)
Most states set the price at "avoided cost,"
or the cost to the utility of producing that extra power. Utilities with excess
power generation capacity are often allowed to have extremely low avoided costs.
This practice has created artificial barriers to cogeneration as well as to
independent power generators.
The
Energy Policy Act of 1992 (EPAct) tried to create a more competitive marketplace
for electricity generation. It created a new class of power generators known as
Exempt Wholesale Generators (EWGs). These are exempt from PUHCA regulation and
can sell power competitively to wholesale customers. A cogeneration facility can
be (but does not have to be) a QF under PURPA and an EWG under EPAct. This
happens when the facility is in the exclusive business of wholesale power sales,
and makes no retail power sales to its "steam host" (customer).
Cogeneration
Technology
A
typical cogeneration system consists of an engine, steam turbine, or combustion
turbine that drives an electrical generator. A waste heat exchanger recovers
waste heat from the engine and/or exhaust gas to produce hot water or steam.
Cogeneration produces a given amount of electric power and process heat with 10%
to 30% less fuel than it takes to produce the electricity and process heat
separately.
There
are two main types of cogeneration concepts: "Topping Cycle" plants,
and "Bottoming Cycle" plants. A topping cycle plant generates
electricity or mechanical power first. Facilities that generate electrical power
may produce the electricity for their own use, and then sell any excess power to
a utility. There are four types of topping cycle cogeneration systems. The first
type burns fuel in a gas turbine or diesel engine to produce electrical or
mechanical power. The exhaust provides process heat, or goes to a heat recovery
boiler to create steam to drive a secondary steam turbine. This is a
combined-cycle topping system. The second type of system burns fuel (any type)
to produce high-pressure steam that then passes through a steam turbine to
produce power. The exhaust provides low-pressure process steam. This is a
steam-turbine topping system. A third type burns a fuel such as natural gas,
diesel, wood, gasified coal, or landfill gas. The hot water from the engine
jacket cooling system flows to a heat recovery boiler, where it is converted to
process steam and hot water for space heating. The fourth type is a gas-turbine
topping system. A natural gas turbine drives a generator. The exhaust gas goes
to a heat recovery boiler that makes process steam and process heat. A topping
cycle cogeneration plant always uses some additional fuel, beyond what is needed
for manufacturing, so there is an operating cost associated with the power
production.
Bottoming
cycle plants are much less common than topping cycle plants. These plants exist
in heavy industries such as glass or metals manufacturing where very high
temperature furnaces are used. A waste heat recovery boiler recaptures waste
heat from a manufacturing heating process. This waste heat is then used to
produce steam that drives a steam turbine to produce electricity. Since fuel is
burned first in the production process, no extra fuel is required to produce
electricity.
An
emerging technology that has cogeneration possibilities is the fuel cell. A fuel
cell is a device that converts hydrogen to electricity without combustion. Heat
is also produced. Most fuel cells use natural gas (composed mainly of methane)
as the source of hydrogen. The first commercial availability of fuel cell
technology was the phosphoric acid fuel cell, which has been on the market for a
few years. There are about 50 installed and operating in the United States.
Other fuel cell technologies (molten carbonate and solid oxide) are in early
stages of development. Solid oxide fuel cells (SOFCs) may be potential source
for cogeneration, due to the high temperature heat generated by their operation.
Cogeneration
Applications
Cogeneration
systems have been designed and built for many different applications.
Large-scale systems can be built on-site at a plant, or off-site. Off-site
plants need to be close enough to a steam customer (or municipal steam loop) to
cover the cost of a steam pipeline. Industrial or commercial facility owners can
operate the plants, or a utility or a non-utility generator (NUG) may own and
operate them. Manufacturers use 90% of all cogeneration systems. Some industries
and waste incinerator operators who own their own equipment realize sizable
profits with cogeneration.
Another
large-scale application of cogeneration is for district heating and cooling. Many colleges,
hospitals, office buildings and even cities, that have extensive district heating and cooling systems, have
at their core, a cogeneration or trigeneration power plant. The University of Florida has a 42 Megawatt (MW) gas
turbine cogeneration plant, built in partnership with the Florida Power
Corporation. Some large cogeneration facilities were built primarily to
produce power. They produce only enough steam to meet the requirements for
qualified facilities under PURPA. If no steam host is nearby, one can be built.
