Impact of CHP System Component Efficiencies on the Economic Benefit of CHP Systems Using Spark Spread Analysis

Abstract

A combined heating and power system (CHP) can take the place of a conventional system with separate heating and power (SHP) where electricity is purchased from the grid. The CHP system provides electrical energy through a prime mover located near the building it serves, and waste heat from this generation is captured and delivered to the building to provide thermal energy. For a CHP system to show an economic advantage over a conventional system, its operating costs must be lower when providing the same amount of thermal energy and electricity that would have come from the SHP system. The spark spread (SS), or price difference between purchased electricity and fuel, is used as a simple indicator as to whether the CHP system is economically viable. Rather than using a single value of SS as a cutoff for viability of the CHP system, a more detailed spark spread expressed in terms of the efficiencies of the CHP system and SHP system components can be used to determine if a CHP system is economically viable. In an initial feasibility study, the calculation of the SS is based on estimates of a number of variables. It is important to assess the likely impact of changes in certain of some of these variables, as such changes can affect the SS calculations. This paper presents a sensitivity analysis to determine the effects of different parameters on the cost ratio which is used to calculate SS, including: reference heating system efficiency, power generation unit (PGU) efficiency and CHP overall system efficiency. Because CHP system efficiency itself is a function of the PGU efficiency as well as the thermal efficiency, these two parts of the total system efficiency are also investigated separately. Since the cost of purchased electricity and fuel varies by geographic region, the required spark spread for a given system may indicate favorable economics for a CHP system in one location while the CHP system shows no potential for savings in another location. Therefore, the sensitivity analysis is considered for three different U.S. locations.