U.S. Department of Energy - Energy Efficiency and Renewable Energy
Advanced Manufacturing Office – Industrial Distributed Energy
Developing a Combined Heat and Power Project
Developing a combined heat and power (CHP) installation requires significant time, effort, and investment. So it's prudent to approach the task in a series of steps. The first step requires less work, typically only one to two days, and help you to determine whether further efforts are justified. The next step is a more detailed feasibility analysis, which, if positive, would be followed by a preliminary design. At that point, the cost projections should be sufficient to allow you to make an informed decision about whether a full CHP project design effort would make sense for your application.
- Walk-Through Analysis — Screen a potential site to decide whether a detailed analysis is appropriate:
- Technical issues — Are thermal and electrical loads sufficient to support CHP? (Are they above a minimum size threshold, are the electric and thermal loads coincident, are thermal requirements compatible with CHP outputs?)
- Site conditions — Can the facility infrastructure support a CHP system (available space, fuel availability, zoning limitations)?
- Economics — Do the fuel and electric rates support CHP (average retail electric price, fuel costs, required return on investment, or payback)?
- Environmental issues — Are there any environmental limitations that would preclude CHP?
- Feasibility Analysis — If the Walk-through is positive, the next stop is a screening analysis that considers more specific details such as:
- Bundled and unbundled electric tariffs (retail service rates, partial service rates, standby/back-up rates, transmission and distribution tariffs)
- Fuel access and price
- Capital budget
- Operation and maintenance costs
- Operating modes (baseload, thermal following, electric following)
- Interconnection requirements and costs
- Environmental permitting requirements and costs (including the cost of offsets)
- Project structure and project development costs (insurance, administrative and management fees, financing).
- Preliminary Design — The preliminary detailed design phase is a more comprehensive evaluation than the screening analysis, including:
- Analysis of hourly energy requirements and costs
- System part load performance.
- Detailed Design — Forms the basis for performance modeling and budget