When Hurricane Katrina struck in 2005, the Mississippi Baptist Medical Center in Jackson, Miss., remained open and operational despite the loss of grid power for several days, according to the U.S. DOE. This was because the hospital's combined-heat-and-power (CHP) system provided electricity, hot water and cooling service beyond what could be provided by its backup generators alone.
The ability to produce electricity on-site rather than being reliant on the grid not only provides consistency and reliability for institutions such as hospitals where electricity is imperative, but also reduces grid congestion and avoids distribution costs. Those are only a few of the many outstanding benefits of CHP or cogeneration, and its widespread potential in the U.S. is looming. In fact, in 2008, the DOE published an in-depth report on the potential of CHP deployment in the country and determined that it is one of the most promising options in the country’s energy efficiency portfolio.
Notably, the report points out that while CHP has been around in one form or another for more than 100 years—it is a proven, not speculative, technology and still remains vastly underutilized even though it’s one of the most compelling sources of energy efficiency that could, with even modest investments, quickly move the U.S. toward greater energy security and a cleaner environment.
ABCs of CHP
CHP is a form of distributed generation and is defined by the U.S. EPA as an integrated system that generates at least a portion of the electricity requirements of a building, facility or campus, and recycles the thermal energy exhausted from the electric generation; energy that would normally be wasted. Generally, CHP systems consist of several individual components, including a prime mover (heat engine), generator, heat recovery and electrical interconnection, all configured into an integrated whole. Prime movers for CHP systems such as steam turbines, gas or combustion turbines are capable of burning a variety of fuels, including biomass or biogas. According to the U.S. Energy Information Administration, reciprocating engines are the primary technology of choice and are used in about 47 percent of existing CHP systems in the U.S. Additional components used in configuring a complete CHP system include boilers, absorption chillers, desiccants, engine-driven chillers and gasifiers.
While CHP systems can run on fossil fuels, there are many advantages to using biomass including reduced greenhouse gas/carbon dioxide emissions, local economic development, waste reduction and the security of a domestic fuel supply. In 2008, more than 60 percent of current biomass-powered electricity generation in the country was in the form of CHP, according to the EPA. Wood and other biomass fueled approximately 3 percent of existing U.S. CHP capacity.
Christopher Recchia, executive director of the Biomass Energy Resource Center, says a good biomass CHP system candidate should be able to successfully source a local fuel supply such as low-grade wood that might have previously been used by pulp and paper but declined over time, or from plentiful forest land that isn’t being successfully or actively managed. “Or, if you’re in a place like Nebraska, energy grass or agriculture residues that aren’t being used might be a good source,” Recchia says.
Virginia-based nonprofit BERC is a leading organization involved in the assessment, development and management of community-scale biomass energy projects. BERC expertise includes biomass fuel systems, environmental policy and management, biomass fuel supply, and project and program management.
Supporting Recchia’s viewpoint is a biomass cogeneration project being developed by Iberdrola Renewables, set to break ground this fall in Lake County, Ore. Spokeswoman Jan Johnson says one of the most attractive qualities of implementing the project was the ability to secure a good biomass fuel supply partner. The 24-megawatt (MW) plant will be co-located with a sawmill and utilize its waste byproducts as feedstock, while in turn supplying the mill with steam.
Once a biomass resource is secured, however, there are still a few other essential components involved in being a good candidate, Recchia says.
“One of the first things that should be done is to look at all of your buildings and gather any heat demand information you have,” he says. “If you have hourly data, that is great, but any data is good data.”
Next, a facility’s existing system and fuel usage should be examined, whether it be coal, oil or natural gas, as well as whether there are multiple buildings already connected and if the existing system is steam-based or hot water based. “A lot of colleges, for example, have steam-based systems,” Recchia points out. “Hot water is more efficient and modern, but we find that a lot of colleges are already committed to a steam distribution system and can’t change that. That’s okay, but if they don’t currently have a distribution system we encourage a hot water system.”
If a medium- or large-sized college—which Reccia says BERC has typically found to be the best candidates for biomass CHP systems—wants to figure out if a system applies to their needs, they should also evaluate their energy demands and heat load system. “We definitely support CHP but we also really support thermal-led CHP, which is when you’re looking to maximize heating and cooling demands that you might have, and produce whatever amount of electricity proportionally, which can be supported by that type of system,” he says. “Otherwise, you may get into a situation where you’re producing electricity, but you’re wasting a lot of heat and that will reduce the economics of it.”
