Training Module

COMBINED HEAT AND POWER PROJECT ANALYSIS

SPEAKERS NOTES

CLEAN ENERGY PROJECT ANALYSIS COURSE

This document provides a transcription of the oral presentation (Voice & Slides) for this training
module and it can be used as speaker's notes. The oral presentation includes a background of the
technology and provides an overview of the algorithms found in the RETScreen Model. The training

material is available free-of-charge at the RETScreen International Clean Energy Decision Support
Centre Website: www.retscreen.net.

SLIDE 1: Combined Heat and Power Project Analysis

This is the Combined Heat and Power Project Analysis
Training Module of the RETScreen Clean Energy Project
Analysis Course. In this presentation, we examine the
use of combined heat and power systems, such as the
plant shown in this photo.

Slide 1

SLIDE 2: Objectives
This module has three objectives. These are, first, to
review the basics of combined heat and power, or
CHP, systems; second, to illustrate key considerations
in combined heat and power project analysis; and third,
to introduce the RETScreen Combined Heat and Power
Project Model.

Slide 2

SLIDE 3: What do Combined Heat and Power (CHP)

systems provide?
CHP systems provide both electricity and heat, and are
sometimes called cogeneration systems as a result.
The electricity can be used for loads on or near the site,
or can be fed into the electric grid. The electric
generation equipment in the CHP system is usually
driven by the combustion of fuel, such as gas, diesel, or
biomass. Part of the combustion heat can not be used to
generate electricity; the combined heat and power
system recovers this heat, which would otherwise be
wasted, and distributes it to nearby heat loads, such as
buildings and industrial processes.

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SLIDE 3: What do Combined Heat and Power (CHP) systems provide? (cont.)
A CHP system has a number of attractive attributes other than its ability to provide heat
and power. These include increased efficiency, reduced waste and reduced emissions.
Normally the production of electricity is not especially efficient, due to heat rejected to the
environment. By making use of this wasted heat, the overall system efficiency is
improved, and more useful energy is produced per unit of fuel. This in turn reduces total
greenhouse gas and other pollution emissions.
Since heat is not easily transported over long distances, CHP plants are normally located
near heat loads, and thus dispersed geographically. This often means that electricity is
produced closer to the ultimate load than is the case with centralized power production, in
which large plants service loads that may be quite distant. This so-called distributed
generation can reduce losses incurred in the transmission of electricity.
Combined heat and power developments can provide a source of energy, and heat in
particular, for district energy systems. In district energy systems, a central plant
distributes hot water or steam, and sometimes chilled water, to the buildings in its vicinity.
This arrangement is more efficient than locating autonomous heating and cooling
equipment in each building.
Some CHP systems also provide cooling. The CHP system may drive conventional
refrigeration equipment using a portion of its power output, or it may turn its heat output
into cooling using absorption refrigeration equipment or desiccant dehumidifiers. In this
way, increased demand for cooling during hot periods provides a heat load to make up
for reduced space heating requirements.

SLIDE 4: CHP System Motivation

Electricity generation is inherently inefficient: one-half to two-thirds of the energy input to
a typical generation system is wasted as heat, rather than turned into electricity.
This is the motivation for combined heat and power systems: locate an electric power
generating system near a heat load that will utilize the heat rejected from the generation
equipment. This increases overall efficiency, from the range of 25 to 55% to the range of
60 to 90%, depending on the equipment and the application. The heat, which would
otherwise be lost, can be used for industrial processes, space heating, water heating,
cooling, or other purposes.

Slide 4

The financial motivation for CHP plants often stems from the high value of the electricity
produced. Electricity is more versatile and easily transported than heat, and thus
commands a higher price. If a plant must be built to furnish heat to a load, it can make
sense to invest slightly more in the plant, so that it provides both heat and electricity.
The figure on this slide shows that the quantity of heat wasted by thermal conversion
plants is enormous: around 25,000 TWh worldwide in the year 2002. The figure also
shows that fossil fuels, specifically coal, oil, and natural gas, drive the majority of the
worlds electricity generation, so improving efficiency can have major economic and
environmental benefits.

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SLIDE 5: The CHP Concept

This concept of using the waste heat from power generation equipment is illustrated by
the diagram on this slide. The input to the system is 100 units of energy, embodied in
fuel. This operates the power system, which drives an electrical generator. The output of
this generator is 30 units of electrical energy. If this equipment were not part of a CHP
system, the efficiency of the system would be 30%, and 70% of the energy embodied by
the fuel would be wasted as heat and exhaust. By adding a Heat Recovery Steam
Generator (HRSG), however, 55 units of useful heat can be extracted from this waste
stream, and fed to a heating load. (The heat recovery efficiency is around 75 to 80%, and
the overall efficiency is therefore 85%.)

