When and who should invest in cogeneration

To ensure that the purchase of a cogeneration plant is profitable over time, it is necessary to take into account several factors by carefully studying each individual and different reality in which the CHP system must be implemented.

Let's briefly list the most important prerequisites to achieve real savings

  • Consistency of user energy demand
  • Plant flexibility
  • The physical proximity of users
  • Presence of necessary fuel broadcasting service
  • "Spark spread" sufficient (>50)

The constancy of the energy demand of the users

This is perhaps the crucial factor for the construction of a system of this type, the more the structure is energy-intensive, the more the gain will be fast and continuous. The user must present a simultaneous demand for electricity and heat for a certain number of hours per year and if the user goes below 4000 hours of operation per year the economic return is not guaranteed. All this occurs in the initial phase of technical-economic feasibility analysis, where there is an accurate analysis of consumption and electrical and thermal load, considering both the maximum power required, daily, monthly and seasonal load curves.

Plant flexibility

It must be considered that plants of this type are not able to reduce their load to less than 50%, and this can negatively affect the overall efficiency of the system as well. It is necessary to understand that cogeneration plants have the task of covering the basic energy demand of the structure but not the load peaks. So as to exploit them always at 100%, different configurations exist which can be implemented between the user and the national grid depending on the needs that vary from case to case. When the energy demand from the structure (for example a factory or a hotel) can not be covered by the cogenerator it can happen that this demand is covered by the traditional distribution service(national electrical grid). The cogeneration system is therefore profitable when a balance is reached between the needs of the user and the potential of the CHP Unit.

The physical proximity of the user

Cogeneration systems are always installed near the facility that needs support in order to minimize losses from transport and help the use of heat recovered from operating processes. It is, therefore, necessary that there is an effective physical availability for the location. Usually, the client has the opportunity to choose the types of solutions that best suit the available locations of the system installation - both outdoor or indoor. The place for installation is highly dependent on the size of the system.

Presence of the necessary fuel

It may happen that in some particularly isolated areas there is a need for the construction of pipes that carry the required fuel to the user. This possibility could affect up to 10% of the total cost of the system but still depends very much on the type of fuel that is transported.

Sufficient spark spread

The spark-spread represents the difference between the cost of electricity and the cost of fuel for its generation. When evaluating the spark spread for cogeneration, the avoided cost of the fuel needed to generate the heat recovered from the cogenerator can be added. This index provides a good indication of the potential economic results of cogeneration. A good approximation is to set a minimum spark spread of 50 to start considering cogeneration economically feasible.

So, what are the industrial sectors to which it is most worthwhile to invest in this type of solution?

The service sector users for which cogeneration is most interesting are obviously those with a high demand for heat and, at the same time, for electricity. Hotels, hospitals and sports centers with swimming pools are the most suitable users. From the economic analysis emerge economic returns are really attractive concerning large health facilities (hospitals, clinics, nursing homes, etc..) and sports facilities with swimming pools. Other possible sectors of application may be shopping centers, paper mills, food industries, oil refining industries, chemical and pharmaceutical industries, ceramic industries, textile industries and industries for the production of plastic materials.

To sum up, any type of user that has a simultaneous energy requirement of electricity and heat (but also cooling, using absorption systems combined with cogeneration), for a number of hours per year over 4000  and cogeneration spark-spread over 50 have certainly a good potential to take advantage of the economic and environmental benefits from cogeneration.