Canned heat: getting the hots for CHP

If media reports are to be believed, the future for cogeneration or combined heat and power is looking bullish, but is this the case? PEi takes a snapshot at the global CHP market, and looks at its current status, the challenges it faces and what the future may hold for this generation technology.

By: Heather Johnstone, Senior Editor

Achieving improvements in energy supply efficiencies is a fundamental part of the world achieving the goal of every country having a secure, reliable and affordable energy supply. In the power sector the consensus is that this can be achieved through the utilization of a portfolio of existing and emerging technologies, and is now the major focus of most countries across the globe.

One area that a growing number see as an attractive strategy for improving supply efficiency is increasing the investment in high efficiency cogeneration or combined heat and power (CHP).

However, before we explore that further, what is CHP exactly? The most common definition is “the generation of electricity and the use of the thermal energy given off by that generation for applications such as heating buildings, steam generation or hot water for industrial processes or district heating.” CHP facilities can also range widely in terms of scale. From very large installations of several hundred megawatts – comparable in scale to large central power plants – to very small-scale units for use in individual homes.

CHP falls under the decentralized energy title, which is defined by the World Alliance of Decentralized Energy (WADE) as “electricity production at or near the point of use, irrespective of size, technology or fuel used – both off-grid and on-grid”.

The outlook for decentralized energy, certainly from WADE’s point of view, is upbeat. According to David Sweet, executive director: ” While policy obstacles still abound, the long-term global market fundamentals for decentralized energy are phenomenal, as energy prices continue to escalate, energy security and reliability concerns deepen, and as the climate challenge becomes a global priority.” But how does CHP fit into this predicted growth scenario worldwide?

To help answer this question we present data on the current status of the global CHP market together with some country specific figures, and look at its future potential and the challenges this generation technology faces. However, a word of warning, care should be taken when interpreting the data below, primarily because there is currently very little reliable global data on CHP available.

CHP: State of play

According to data from the International Energy Agency (IEA), the global production of electricity from CHP has been gradually increasing over the last decade or so, and as of 2003 was responsible for more than ten per cent of total global electricity production (representing a total output of close to 1790 TWh).

Furthermore, the main growth has occurred in OECD countries, while in non-OECD countries there appears to have been a slow decline in CHP over the same period.

With regard to the amount of cogenerated heat, no specific date are available, but the IEA has estimated it at between 5-15 exajoule (EJ) per year, which represents an important share of industrial heat supply.

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In Table 1, taken from the IEA’s Indicators for Industrial Energy Efficiency and CO2 Emissions: A Technology Perspectives, 2007, key data on installed CHP capacity in a select number of countries is provided, along with estimates of its total contribution to power generation in those countries. The countries with the highest total installed CHP capacities are the USA (76 GW), Russia (65 GW) and China (56 GW), with the EU-25 bloc having the largest at over 91 GW. However, from Table 1 you can see that CHP’s contribution to total capacity and total generation differs significantly. For example, Denmark has a total installed CHP capacity of only 5.4 GW, but CHP has more than a 50 per cent of share of the country’s total generation. In contrast, the United States has a large total installed CHP base of 76.5 GW, but cogneration only accounts for a tiny 4.6 per cent of its total generation.

The majority of installations are the large-scale industrial CHP facilities, rather than the smaller-scale plants. In the United States, for example, over 85 per cent of existing capacity is represented by systems that are 50 MW or more.

CHP technologies

According to a recent article by Tom Kerr, the IEA Secretariat (Cogeneration & On-Site Power Production, September/October, 2007, p.27-35), natural gas remains the primary fuel for CHP applications – 40 per cent of CHP-generated electricity in the EU and 70 per cent in the USA, but coal, biomass and process wastes are also being used in many CHP applications.

However, the dominance of natural gas means that combustion turbines remain the predominant technology. As an example, in the EU this technology currently represent 38 per cent of CHP-generated power, and 67 per cent of installed capacity in the United States. For smaller-scale applications, other technologies are showing true promise. These include fuel cells, which have shown a efficiency of 90 per cent under CHP conditions, and are likely to play an important role in cogeneration in the medium to long-term. Although a cost barrier remains to be overcome with this technology, there are a number of companies currently exploring this area. They include Wärtsilä of Finland and Tognum of Germany.

Other proven technologies that look set to play a greater role in the future, again on the small scale, are Stirling engines and microturbines, although concerns regarding their efficiency, as well as cost constraints still remain.

Challenges facing CHP

As CHP continues its journey to achieving acceptance as a technology that can make a significant contribution to the world’s power generation mix it is unlikely to be a smooth one. CHP is facing several challenges that will need to be overcome before this can be happen, with the majority being regulatory or policy related rather than technology based. These include access to the grid, feed-in tariffs and siting and permitting. Clearly, new energy policies need to be introduced to give CHP a level playing field with more traditional generation technologies.

The continuing rise in gas prices is also having a profound effect on the economics of CHP. This, coupled with the growing interest in coal as a xheap fuel source, means that technological developments must become an priority in order for CHP to fulfil its potential.

What does the future hold?

The likely consensus is that CHP has a huge potential for future growth, and that through technological advances and by addressing some of the key barriers to its wider acceptance, its potential growth is likely to be realized.

Currently, no global estimates for the potential of CHP exist, although a number of country and region-specific studies have been conducted. However, it is difficult to compare these studies because each differs in their definitions, methodologies, system boundaries and technology assumptions.

However, in his article Kerr took an overview and presented the following findings. The potential for CHP in the United States is estimated to be between 48 GW and 88 GW, but this only covers large-scale systems. In Europe, the CHP potential has been estimated to be double the current installed CHP capacity. Some studies estimate the maximum potential by 2020 will be 252 GW, of which approximately 200 GW will be from the EU-bloc. While others estimate that there is approximately 150 GW of remaining CHP potential in the region, half of which is in the manufacturing sector.

Unfortunately, studies currently available from other regions and countries are limited and unreliable. However, there is anecdotal evidence that in regions such as South America (particularly in Brazil) and in Asian countries, such as Thailand, a lot of optimism exists for the future potential for biomass fired cogeneration. Indeed, the Thai energy minister recently indicated that the government is keen to promote cogeneration projects through small independent power producers.

Cogeneration or CHP can play a key role in the world’s future energy supply, but it is dependent on continued technology advancement, improved economics and the introduction of new energy policies that provide a level playing field for CHP. There is little doubt that the removal of barriers regarding grid access and the introduction of more competitive feed-in tariffs will help the expansion of industrial CHP in many parts of the world.

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