Slide 5

SLIDE 6: CHP Description: Equipment and Technologies

Combined heat and power systems make use of waste heat from power generation
equipment. An essential component, therefore, is power generating equipment that
rejects heat at a temperature high enough to be useful. Most CHP plants employ gas
turbines, steam turbines, or reciprocating engines to drive their electrical generators,
although more exotic technologies such as fuel cells are occasionally seen.

Slide 6

A jet engine is an example of a gas turbine: a stream of inlet air is compressed, heat is
added, generally by combustion of a gaseous or liquid fuel, and then the high pressure
outlet stream turns a reaction turbine at high speed. The reaction turbine in turn drives a
generator.
A steam turbine is driven by high-pressure steam, generated in a boiler. Water in the
boiler is raised to its boiling point by the addition of heat from combustion of one of a wide
range of fuels.
A gas turbine and a steam turbine can be placed in series in a so-called combined cycle
plant. The hot exhaust gases of the gas turbine are used to generate steam for the steam
turbine. In terms of power generation, this technology can achieve 55% efficiency; this is
one of the most efficient combustion-based power generation technologies.
Reciprocating engines are well known to most people as the power plants in gasolinefuelled cars, which rely on the spark-ignited Otto cycle, and diesel-fuelled trucks, which
rely on the high temperatures achieved during compression to cause ignition. Following
ignition, the expansion of the combusting mixture drives a piston.
These are the power generating technologies used in CHP plants. A second essential
component of these plants is the waste heat recovery unit, which collects the waste heat
from the power plant so that it can be delivered to heat loads. The nature of the waste
heat recovery system depends on the type of power plant, the required temperature, and
the characteristics of the heat load.
Most applications requiring high temperature heat will demand steam, which can be
produced using the hot exhaust gases of a gas turbine or reciprocating engine; this
requires a heat recovery steam generator. Steam turbines can sometimes provide lowgrade steam at their exhaust port; otherwise it can be bled from the turbine as necessary.
When only low temperature heat is available, it can be used to preheat water destined for
steam generation.

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SLIDE 6: CHP Description: Equipment and Technologies (cont.)

Low temperature heat can be conveniently transported from the plant to loads in streams
of hot water. A heat exchanger recovers the waste heat from the power generation
equipment. The hot water can be used directly, such as for domestic hot water, or for
space heating. The temperature of the water can be raised somewhat by a heat pump, if
necessary.
CHP plants will often include dedicated heating systems to supply heat in combination
with or in addition to that available from the power plant. These include boilers and
furnaces.
Where a cooling load is located near the CHP plant, cooling equipment may be included
as part of the system. This may be vapour compression cycle refrigeration equipment,
such as conventional chillers or heat pumps, that are driven by a portion of the CHP
plants power output. Alternatively, absorption refrigeration systems and desiccant
dehumidifiers make use of the heat output of the plant.

SLIDE 7: CHP Description (cont.): Fuel Types

CHP systems can, depending on the equipment used, operate on a wide variety of fuels.
Fossil fuels, such as natural gas, diesel, and coal, are undoubtedly the most common
fuels. Although the combustion of fossil fuels has negative environmental consequences,
CHP plants are considered clean energy technologies due to their high efficiency.

Slide 7

CHP systems can also run on biomass, as seen in the upper photo on this slide. Biomass
includes wood bark, shavings and chips; biogas emitted by decomposing animal or plant
waste; agricultural byproducts; and purpose-grown energy crops such as poplar and
switchgrass. A byproduct of sugar-cane refining, called bagasse, is widely used in Brazil
and elsewhere.
Landfills emit methane and other combustible gases as they decompose. A landfill can be
capped and the emitted gas captured. This gas can run a CHP plant.
At certain locations heat from below the earths crust is available near the surface. This
can give rise to volcanoes and geysers, such as the one pictured on this slide. This heat
can also be used in CHP plants.
Hydrogen is produced using electricity or by processing conventional fossil fuels. It is one
way to store electrical energy, generated by hydroelectric plants or wind turbines, for
example. It can be combusted, but is particularly useful as a fuel for certain types of fuel
cells. It is, therefore, a potential fuel for CHP systems.

