CHP Today

Combined heat and power (CHP) is a technology-neutral and fuel-flexible means to produce electricity and thermal energy at high efficiency. On-site combined generation of electrical and thermal energy with CHP results in emissions reductions today by primarily displacing fossil fuel emissions from central generation, eliminating transmission and distribution (T&D) losses, and avoiding the use of an on-site boiler (to meet thermal needs).

While CHP utilizes a wide variety of fuels, natural gas has historically been the dominant fuel source due to its wide availability, ease of use, low emissions and competitive price. However, CHP systems have also long used alternative fuels such as biomass and wood, biogas and landfill gas, municipal and process wastes, waste gas streams and hydrogen mixtures where available. CHP is well positioned to use higher levels of such low and zero-carbon resources as they become more available, while maintaining its significant energy efficiency and CO₂ emissions advantages.

CHP Energy Efficiency and CO₂ Emissions Benefits

Properly applied CHP systems have higher overall efficiency than separate heat and power systems as illustrated in the 20 MW gas turbine example below. Note that this also results in CO₂ emissions savings with respect to current marginal grid emissions.

CHP Compared to the Marginal Electric Grid

A comparison of on-site natural gas-based CHP systems with today’s marginal grid-based resources (natural gas engine and combined cycle-powerplants) is shown in the graph below¹, which further emphasizes the efficiency benefits of well designed CHP systems. The chart compares the net CO₂ output tied to electricity in terms of lbs/MWh (based on power output divided by fuel chargeable to power) of typical CHP systems in the blue bars to the CO₂ output in terms of lbs/MWh (including T&D losses) of new natural gas central station generation options in yellow bars (100 MW combined cycle gas turbine generation and 10 MW medium speed recip engine generation). As shown, the higher net electric efficiency of properly designed and operated CHP systems (62 to 88% vs 42 and 53% for 10 MW power only engine and combined cycle respectively) results in lower net CO₂ emissions than state-of-the-art marginal natural gas generation on a lbs per MWh basis. This means that natural gas CHP can meet marginal grid requirements more efficiently and with less carbon emissions than central station resources.

CHP Compared with GRID Sized Renewables

The table below shows the energy and CO₂ savings from a 20 MW natural gas CHP system lined up with the energy and CO₂ savings from 20 MWs of utility scale solar PV and 20 MW of Wind capacity. First, it’s important to note that CHP, like energy efficiency projects and renewable projects, displaces marginal grid generation (including T&D losses) and today, that marginal generation is currently a mix of coal and natural gas in most regions of the US. The annual CO₂ savings from natural gas CHP is larger than the annual savings from 20 MW of PV and Wind because of the high annual operating hours and high efficiency of properly designed and operated CHP systems. The higher operating hours are reflected in the much higher annual capacity factor of 90% for CHP vs the 2019 national averages of 24% for PV and 34% for Wind (and consequently much higher annual electricity generation). The last column shows CHP’s savings further increase if that system is fueled by biogas or some other net-zero fuel.

While economy-wide electrification and decarbonization of electricity generation is being pursued aggressively in many states and cities, fossil fuels, and natural gas specifically, are likely to remain as the marginal generation resource for the near and mid-term, and may be necessary over the longer term in some regions to support the integration of greater amounts of renewable resources and provide grid regulation services. A 2020 study³ evaluated the regional emissions reduction potential of natural gas CHP through 2050. The study used state level economic forecasts and legislated mandates, such as zero grid emissions in New York in 2040 and California in 2045, to model marginal grid generation resources by region through 2050. As shown, natural gas fueled CHP continued to reduce carbon emissions compared to the marginal grid emissions well beyond the typical lifetime of CHP systems in every region outside of New York and California where zero grid mandates were in place.

CHP Tomorrow

CHP Decarbonization Using Low and No Carbon Fuels

The efficiency and emissions advantages of using CHP as a marginal resource will remain as the natural gas infrastructure decarbonizes and renewable and net-zero fuels such as RNG and hydrogen enter the market on both sides of the meter. Renewable fuels include biogas, biomass, renewable natural gas (RNG), and green hydrogen. Biogas and biomass already fuel CHP systems and will continue to play a role when they are the most economic option for a facility that needs both electricity and thermal energy onsite. Renewable natural gas (RNG) consists of different bio-based gas options upgraded for use in place of fossil natural gas. Recent studies⁴ have estimated 4.5 trillion cubic feet (Tcf) of RNG could be available in the U.S. by 2040. This is about 20% of the current total U.S. natural gas consumption or 75% of industrial gas consumption. CHP is a highly efficient way of using these emerging fuels, essentially extending the availability of these limited resources.

CHP Technology Readiness for Hydrogen Fuel

Most gas turbines and natural gas engines available today can operate on hydrogen mixtures ranging 10 to 40% depending on the manufacturer and model. All major turbine and engine manufacturers are on track to have 100% hydrogen compatible systems commercially available by 2030 or earlier. Low to no carbon fuels provide a path for CHP to decarbonize thermal end-uses in industrial and commercial facilities that are difficult or too costly to electrify, and decarbonize critical facilities that need dispatchable on-site power for long duration resilience and operational reliability.

Decarbonizing CHP compared to Decarbonizing the Electric Grid

The figure below is a simplified illustration of how natural gas CHP decreases emissions in the short term, and how increasing levels of renewable and low to no carbon fuels can maintain the emissions advantage of CHP as the grid decarbonizes. A conservative natural gas CHP net CO2 emissions rate is shown in the figure by the horizontal black line of 710 lbs CO2/MWh, while the marginal grid emissions rate is represented by the orange line. Grid emissions decrease linearly from 1,550 lb/MWh (AVERT 2019 U.S. CO2 Uniform Energy Efficiency emissions rate) (EPA 2019). The timeframe represented by the blue-gray shaded region on the top left represents the time that natural gas CHP provides emissions savings compared to the grid. As marginal grid emissions decrease below the natural gas CHP emissions rate, CHP can efficiently use renewable and other net zero carbon fuels to keep pace with declining grid emissions rates and maintain carbon neutrality with respect to the grid.

CHP is the most efficient way to generate power and thermal energy and can reduce CO2 emissions now and in the future. The role of CHP is changing to accommodate the needs of transitioning to net-zero carbon emissions. CHP can serve as a flexible and efficient resource for current and future power and thermal needs, providing optionality and resilience. CHP using RNG and hydrogen is a way of decarbonizing industrial processes where the thermal requirements are difficult to electrify due to technology limits or cost. Renewably fueled CHP can serve as a low carbon source of on-site dispatchable power and thermal energy for critical infrastructure and industrial operations where energy reliability and resilience is a critical requirement. CHP is a highly efficient way of using emerging low- to zero-carbon fuels such as RNG and hydrogen, extending the availability of these resources which will initially be limited in supply and high in cost. Advanced thermal storage will further increase the efficiency of CHP systems, providing increased flexibility for CHP systems to address non-coincident thermal and electricity loads and enhancing the ability of CHP to provide critical services to the surrounding grid.