Cogeneration - The Basics fo Combined Heat and Power - You Should Know. What is CHP?
The rapid increase in energy prices over the last decade, combined with the ecological pressure related to climate protection—whether it's a perceived issue as some argue, or a real threat posing a potential disaster to the planet—has driven the continuous development of renewable energy technologies. The aim of this development is both to gain access to cheaper energy and to protect the environment.
These trends will definitively force companies to implement more efficient energy management systems, or else risk losing competitiveness against companies in countries with access to cheaper energy. This is where cogeneration (or: Combined Heat and Power - CHP) comes into play—addressing these trends, even though few have heard about cogeneration - or in general terms. What is cogeneration, what does the full name: Combined Heat and Power mean, what is CHP used for, and where is it applied? These are the questions we will explore in the following article.
✅ How does the cogeneration process work? Is there any difference between the cogeneration and CHP?
✅ So what is the CHP? What is the purpose of using Cogeneration?
The purpose of cogeneration is to produce cheap energy — either electrical or thermal. The acronym CHP (Combined Heat and Power) largely hints at the aim of using cogeneration. In most cases, it is intended to provide both types of energy simultaneously.
The cogeneration process is carried out by special devices equipped with components responsible for energy production, called CHP units or cogeneration systems. By combining both processes in a single device (or rather a type of a plant), the thermal energy produced as a by-product of electrical energy generation can be captured using special, quite large heat exchangers. These cogeneration heat exchangers are not the small plate heat exchangers familiar from our gas boilers. They are larger devices capable of transferring significant amounts of energy, for example, to water (essentially, heating water). This can also involve other media if the goal of cogeneration in a given facility is to heat a different medium (such as pasteurizing milk or another product in the food industry). The hot water, in turn, can be used to heat warehouses or offices. This results in nearly free energy that is simply recovered.
✅ When the companies invest in CHP units or bigger systems as Combined Heat and Power plants?
Unfortunately, cogeneration devices - sometimes called CHP units, in some case even Combined Heat and Power Plants are currently quite expensive and take up a lot of space, so this technology is not often used in single-family homes. However, cogeneration technology is evolving, and who knows, maybe one day we will have small CHP units in modern homes, although such solutions are already encountered today.
At present, Combined Heat and Power is used in industrial plants—factories, food production (which is quite energy-intensive), construction material production, etc. It is also employed by large companies with extensive warehouse spaces, such as logistics centers, making them more efficient. Public swimming pools are another common and excellent application for cogeneration. Additionally, cogeneration systems are used in larger hotels, hospitals, and public utility buildings.
✅ In the long term, cogeneration reduces costs and provides a competitive edge.
Cogeneration is an efficient system and has several advantages. First and foremost, in the long run, businesses that implement it are more energy-efficient. In the future, the energy consumed by businesses and the cost of obtaining it will be the main factors shaping prices. Therefore, companies that implement it will gain an additional competitive advantage over time after the investment pays off.
Many companies that have switched to cogeneration have managed to reduce their purchases of electricity from public suppliers by up to 50%. CHP combined with PV panels can potentially be a system that fundamentally changes the cost calculations for a company, especially if it consumes significant amounts of energy.
✅ How long does it take for a cogeneration investment to pay off?
It depends on how much energy a business actually uses. Given the costs and sizes of cogeneration units, it is not profitable to use them in homes, nor would it be profitable for companies that only run a computer, printer, or occasionally air conditioning.
In companies that consume larger amounts of energy, such as manufacturing enterprises, cogeneration or CHP unit often pays off even faster than the much better-known photovoltaic panels. It often takes a few years, with estimates ranging from 3 to 6 years, although 3 years is likely an optimistic scenario. However, one must consider the continuous increase in public electricity and heating costs each year.
Currently, few companies face the potential threat of energy shortages from public suppliers, but a few years ago, during the pandemic and the first year of the war in Ukraine, some companies in different countries considered this possibility. It is worth noting that Combined Heat and Power Plant is a type of private power plant — it can operate outside the state’s energy system. No power outages can disrupt a company unless they last for an extended period. Thus, cogeneration increases a company's resilience to energy supply interruptions, for example, due to storms or strong winds. It provides a company with independence.
Combining electricity and heat production within a single device uses less fuel relative to the amount of energy produced than if we were to use two separate systems. Lower fuel consumption not only reduces costs but also aligns with ecological trends.
Not all CHP Cogeneration Plants or CHP units are the same. They are sets of devices that require varying amounts of space, and it is impossible to provide a single answer. A cogeneration unit must be selected in collaboration with a specialized company that will propose the appropriate system based on the specifics of your company.
☑️ At this point, we would like to clarify that we are not affiliated with any cogeneration system manufacturers, and our article is independent and not sponsored. We do not endorse any specific company.
Cogeneration systems most commonly rely on turbines—steam or gas, sometimes in a hybrid form.
A cogeneration system draws energy from various fuel sources, which are used for the simultaneous production of electricity and heat, depending on our needs. The most commonly used fuels are natural gas (known as gas cogeneration), but it can also be coal, biomass, pellets, and various heating oils. Some companies have access to cheaper fuel of a certain type, so the cogeneration system is selected individually to meet the needs and capabilities of the company.
Let's take gas cogeneration as an example. In systems using natural gas, the fuel is burned in gas engines or gas turbines that drive electric generators. This process also produces heat (as we already know), which is recovered and reused for heating buildings, producing process steam, or in district heating systems. Often, it is used for both.
The use of coal, biomass, or pellets in cogeneration systems typically occurs in steam boilers, where the steam drives turbines, producing electricity, and the waste heat is used in a similar manner. This makes cogeneration systems more energy-efficient, as they maximize the use of available fuels while simultaneously reducing harmful emissions into the atmosphere.
✅ How much does a CHP Cogeneration Plant or CHP system cost for a business?
Unfortunately, our answer might be disappointing, as it is not possible to provide a sensible answer to this question — the systems vary greatly, and their size and efficiency must be specifically tailored to the company. The only option is to contact a company offering cogeneration solutions and present your company's needs. It is important that these needs are based on sensible energy consumption data, not arbitrary figures. It is also useful to have data on the building's energy losses and at least a minimally thought-out energy strategy for the company. This strategy should outline whether you aim primarily to improve the efficiency of the company's heating system or if electrical energy efficiency is more important. Only then, with the right consultant, will you be presented with a reasonable cost estimate. Any other information regarding expected costs before familiarizing with the company's needs and specifics should essentially be considered speculative.
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