Use of packaged combined heat and power systems is growing steadily for a number of key application segments. Tildy Bayar spoke to two sector insiders to find out what’s involved, and why good things come in ever-smaller packages.

Use of packaged combined heat and power (CHP) systems is growing steadily in the key markets of the US, Europe and Asia Pacific, largely due to technology improvements and cost reductions.

Within a packaged CHP system can be found the prime mover, alternator, heat exchangers and a control panel. These elements are ‘all packaged into a large box that can be dropped into an application, which allows the customer or installer to connect up to a heating system, add fuel and electrical connections, and it’s pretty much ready to go,’ says Scott Briance, sales support manager for UK utility Veolia’s CHP team.

‘The vast majority’ of commercial CHP systems Veolia sells today are packaged, Briance says, especially for new buildings. Installing a packaged system in a new plant room can be ‘almost like buying a large industrial boiler these days – it’s a similar purchasing process,’ he notes.

Packaged CHP systems are also gaining momentum as replacements for boilers. Devon Manz, chief marketing officer with GE’s Distributed Power business, notes that packaged CHP systems are ‘big business’ in Eastern Europe, where they are replacing older coal-fired boilers in commercial installations and district heating plants. A packaged system can be installed at an existing plant ‘relatively easily’, he says, citing examples of ‘buildings where they’ve taken down one wall and extended the building a little bit, or moved things around inside’.

Sizing is a big issue

Briance notes that 50%-60% of CHP systems of 500 kW and below face space restrictions. Veolia generally requires one metre of unused space around a packaged installation in order to leave room for maintenance activity.

‘All of our packages have big doors on the side to allow full access to three of the four sides,’ Briance says, ‘and they need a metre to open’. He says measures can be taken including designing special doors and making the box smaller. ‘We package the components as tightly as we can whilst maintaining access to key service areas such as filters, spark plugs and oil,’ he says. ‘It’s always a bit of a compromise, and is all done through careful design. We have put CHPs into situations where there is less than half a metre all the way round, but we had to change our standard design to allow the level of access required.’

Within the CHP package, the necessary components must fit into the available space around the engine, with the length and width of the package determined by the engine’s size. While all packaged CHP systems generally contain very similar components, different manufacturers will design their packages differently depending on maintenance considerations. ‘Some manufacturers might package very tightly in order to get the overall size down, but they might have to compromise the ability to service,’ says Briance.

‘Traditionally our CHPs have had the engine at the bottom below the exhaust gas heat exchanger,’ he says, but ‘on one 200 kW unit that large tube was getting so close to the top of the engine that the engineers were struggling to change the spark plugs.’ In the revised design ‘we’ve moved the heat exchanger to a low level so it is alongside the engine.’ He notes that the firm attempts ‘to stick as close to as possible to the standard design most of the time – but it’s not always possible.’

GE’s CHP packages can use either gas engines or gas turbines. According to Manz, ‘Engines are definitely up and coming, and can provide higher overall electricity and efficiency, but I don’t think you can get more power out per square foot than from an aeroderivative gas turbine. In locations where space is extremely tight, turbines are the right choice – they are used for offshore oil and gas applications. For airports and hospitals, space is of high value and they look at turbines because they need both power and heat anyway.’

GE’s gas engine-based packaged CHP systems include the engine, genset, cooling system and heat recovery system in a 40-foot (12-metre) container which can be shipped to a site and, Manz says, installed with minimal resources and effort. However, he notes that most of the firm’s turbine-based systems are larger and must be built on-site, requiring ‘more site-intensive labour to get them up and running’.

‘With a gas engine,’ he says, ‘we supply the complete system and take the hot water from the package. The system recovers heat from the engine, exhaust and cooling system, so you pipe it up to your system to pump hot water through a plant or building. The same can be done for turbines, although it is a much bigger system and waste heat recovery system.’

The cost equation

The cost of a packaged CHP system will vary, says Briance, and whether it is cheaper than a bespoke system will depend on the scale of the installation required. For smaller projects, given that packaged systems are designed for ease of installation, he says ‘it’s probably cheaper to buy a packaged CHP where possible’.

However, he notes that ‘a major revolution in cheap CHP’ is unlikely given that there aren’t many costs that can be cut. Since the prime mover needs to be good quality and high efficiency, and to work reliably for a lifetime of up to 20 years, it tends to be more costly – but ‘we would never risk the quality of the overall product [by saving money on the prime mover],’ Briance says, ‘because it tends to be a false economy’. In addition, much of the equipment that goes into a CHP package ‘is already quite mass-produced, and the costs are what the costs are.’ Still, prices for packaged CHP systems ‘have stayed pretty stable over the last few years, and if anything have gone slightly up’, he notes.

‘With the current spark gap I would expect a 200 kW- 250 kW CHP to pay back in less than four years,’ he explains. ‘We tend to see that 500 kW and above will be under three-year payback times for a full installation. We have calculated payback times of less than two years.’

Hospitals, Briance says, are ‘more than capable of taking around 1 MW of electrical CHP, if not more’, so their payback times tend to be relatively short – and they also expect a high level of availability and service. Hotels which choose CHP ‘look for a specific IRR – around 19%-20%, which comes in around a four-year payback time. Four to five years is more acceptable in the hotel industry, and more realistic for the size of the CHP they’re taking – around the 200 kW-300 kW mark,’ he notes, ‘similarly to leisure centres.’

For Manz, the costs associated with a packaged CHP system will depend on the needs of the facility. If steam is the main need, he says, he would advise the customer to purchase a gas turbine-based system. Gas turbines ‘have a lower overall electrical efficiency and higher exhaust temperatures, so they can produce a higher quality and volume of steam,’ he says. If the customer’s main need is hot water, for which the highest overall efficiency is needed, he recommends a gas engine-based system.

If electrical power is the main need, Manz’s recommendation would vary depending on how much power is desired. An apartment building will require ‘several megawatts’ of heat, with around 70 MW for an airport and 50 MW for a hospital – it ‘varies dramatically,’ he says, and requires different equipment combinations. ‘One gas turbine can supply 50 MW of heat; for a hot water project you might need 50 MW, so we can do multiple engines. The maximum heat output is not always required,’ he says, ‘but for some customers heat is extremely valuable and they want maximum heat, while electrical efficiency is not as important.’

When asked what kinds of businesses tend to buy packaged CHP systems, Manz replies: ‘All of them’. Uptake in greenhouses is growing mainly in Russia, he says, because of food industry demand, and uptake by airports, hospitals, hotels, apartment complexes, industry and breweries is growing worldwide.

Manz cites Eastern Europe (especially the Czech Republic, Hungary, Poland and Romania), Russia and the Netherlands as particularly strong market segments, with the latter country being a robust region for cogeneration systems because of its greenhouses.

50% of CHP systems face space restrictions Credit: GE

Smaller packages with more functionality

Briance sees packaged CHP systems reducing in size over time. He says the systems ‘will slowly but surely get smaller’ as engine technology improves. He also foresees the addition of more functionality, and thus more equipment, to the package.

One of the biggest changes to the packaged CHP segment over the next four to five years is ‘how manufacturers package a product that can provide the emissions required by modern cities whilst keeping overall cost down.’ Veolia is ‘regularly asked to do larger engines with the same emissions output as smaller ones,’ he says, which means the use of SCRs, which are ‘starting to get more prevalent’. However, he notes that ‘whenever a SCR needs to be put onto a CHP, it becomes a very bespoke product’, and while he envisions that SCR technology will become part of the standard CHP package in future, ‘we’re not there quite yet.’

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