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SLIDE 8: CHP Description (cont.): Applications

CHP systems exist at a variety of scales. There are small systems for single buildings,
such as the greenhouse seen on this slide. Larger systems serve commercial and
industrial buildings or complexes, including the city hall shown here. Very large systems
are found near large heat loads, such as industrial processes and whole communities
utilizing district energy systems, as illustrated by the plant shown at the bottom of this
slide.

Slide 8

SLIDE 9: District Energy Systems

A heat distribution system transports heat from the heating plant to the locations where it
is required. These locations may be within the same building as the plant or, in the case
of a district heating system, may be a cluster of buildings located in the vicinity of the
plant. The consumers are often grouped in clusters of public, commercial, and residential
buildings located within a few hundred meters of each other. A network of insulated
piping, buried 60 to 80 cm below the surface of the ground, conveys water away from the
plant at temperatures up to 130 degrees Celsius and returns the water, cooled to
temperatures of 40 to 80 degrees, back to the plant for reheating. The pipes need not be
buried below frost line since the pipes are insulated and contain circulating heated water.

Slide 9

District heating systems can be made to transport chilled water for building cooling during
summer. When they do such double service, the piping networks are referred to as
district energy systems.
A district energy system creates a sizeable heat load for a CHP plant. With the waste
heat of the power generation equipment substituting for the output of individual heating
and cooling systems located in each of the buildings, overall efficiency is improved.
Furthermore, compared with autonomous distributed heating and cooling plants, the
centralized district energy system can offer better emissions controls, more advanced
safety systems, better comfort, and operating convenience.
The initial costs of a district heating system are high. District heating is easiest to
integrate into newly constructed communities and requires a high level of planning and
organization.

SLIDE 10: CHP System Costs

CHP system costs vary widely from installation to installation. For example, the table on
this slide lists the installed costs of various power generating technologies, many of which
can be found in combined heat and power projects. However, these installed costs do not
include many of the other initial costs that may be associated with the CHP system:
heating equipment, cooling equipment, electrical interconnection, access roads, and
district energy piping. More importantly, the initial costs say nothing about the recurring
costs, which may be even more significant. These include fuel, O&M, and equipment
replacement and repair.

Slide 10

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SLIDE 11: CHP Project Considerations

The success of a CHP project is influenced by a number of risk factors.
First, for equipment that is designed to be used with a particular fuel, there must be a
reliable, long-term supply of that fuel.
Slide 11

Second, construction of the project must be carefully managed to keep capital costs from
escalating beyond their budgeted levels.
Third, the demand for heat and power has to be positively correlated. An on-site heat
load requiring a large fraction of the annual heat output of the plant must be present;
otherwise the waste heat will not be productively employed. Conversely, if the electricity
cannot all be consumed on site, then the long-term sale of electricity onto the grid must
be negotiated. The power plant should be sized such that its heat output is sufficient to
meet the heating base load; the heat output of the system is typically 100% to 200% of
the electricity output. Excess heat, especially during summer when space heating loads
decline, can be used for cooling through absorption chillers.
Finally, the relative cost of electricity and fuel, especially natural gas, strongly influences
the financial viability of a project. The difference between the price of electricity sold by a
generator and the price of the fuel used to generate it, adjusted for equivalent units, is
called the spark price spread. It must be positive for the operation of the CHP plant to
be financially attractive.

SLIDE 12: Single Buildings

Example: Canada
Single buildings requiring both heat and a reliable power supply are excellent candidates
for CHP plants; these include hospitals, schools, commercial buildings, and agricultural
buildings. The CHP plant can provide cooling as well. The photos on this slide show the
reciprocating engine power plant and exhaust heat recovery steam generator used in a
hospital located in Ontario, Canada.

Slide 12

SLIDE 13: Multiple Buildings

Examples: Sweden and the USA
Clusters of buildings can be served by a single central heating, cooling, and power plant.
This is often done for universities, industrial and commercial complexes, communities,
and hospitals. In their most developed form, these are district energy systems. The
pictures on this slide show a CHP district energy plant in Sweden and the 25 MW gas
turbine used in a CHP plant at the Massachusetts Institute of Technology, in Cambridge,
Massachusetts, USA.

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SLIDE 14: RETScreen Industrial Processes

Example: Brazil
Industries with a high constant heating or cooling demand are good candidates for CHP
developments. This is especially true for industries that produce waste material that can
be used as a fuel, such as the bagasse byproduct of the sugar cane refinery seen in this
photo. The diagram shows how the waste heat from a gas turbine combined cycle power
plant can satisfy an industrial heat load.

