Combined Heat and Power (CHP)

Learn the benefits of CHP for large public and commercial buildings.
CHP systems generate electric power and heat simultaneously, and convert wasted heat back into useful energy. The result is less waste, a lower carbon footprint, and up to 80 percent efficiency.


Why CHP For Your Business?

CHP is the simultaneous generation of electric and thermal energy from a single fuel source such as natural gas. For example, when coupled with a generator, a natural gas-fired engine produces electric energy. The engine also produces waste heat via engine exhaust gas, as well as heat rejected through the radiator, to keep the engine and lubricant at the optimal temperature. This normally wasted heat can be captured to produce steam or hot water for space heating, domestic hot water, or manufacturing processes. The steam or hot water produced by the CHP unit will reduce the amount of fuel that would have otherwise been used in the facility’s boiler for these end uses.

The overall efficiency of a CHP system can be as high as 80 percent, exceeding that of power generated from a central plant and delivered via the transmission and distribution system (~ 35 to 40 percent efficiency) combined with on-site production of thermal energy.  Additionally, the increased efficiency of CHP often leads to a lower carbon footprint because of reduced greenhouse gas emissions.
Other significant benefits of the CHP system may include standby power capability at the facility and better control of power, depending on the type of generator and controls used in the CHP system. If these capabilities are of interest to you, discuss options and costs with your CHP supplier.  In addition, federal, state and electric utility energy efficiency program incentives for CHP systems can significantly improve project economics.
In order to derive the maximum benefit from a CHP installation, thermal energy generated by the CHP unit should be fully utilized by the host facility. The best CHP applications are facilities with high annual hours of operation and continuous thermal load. Facilities in which electrical and thermal loads coincide to a large degree are ideal.  Examples of such applications include industrial processes that need heat and electricity during the same time period (particularly those with 24/7 operation), and commercial applications such as hotels, hospitals, nursing homes, schools, colleges, laundries, health facilities, and multi-unit apartments. Round-the-clock thermal and electrical loads are of key importance in allowing a return on the CHP capital investment within an acceptable amount of time.

Incentives available for CHP projects are designed to encourage “right-sizing.” In general, CHP systems which are sized without taking into account electrical and thermal energy-efficiency measures may ultimately end up being too large for the building’s electric and thermal load. This is especially true if standard building energy-efficiency measures are implemented after, rather than before, a CHP system is sized and installed. The incentives offered for CHP units are designed specifically to discourage “wrong sizing”. Higher incentives are awarded to projects that incorporate standard building energy-efficiency measures in advance of CHP project development.

Actual incentive levels are based on the annual electrical and thermal efficiency, annual electrical power generation, the kW generated during the ISO co-incidental peak period, and the tier levels as described in the  Guide to Submitting CHP Applications. The Tier 1, 2, and 3 incentive structure is for CHP projects that meet all program requirements under the Retrofit Program and shall consist of the implementation of CHP projects in support of an existing facility. The first step towards estimating the incentive level is to determine the “tier level” of the project. Please note that specific incentives will vary depending on the annual efficiency (electrical and thermal) of a project and other project attributes. Incentives as outlined in the Guide are not guaranteed.

Each Program Administrator will approve incentives based on their budgets and other criteria to administer their specific program efficiently.


Combined Heat and Power Industry Summit (June 23, 2016)

For complete details, contact your Program Administrator.  For more information about all aspects of CHP project possibilities, please refer to  A Guide to Submitting CHP Applications for Incentives in Massachusetts.


Current Incentives for Combined Heat and Power (CHP)

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