While people become excited about CHP, Reccia says what BERC generally finds is that the thermal side of CHP helps subsidize the electrical component. “It is usually most cost effective if you do straight thermal and a little less cost effective if you do CHP, but there are a variety of reasons why people choose to go the CHP route. We’re supportive of that, as long as you’re trying to maximize the efficiency of the system overall,” he says.
Biomass CHP installation activity hasn’t kept up with current interest because of the cost barriers, Reccia adds. “Colleges are becoming interested in it because they climb onto the climate change commitment, and this is a very good way to help them with that,” he says. “So we’ve seen an increased interest, but definitely not as many installations.”
Once deemed a good candidate for biomass CHP, there are other issues to consider. In particular, what kind of state or federal programs or incentives are available to help alleviate costs, as well as what might prevent a project from getting off the ground?
Incentives and Barriers
In addition to supporting research, in 2001 the DOE established the first of eight regional CHP, or clean energy application, centers to provide local technical assistance and educational support for CHP development. That same year, the EPA established the CHP Partnership Program, which encourages cost-effective CHP projects and the expansion of CHP development in under-utilized markets and applications.
Other federal tax incentives that may be applicable to CHP include a Recovery Act production tax credit of 1.5 cents for any closed-loop biomass project and a 75-cent credit for any open-loop biomass project for the first 10 years, and a 10 percent investment tax credit for the first 15 MW of CHP systems under 50 MW placed into service between now and Jan. 1, 2017, under the Energy Improvement and Extension Act of 2008.
For the past several years, many states have begun to realize that a variety of policy measures are needed to remove the barriers to CHP development, and have implemented a series of incentives, including adding CHP to receive credit under renewable portfolio standards (RPS). Currently, 13 states include CHP or waste energy recovery in their RPS.
One recent push for CHP support occurred in North Carolina, which in August passed a 30 percent tax investment credit law for biomass CHP projects. Keith McAllister, director of the Southeast Clean Energy Application Center, says that CHP hasn’t seen a lot of activity in the state, but that the interest level has been rising over the past few years, particularly for biomass-fueled projects. "The passage of this bill, which allows CHP fueled from any source to get the tax credit, should bring the bigger players to the table,” he says, pointing out that there are still barriers to the market place.
So, what are these barriers? Reccia says mainly, much like many new energy projects, initial capital cost is the culprit. “Even though we can usually show a cost savings in one year by converting— particularly with fuel oil, natural gas a little less so—they are very capital intensive and a lot of colleges don’t have that type of capital available, although they are in better positions than other public buildings that want to use this.”
In addition, where feasible, biomass CHP systems are factored at a comparatively higher cost than other fuel sources and vary based on the size of the application as well as the fuel type, according to Neeharika Naik-Dhungel, program manager of the EPA’s CHP Partnership. “For example, at a large wastewater treatment facility, successful turbine installation may be about 15 percent higher using biogas than natural gas, whereas a smaller biogas unit may cost twice as much than a comparable natural gas-fired CHP system,” Naik-Dhungel says. “This includes the cost of ancillary equipment such as piping, storage or a flare required to be installed for a biogas CHP
However, these costs are one set of factors in a CHP development and are not the sole determinant of a successful CHP project. The benefits of a biomass CHP application, range from greenhouse gas reductions, energy cost savings, local economic development, waste reduction and the security of a domestic fuel supply.”
In addition, competition for biomass fuel supplies is intensifying in some regions, so a biomass CHP project may have difficulties securing a steady source or fuel contract.
And while tax incentives might be good for biomass CHP projects, many colleges are tax exempt. “So it wouldn’t help them much unless they bring in a private entity or third party,” Reccia adds. “They would definitely make the money back, they just don’t have it right now.”
Still, there will be continued activity in the future because of the role a biomass CHP system can potentially play in a sustainability strategy and in the renewable market. “There has been steady activity in the market over the past three to four years,” Naik-Dhungel says. “Five to 15 biomass CHP systems are being planned at any given point with four to eight systems being installed in a year. Its growth will continue in sectors and applications where there are long-term sustainability commitments, and where the project financing lends to the application. There have been and continue to be applications in district energy systems on university campuses and for local government, wastewater utilities and other anaerobic applications such as dairy farms. In the industrial sector, there will be continued applications in the paper, chemical, wood products, and food processing industries, but only when feasible.”
Author: Anna Austin
Associate Editor, Biomass Power & Thermal