Slide 14

SLIDE 15: Landfill Gas

Examples: Canada and Sweden
Landfills produce methane as waste decomposes. The landfill can be capped and the gas
collected for use as a fuel in cooling, heating, or power projects. The diagram on this slide
shows schematically the use of landfill gas. The photo shows a Swedish CHP plant
fuelled with landfill gas and connected to a district heating system.

Slide 15

SLIDE 16: RETScreen CHP Project Model

The RETScreen CHP Project Model provides an analysis of the energy production, lifecycle costs, and greenhouse gas emissions for a CHP system located anywhere in the
world. All combinations of power, heating, and cooling systems can be analysed. Virtually
all power generating technologies and fuels are permitted, and different operating
strategies can be employed. There are even tools for landfill gas production and district
energy systems. The software is available in many different languages, and it is possible
to change from one language to another with a simple switch; another switch permits the
use of either metric or imperial units. Other tools include a currency switch, user defined
fuel and electricity rate calculators, and a unit conversion tool among others.

Slide 16

SLIDE 17: RETScreen CHP Project Model (cont.)

RETScreen can model systems using virtually any combination of heating, cooling, and
power generation. This is illustrated by the diagram on this slide, which shows the input of
fuel to the system, the flow of heat and electricity, and the production of heat, cooling,
and power. (Project types include: Heating only; Power only; Cooling only; Combined
heating and power; Combined cooling and power; Combined heating and cooling; and
Combined cooling, heating and power.)

Slide 17

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SLIDE 18: RETScreen CHP Project Model for Heating Systems

The RETScreen CHP Project Model accommodates systems incorporating multiple heat
sources. For example, the diagram on this slide shows the average heating load, cooling
load, and power generation for each month of the year for a particular CHP system. The
heating load peaks in the winter months and the cooling load peaks in the summer
months. The heating load is supplied by three different systems: a base load heating
system, an intermediate load heating system, and a peak load heating system. The peak
load heat source runs relatively infrequently and therefore should be characterized by low
capital costs, even if that results in somewhat elevated operating costs. In contrast, the
base load will usually be met by waste heat recovery, which entails minimal operating
costs.

Slide 18

SLIDE 19: RETScreen CHP Project Model for Cooling Systems

The RETScreen CHP Project Model can similarly accomodate plants incorporating
multiple cooling systems. On this slide, the plant includes a base load cooling system and
a peak load cooling system. Different technologies could be used for base and peak load
cooling; one could be an absorption chiller and the other a vapour compression cycle
chiller, for example.

Slide 19

SLIDE 20: RETScreen CHP Project Model for Power Systems

The RETScreen CHP Project Model permits multiple power generation sources as well.
Here a base load power, intermediate load power, and peak load power generator are
included. The user can select the operating strategy for the power generation equipment:
for example, in this system, the user can require the intermediate load power generator to
operate at maximum power all the time, at the level that supplies the power load that is in
excess of the base load, or at the level that satisfies the heat load.

Slide 20

SLIDE 21: RETScreen CHP Energy Calculation

In overview, the RETScreen CHP energy calculation starts by estimating load and
demand curves over the course of the year. These will vary depending on whether
heating, cooling, power generation, or a combination of these are involved. Then the
equipment characteristics, and in particular their fuel requirements per unit of load, are
defined. Finally RETScreen calculates the energy delivered and the corresponding fuel
consumption.

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Combined Heat and Power Project Analysis Training Module

SLIDE 22: Example Validation of the RETScreen CHP Project Model

The overall validity of the RETScreen CHP model was established in tests conducted by
an independent consultantFVB Energy Inc.and by numerous beta testers from
industry, utilities, government and academia. It was also compared with other models and
measured data. For example, the table on this slide shows good agreement between one
part of the model, the steam turbine performance calculations, and the output of a GE
Energy process simulation software called GateCycle.

Slide 22

SLIDE 23: Conclusions

CHP systems make efficient use of heat that would otherwise be wasted. In this way,
they reduce the fuel required to meet a combination of heat and power loads. Since these
loads are normally met by fossil fuels, this reduces greenhouse gas emissions. With
minimal input from the user, RETScreen can determine demand and load duration
curves, energy delivered, and fuel consumption for various combinations of heating,
cooling, and power systems. It thus significantly reduces the time, effort, and cost of
conducting preliminary feasibility studies.

Slide 23

SLIDE 24: Questions?

This is the end of the Combined Heat and Power Project Analysis Training Module in the
RETScreen International Clean Energy Project Analysis Course.
Slide 24

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