Heat and Power More Attractive Than Ever
Due to the availability and reliability of
natural gas at stable and historically low prices the case for
CHP is better than ever. In addition to this we have significant
changes in how the RTO and ISO systems are addressing ancillary
services that can have significant impacts on the sizing and
design of CHP. These are a direct result of FERC Order 745 and
FERC Order 755. We also are now considering how CHP can
provide hardening of assets and provide power during grid
emergencies or blackouts.
Together this means that there are now
opportunities to more efficiently and economically design CHP
facilities. In typical CHP projects, the CHP plants are
sized based on operating economics which require the host site
to utilize most of the recoverable waste heat. Under this
paradigm the engine generator units are capable of providing
between 60% and 75% of the facility Electric Peak. This
enables them to provide up to 85% of the total annual electric
power due to the very limited number of hours per year that the
actual load exceeds the capacity of the engine generator sets.
During off peak hours, the units are set to follow the electric
load and turn down as needed to avoid exporting power.
This is necessary to preserve the operating economics of the CHP
plant. The highest value product of these plants is the
electric power produced when it displaces the purchase of full
retail priced electricity.
This operating scenario while very typical
contributes to one of the major challenges facing the regional
electric grids. The peak energy needs of these facilities
are being met by the electric power grid. This in turn
contributes to an increase in summer peak demand. We would
have much greater economic return if CHP plants were built to
meet the full site electric demand but reserved part of this low
duration hour capacity to be monetized through the ISO Ancillary
Markets as dispatchable peak power, spinning reserve and
In 2007, it was estimated that the value of reserved
capacity through the ISO would be worth up to $300,000/MW/yr.
Recent actual data now demonstrates that each MW of reserved CHP can be
This CHP sizing and economic paradigm is even more
relevant today, especially post Super Storm Sandy. Sizing CHP in
this manner also makes it much easier to operate during a power blackout
with the CHP in island mode.
Contributor: Joseph Sullivan
Date: November, 2014