Unbundled: Maximizing CHP Value by Accounting for Energy, Capacity, and Carbon Dioxide Emissions Separately
Abstract
Combined heat and power (CHP) systems have not reached their full market potential, despite being a proven technology, due to several market barriers. Additionally, several barriers have prevented widespread adoption of utility and government programs which promote CHP, notably, the disagreement on methods to quantify benefits to the electric grid. A root cause of the disagreement in methods is how to discount claimed electricity savings by accounting for the increased fuel use at the CHP host site.
This adjustment, however, is unnecessary. CHP may result in increased fuel use at a single site, but they also result in a net decrease in societal fuel use. Thus, while many accounting methods show the increased site fuel use as a cost to society, it isn’t.
CHP produces benefits to the electric system by reducing load, benefits the fuel system by reducing net societal fuel consumption, and reduces net societal carbon dioxide emissions. Unbundling the accounting of CHP’s reduction attributes could thus maximize their value by recognizing each of these value streams. For example, the benefit to the electric grid of CHP is its full generation output. Consider that price suppression in wholesale electricity markets would be the full generation output of a CHP plant. Thus, discounting the claimed electricity savings of CHP because of the increased fuel use on-site results in severely undervaluing its societal contribution as an electricity resource. Similarly, CHP results in net societal fuel and carbon dioxide savings, each with a value separate and distinct from that which accrues to the electric grid.
In this paper we illustrate that the value of CHP to the electric grid is underestimated by various published savings accounting methods. We propose unbundling the savings accounting, allowing the use of much simpler accounting methods for electrical energy (kWh), capacity (kW), fuel (mmBtu), and carbon dioxide emissions savings based on standard thermodynamic equations.
Unbundled: Maximizing CHP Value by Accounting for Energy, Capacity, and Carbon Dioxide Emissions Separately
Kleinhenz, P., Seryak, J., and Sever, F. Proceedings of the 2015 ACEEE Summer Study on Industry, August 2015, Buffalo, NY.