Cogeneration CHP, Gas & Oil Fired, On Site Power

Success in a package

a winning formula for modern CHP

A CHP investment does not come cheap. And with the sheer number of options and regulations out there, making an educated investment decision is not easy either. But, as William Cristofaro points out, the secret of modern CHP is to combine the right factory ‘package’ with proper site design, modularity and automated control and monitoring.

On-site power plants using cogeneration have been a small part of the energy landscape for some time; however, a variety of driving factors promises to accelerate development of small-scale cogeneration. A formula for successful CHP plants is now emerging that takes advantage of the positive technical, regulatory and market factors, while working around or addressing barriers to CHP.

This article focuses on CHP plants in the 100–5000 kW range. These are usually plants built on the customer’s site for the primary purpose of providing electric power, heat and cooling directly to the customer. Such systems may also sell some power back to the utility grid, and heat and cooling to a nearby facility. These CHP plants are often natural gas-fired prime movers or fuel cells. Current technology typically includes:

  • sizes from 100 kW to 2000 kW, while higher sizes are available
  • natural gas engines n gas expansion microturbines (75–250 kW)
  • larger gas expansion turbines (1500 kW and up)
  • fuel cells (5–200 kW) n induction or synchronous plants
  • steam turbines (added to existing steam sources).
A successful CHP plant is really the proper integration of many central plant components 

It is crucial to realize that a successful CHP plant is really the proper integration of many central plant components to deliver electric power, heat and cooling to the customer economically. CHP plants are seldom economical and are of limited benefit unless these components are integrated properly.

Figure 1 illustrates the fundamental arrangement common in successful CHP plants.

Figure 1. Typical CHP plant layout. Modular units provide greater reliability and better load-following capability. Air conditioning, via absorbers and making use of the waste heat from the cogen units, uses ozone-free refrigerant (distilled water) 

moving on from centralized models

Centralized electricity systems have never operated to maximize benefits to consumers. But the development of better, decentralized models – for developing countries in particular – cannot rely solely on the application of market forces. We also need to get policies and regulation right, suggests Jussi Heikkinen.

Have you ever asked yourself what an optimum system, providing electricity for everybody in your society, would be like? The following three things would form the core of a good answer:

  • reliability and capability of keeping the frequency and voltage stable at any load
  • lowest total costs for providing the power to the consumers, including capital, generation, transmission, distribution, environmental and decommissioning costs
  • lowest possible overall environmental impact, including flue gas emissions and undesirable by-products such as sludge.


Under regulated electricity markets in the past, power system solutions were – contrary to quite common beliefs – optimized not for society and consumers but for the utility monopoly itself. A strong nationwide grid with only a few large generation units was very reliable and easy to manage and control as a system. However, it was a hugely expensive investment. It was affordable only because utilities faced no competition and could transfer their whole cost matrix to a tariff price structure.

There was little incentive for the utility to build a number of smaller cogeneration plants directly feeding the actual loads, despite of the good economic performance that these smaller plants could provide. Excessive large-scale baseload capacity was constructed to cover almost the whole load curve, including peaks, leading to a far-from-optimum system and capital-cost structure. No wonder electricity prices collapsed when markets were deregulated – this was when excessive capacity became a visible fact, with supply exceeding demand. A lot of money had also been invested in constructing the national high-voltage grids that form the skeleton of the modern electricity systems. All the grid costs (capital, operation and maintenance) were hidden in the power tariffs.

The monopolies are gone now, yet on the grid side the situation is still somewhat monopolistic, and will remain so due to practical limitations. Even in today’s changed electricity market, some persistent ‘truths’ that were born in the utility era are still very much present and defended. One of them is economies of scale, or ‘the bigger the better’. Extreme evidence of how truly the utilities believed in – and applied – this principle could be seen in the use of coal-fired peaking plants.