Energy Economics & Procurement
Energy Efficiency & Optimization
High energy prices are taking their toll, driving inflation and impacting interest rates. If natural gas and electricity costs are reducing your company’s margins, you may want to learn whether cogeneration is right for you.
Cogeneration (Cogen) or Combined Heat & Power (CHP) technologies burn fuel to produce both electricity and heat simultaneously. There are many benefits of using these systems:
Even though a CHP system has many benefits it is not suitable for every business. Using a CHP system could have disadvantages, depending on the specific circumstances:
High CapEx and O&M Costs: A commercial cogen system that does not have financial support, such as government rebates or external investors, might be prohibitively expensive. Lacking financial incentives, a cogen CapEx project may have a relatively long payback period and low Return on Investment (ROI). Also, a cogen unit can have higher operation and maintenance (O&M) costs than traditional energy sources.
Constant Load Requirement: CHP systems are generally suitable for facilities with constant power and space heating requirements throughout the year. A CHP unit, to be financially viable, should be able to run in its full capacity. An example would be a greenhouse that has high power and heating demand during the winter months, but very low demand during the summer months. It might not be financially beneficial to run the CHP system only in wintertime and keep it idle during the summertime. Inconsistent power and heating demand and too much downtime can make cogeneration a less than optimal investment.
Environmental Issues: Operating a CHP unit with diesel or other high carbon-intensive fossil fuels can be a less environmentally-friendly solution in a jurisdiction with a clean electricity grid. If the carbon tax is levied on the input fuel, the additional cost may render such a cogen system uneconomic.
Is Cogen right for you? Undertake financial and environmental analyses. A financially viable CHP system depends on numerous factors: the initial investment cost; interest rates; the facility’s operating hours; seasonality; fuel price; and type of Cogen technology.
Ask us how 360 Energy can help you do a comprehensive and holistic analysis before you decide if a Combined Heat and Power system is right for you.
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OG Link:
https://360energy.net/is-cogeneration-right-for-you/
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