Cogeneration and the development of the smart grid

Figure 1. CHP versus separate heat and power generation

While no ‘silver bullet’, cogeneration could play an important role in helping Europe to balance its power grids and accommodate larger amounts of intermittent renewable generation. Leon Sijbers discusses the situation at electricity system, micro-grid and domestic levels.

Energy is the life blood of our society. The well-being of our people, industry and economy depends on safe, secure, sustainable and affordable energy. At the same time, energy related emissions account for almost 80% of the European Union’s total greenhouse gas emissions. So we are faced with the challenge of lowering the industry’s carbon dioxide footprint over the same period that we expect energy demand to increase significantly.

We will need a smarter grid to modernize and optimize how we generate, move and consume energy. In this article I would like to analyze how new and different forms of generation ” especially renewable, decentralized generation enabled by the smart grid ” affect the cogeneration business from:

  • the system level;
  • the micro-grid (for instance, city or rural area) level; and
  • the home level.


Cogeneration (also known as combined heat and power, CHP) is the use of a power station to generate both electricity and useful heat.

All power plants emit a certain amount of heat during electricity generation. This can be released into the natural environment through cooling towers, flue gases, or by other means. By contrast, CHP captures some or all of the by-product heat for heating purposes, either very close to the plant, or ” especially in Scandinavia and Eastern Europe ” as hot water for district heating.

The business case for cogeneration versus a conventional generation plant has always been one of greater efficiency. Cogeneration is a thermodynamically efficient use of fuel. In the separate production of electricity, some energy must be rejected as waste heat, but in cogeneration this thermal energy is put to good use. The efficiency of a local CHP plant compared with a conventional thermal plant with transportation is higher, as shown in Figure 1.

Thermal power plants do not convert all of their thermal energy into electricity. In most conventional generation, a bit more than half is lost as excess heat. By capturing the excess heat, CHP uses heat that would be wasted in a conventional power plant, potentially reaching a total efficiency of up to 80%, compared with 60% for the best conventional plants. This means less fuel needs to be consumed to produce the same amount of useful energy.


But at the system level, the challenge is regulating and balancing intermittent forms of renewable generation such as solar and wind power ” large hydropower production is an exception among renewables as such units are typically well-suited for electricity balancing.

So achieving a suitable balance must be found within the surrounding system, that is by balancing conventional generation and renewable generation sources to meet demand. Looking at Denmark, for instance, Figure 2 shows demand versus (forecasted) generation from wind. Gas-fired CHP plants (widely used in Denmark) can help the electricity grid to cope with intermittent supplies of renewable energy because they respond faster and are more flexible ” as well as more efficient”than conventional power stations.


With energy efficiency discussions increasingly focused on intensive energy areas like cities ” and with security of supply discussions focused on remote areas ” the micro-grid is one of the solutions being considered. A micro-grid is essentially a mini, self-contained power grid that balances and controls independent power generation and storage to reduce energy consumption and to enable more local power generation, including renewable energy sources like solar and small-scale wind.

Another option is the fuelling of the CHP plant with biomass such as wood, crops, landfill gas, alcohol fuels or waste, which makes it ideal for a micro-grid in a city or very remote areas. This is one of the ‘waste-to-power’ concepts that are being deployed.

Eventually a micro-grid with CHP generation could be combined with a district heating and cooling system to create a complete local independent energy system. The management system will also enable the micro-grid to connect with and disconnect from the surrounding distribution grid when necessary.


A new development, GE’s Net Zero Home Project, aims for energy neutral living by 2015 and is the next step in energy optimization ” see Figure 3.

These ‘net zero energy homes’ will combine on-site power generation through solar panels or wind turbines coupled with energy-efficient appliances and on-site storage. Consumers will get detailed energy data and may be able to control appliances with a home energy manager device.

In these areas, the projection is that the need for generation including CHP would be reduced, as the energy storage capabilities will be sufficient to provide the flexibility to handle the demand response.


Europe has actively incorporated cogeneration into its energy policy via the CHP Directive. The region has the three countries with the world’s most intensive cogeneration economies: Denmark, the Netherlands and Finland. Other European countries are also making great efforts to increase their efficiency.

According to the IEA 2008 modelling of cogeneration expansion for the G8 countries, expansion of cogeneration in France, Germany, Italy and the UK alone would effectively double existing primary fuel savings by 2030. Governments are being assisted in their CHP endeavours by organizations such as COGEN Europe, the umbrella organization representing the interests of the cogeneration industry, which serves as an information hub for the most recent updates within Europe’s energy policy.

CHP is an important technology to help Europe meet future requirements for balancing the grid, enabling the integration of renewables and supporting micro-grids for cities and rural areas. However, CHP is not a ‘silver bullet’ and other technologies such as net zero homes could become a greater enabler of fuel savings and emissions reductions and thus impact the expansion of CHP in Europe.

Leon Sijbers is business manager Smart Grid Europe with GE Energy. Email:


Figure 2. Electricity demand versus forecasted generation from wind
Figure 3. A schematic illlustrating the Net Zero Home concept


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