Decide if CHP is for You

There are several stages of assessment that you should go through, each becoming more comprehensive.

Step One: Back of the envelope assessment

For a start, use an online calculator, like the one linked below that is provided by Oak Ridge National Laboratories. It requires:

• The cost of electricity at your site ($/kWh)
• The cost of fuel at your site (range of units)
• The number of operating hours that there is coincident thermal and electric load (hours per year)
• The expected capital cost of the project ($/kW - use $1000 as an initial number)

CHP Payback Calculator
Help with and explanation of CHP Payback Calculator

Step Two: Gathering more relevant data

The payback period returned by the online calculator should only be taken as a rough indicator of the financial viability of your facility as there are a large numbers of assumptions built into it and many avenues of economic return are not considered. If the online calculator indicates a payback period of ten years or less, it is probably worthwhile to continue on with a more detailed assessment of the viability of the site as the additional factors considered can have a considerable impact on the viability of the project. As an example, electric utilities sometimes charge customers for the peak electrical demand throughout the billing period that they withdrew from their network and some CHP projects are specifically designed to achieve payback from reducing these charges.

Criteria for CHP

• Good coincidence between electric and thermal loads
• Cost differential between electricity and natural gas (“Spark Spread”) > $12/MMBtu
• Long operating hours (greater than 3,000 hours/year)
• Sites where electric power quality and reliability are important
• Larger size facilities since that usually translates to a lower CHP installed cost per kW