For example, there are large (80 MW) plants operating under PURPA that have
large greenhouses as "steam hosts." The greenhouses operate without
losing money only because their steam heat is virtually free of charge. These
types of plants are candidates to become EWGs in the new regulatory environment.
Many utilities have formed
subsidiaries to own and operate cogeneration plants. These subsidiaries
are successful due to the operation and maintenance experience that the
utilities bring to them. They also usually have a long-term sales contract
lined up before the plant is built. One example is a 300 MW plant that is
owned and operated by a subsidiary co-owned by a utility and an oil
company. The utility feeds the power directly into its grid. The oil
company uses the steam to increase production from its nearby oil wells.
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Cogeneration
Applications
(continued)
Cogeneration
systems are also available to small-scale users of electricity. Small-scale
packaged or "modular" systems are being manufactured for commercial
and light industrial applications. Modular cogeneration systems are compact, and
can be manufactured economically. These systems, ranging in size from 20
kilowatts (kW) to 650 kW produce electricity and hot water from engine waste
heat. It is usually best to size the systems to meet the hot water needs of a
building. Thus, the best applications are for buildings such as hospitals or
restaurants that have a year-round need for hot water or steam. They can be
operated continuously or only during peak load hours to reduce peak demand
charges, although continuous operation usually has the quickest payback period.
Several
companies also attempted to develop systems that burn natural gas and fuel oil
for private residences. These home-sized cogeneration packages had a capacity of
up to 10 kW, and were capable of providing most of the heating and electrical
needs for a home. As of May 2000, none of the companies that developed these
systems are selling these units. Several
fuel call manufacturers are targeting residential and small commercial
applications.
Environmental
Issues
While
cogeneration provides several environmental benefits by making use of waste heat
and waste products, air pollution is a concern any time fossil fuels or biomass
are burned. The major regulated pollutants include particulates, sulfur dioxide
(SO2), and nitrous oxides (NOx). Water quality, while a lesser concern, can also
be a problem. New cogeneration plants are subject to an Environmental Protection
Agency (EPA) permit process designed to meet National Ambient Air Quality
Standards (NAAQS). Many states have stricter regulations than the EPA. This can
add significantly to the initial cost of some cogeneration facilities located in
urban areas.
Some
cogeneration systems, such as diesel engines, do not capture as much waste heat
as other systems. Others may not be able to use all the thermal energy that they
produce because of their location. They are therefore less efficient, and the
corresponding environmental benefits are less than they could be. The
environmental impacts of air and water pollution and waste disposal are very
site-specific for cogeneration. This is a problem for some cogeneration plants
because the special equipment (water treatment, air scrubbers, etc.) required to
meet environmental regulations adds to the cost of the project. If, on the other
hand, pollution control equipment is required for the primary industrial or
commercial process anyway, cogeneration can be economically attractive.
Even
the environmental groups are on the cogeneration bandwagon. Since its'
founding, the Sierra Club has supported total energy (cogeneration). See
the Sierra Club's statement on
energy policy.
Future
Market Development
Several
factors will affect the growth of cogeneration activities. They include the
initial cost of buying and bringing a cogeneration system on-line, maintenance
costs, and environmental control requirements. Some electric utilities do not
need additional electricity. They may have excess generation capacity or a
stable customer base. This leads to lower "avoided cost" rates, which
reduces the viability of cogeneration projects that rely heavily on power sales
to utilities.
The
restructuring of the electric power generation and distribution industry that is
currently underway in many states, makes it more attractive for developers to
become independent power producers and to build "electricity only"
power plants, instead of cogeneration plants. There has also been a great deal
of pressure from utility and industrial special interests to repeal or amend
PURPA. If they are successful, it could be difficult for new cogeneration
projects to get off the ground. Barring that development, improved technology
and cooperation among industries, businesses, utilities, and financiers should
provide impetus to the continued development of both cogeneration projects and
independent power production projects.
One
significant impetus for cogeneration is the issue of global climate change from
global warming caused by the greenhouse effect, of which fossil fuel combustion
is a major contributor.
Cogeneration is
the environmentally-friendly,
economically-sensible way to produce power,
simultaneously saving significant amounts of money and also dramatically
reducing total greenhouse gas
emissions.
Some
of the above information from the DOE website at: www.eren.doe.gov/consumerinfo/
refbriefs/ea6.html
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