Combined Heat and Power - A Solution for Rising Electricity Rates?

In most cases, the cost of power is one of the greatest costs we face both as individuals and as companies.

As Compare Electricity Supply prices continue to increase and conservation and demand management programs wrestle with how to meet aggressive targets, Combined Heat and Power (CHP) plants are being examined as an alternative power source.

CHP is not a new technology or approach to energy management. Depending upon the technology utilized it has a long history. Granted CHP is not as 'sexy' as some renewable energies - and therefore does not seem to result the same focus in the media - however there is a solid case for exploration of this technology as a method to control power costs and demands upon the grid.

In some areas of North America the rising cost of electricity and the lower cost of natural gas (known as the 'spark spread') is driving organizations to reexamine the viability of CHP. But really what are the ideal conditions to explore this alternative approach to grid dependence?

In situations where there is a multi-unit residential facility with a high hot water demand load and an electricity demand greater than 150 kW per month there may be a very compelling return on investment for the exploration of a project. In such an instance a small CHP plant could produce high quality heat for water and also generate electricity (ideally through a plant with integrated inverter) to not only reduce the costs related to grid supplied electricity but also to provide backup power in the case of grid failure. Let me provide an example.

Last year in Ontario we faced an ice storm that disrupted power throughout the GTA (Greater Toronto Area). Some areas were without power for weeks. Had the condominiums in the area had CHP plants, not only would the residents have had power to stay in their buildings, but they would not have been in situations where there was no power for elevators or heat. The residents would not have been forced to seek alternative housing in the dead of winter.

So why isn't CHP more prevalent?

The challenge for adopting this technology has always centered around two items - the physical size of the plant and the cost benefit of the project.

In recent years we have seen the CHP plants become more modular, reducing the foot print required either in the building or beside it - effectively addressing the challenge that used to be associated with a large CHP plant.

From a cost benefit point of view the rising costs of electricity is making the inclusion of a CHP plant more and more viable. In fact, where the electricity rate exceeds 15 cents per KW, it is very worthwhile to explore a CHP solution. If this describes your situation, I would recommend you reach out and explore how such a solution could save costs, improve your facility, and provide some future hedging against the electricity rates that continue to escalate.