Technical Professionals - Market Potential

Two types of estimates have been developed on the following two basis for the market potential of CHP systems in the U.S.:

• Technical feasibility only, and
• Combined technical and economic feasibility

Market Potential Based on Technical Feasibility

The Energy Information (EIA) Administration of DOE sponsored a study to estimate the potential of CHP installations in the U.S. According to this study, there are 1,431,805 buildings in the United States that are suitable for CHP applications requiring a capacity of 77,281 MW.

The study focused on applications where thermal energy load was in the form of steam or hot water, and did not take into consideration use of thermal technologies, such as absorption chillers or desiccant dehumidification, as part of the potential for thermal load. Therefore, total potential could be even higher than 77, 281 MW.

The study also estimates the total existing capacity of CHP installations in the U.S. to be about 4,930 MW and that over 70% of the existing facilities are under 1 MW, and are powered by small reciprocating engines.

The potential commercial and institutional sectors that they looked at were: hotels/motels, nursing homes, hospitals, schools, colleges, commercial laundries, car washes, health clubs, golf clubs, museums, correctional facilities, water treatment plants, extended service restaurants, supermarkets and refrigerated warehouses. The study identified 8 commercial/institutional sector applications that they believe constitute 90% of the installed commercial sector CHP. They are

1. Colleges and Universities
2. District Energy/Utilities
3. Government
4. Hospitals
5. Solid Waste (Landfill) Gas Recovery
6. Offices
7. Airports
8. Health/Sports Center

Installation potential for CHP among various commercial sectors is estimated to be as shown in the following chart.

On a state-by-state basis, the ONSITE study estimated the following potential:

According to the Onsite study, the commercial sector has a large potential for small size generators, in the ranges for small gas engines, microturbines, and fuel cells.

Market Potential Based on Combined Technical and Economic Feasibility

In 2002, a market assessment conducted for DOE/ORNL reveals that the potential building sector market for integrated energy systems (IES) is almost 17GW in 2010, growing to over 35 GW by 2020. For the purposes of this study IES systems include CHP systems with absorption chillers, or engine-driven chillers (EDC) where the heat rejected from the engine is recovered, and combined heat and power (CHP)-only systems. This market potential is based on achievable economics, where IES provides a minimum payback period of 10 years compared against conventional HVAC systems and purchasing electricity from the grid. Many of the IES options analyzed provide payback periods much shorter than 10 years, with a significant portion less than 4 years.

The distribution of total market potential by 2020 among three major types of IES is shown in the following figure. It shows that the market potential for the CHP-only system is the highest (22 GW).

According to this study, the potential for IES is highest (10 GW) in office buildings, as shown in the following figure. Hospitals and colleges, while already established in CHP use, each offer over 7 GW of potential for IES. Schools, retail, and hotels are smaller segments, but with their significant heating and cooling loads, offer additional IES potential. Military bases also offer potential for IES, but generally for CHP-only systems. Military bases do not generally have base-wide cooling distribution systems.

The IES market potential includes an increased use of absorption chillers (8.9 million tons), thermal storage (3.2 million tons), and more engine driven chillers (2.4 million tons). Office buildings offer the maximum potential opportunities (45% of the total potential or about 4.5 GW) for CHP with absorption chillers (3.4 GW) and EDC (1.1 GW).

The market potential distribution by the size and the type of CHP prime mover is shown in the following figure. It shows that the total market potential is higher for engines than for turbines. It also shows that the highest (9 GW) market potential is for engines in the size range of 100-500 kW and that the highest (4 GW) potential for turbines is in the size range of 1-5 MW.

The IES market potential by region is shown in the following figure. It shows that the market potential is the highest in Pacific region followed by Middle Atlantic and New England.

The regional trend is consistent with the “Spark Spreads” for these regions. “Spark Spread” is defined here as difference between the average electricity price (from EIA’s Electric Power Monthly) and the fuel cost of generating electricity (calculated by heat rate of a natural gas engine times average natural gas price from EIA’s Natural Gas Monthly.) The geographic scope used in this study for various regions is shown in the figure below.

The study also examined a number of scenarios to evaluate how sensitive the base case is to varying inputs. In doing so, there was a focus on how reducing the first cost and improving the efficiency of IES impact the market size. In addition, three sensitivities were added to illustrate the effects of changing energy prices on the IES market for buildings.

Overall market potential results of the sensitivity analysis indicate that reductions in the installed cost and improvement in efficiency increase the market size dramatically. Both future scenarios nearly double the market potential market from 35 GW to almost 70 GW.

One important, but recognized, shortcoming of this market assessment is the exclusion of Integrated Energy Systems (IES) employing desiccant dehumidification technologies. A follow-up assessment effort is planned that will include consideration of new ASHRAE design moisture data and ventilation standard requirements and will show likely penetration by IES/desiccant combination systems and, as a result, will increase the total market potential.

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