High electric demand and peak energy usage charges
Matched
Thermal and Electric Demand
CHP
systems provide a very effective synergy between electric generation
peak demand and building cooling peak demand; they both tend
to occur on the hottest summer days. With CHP the load can be
effectively leveled with rejected heat from the electrical generator
being used to drive the cooling system; the electric demand
from the grid is offset by the electric generated and by the
electricity not being used to run cooling equipment.
Reasonable
Thermal Demand
Those
facilities that have high-energy consumption rates, for both
electric and thermal, are the best suited for CHP applications.
High
Occupancy Rates/Operating Hours
Many
applications can be financially viable when occupancy coincides
with peak charges associated with electric utility rates. In
these cases it may be possible to quickly recover the capital
cost of the CHP by the combined peak shaving effects from the
on-site electric generation and the electricity offset from
operating the thermally activated cooling equipment.
The financial viability is further improved if the building
is operated/occupied more hours and has high energy demand such
as a hospital or hotel.
High
Quality or Back-Up power Coincident with Thermal Demand
If
a facility requires high quality power or back-up power, such
as in the computer/data center or grocery store, respectively,
there may already be a requirement for electric generation equipment.
Since a significant amount of the cost of a CHP system resides
in the purchase, installation, and interconnection of the electrical
generation system, if a generator is already available or planned
as part of the facility it is easier to cost justify the transformation
to a CHP system because only the cost of the thermal recovery
equipment would need to be justified. Depending on the facility
and the other factors discussed in this section, taking these
generation costs out of the CHP financial equation often makes
inclusion of the thermal recovery component of CHP more financially
attractive.
New
Construction or Major Renovation
An
obvious potential market is new and facilities that are undergoing
major renovation. In these instances, the cost of a CHP system
need only be justified based on the cost differential from a
more conventional system. This shortens the payback period in
which the CHP system will be paid back.
Central
Heating/Cooling Facilities
The
best candidates for CHP system are those facilities that have
central heating and cooling facilities because the infrastructure
exists and therefore reduces installation costs.
Longer
Term Financial Returns Acceptable
In
today's economy, companies are looking for payback periods of
3 years or less. At the current time, the costs of much of the
equipment as well as engineering and interconnection costs are
likely to result in CHP system payback periods of 4 to 5 years.
Summer
Peak Electrical Rates
In
areas where the air conditioning load is high and the season
is long, CHP systems can be financially more viable than in
areas where the weather conditions are more moderate. In areas
where high humidity exists, the use of a desiccant dehumidification
system to reduce humidity (latent heat load) in combination
with an absorption chiller to reduce temperature (sensible heat
load) can be a financially attractive when operated off of rejected
heat from the electric generation equipment.
High
Electric Demand and Peak Energy Usage Charges
The
financial attractiveness improves in areas where the electric
utilities charge higher summer rates and peak load energy and
demand charges. As discussed above, CHP can have a double impact
in reducing electric load and associated peak energy charges
because the electric demand from the grid is offset by the electric
generated on-site and by the electricity not being used to run
cooling equipment. CHP systems can significantly reduce the
electrical usage during the peak time when demand and energy
charges are high, which translates into lower electricity costs.
In many areas, the utility charge for "standby demand" (charges
for the possibility that the customer may need to use electricity
from the utility) can in itself be financially offsetting if
onsite generation equipment is not available at peak energy
demand times.
