Despite its efficiency and environmental benefits, combined heat and power (CHP) generation has languished at around 10% of worldwide capacity for more than a decade. But a global review shows growth in some sectors and promising new technology on the way.
The statistics are both eye-opening and somewhat depressing. Globally, according to the International Energy Agency (IEA), thermal power plants operate at around 36% average efficiency, while combined heat and power (CHP), or cogeneration plants, beat that by a wide margin, with an average 58% efficiency. The most efficient coal-fired thermal plants currently achieve around 45% efficiency, while state-of-the-art combined cycle plants can manage a bit more than 60%. Meanwhile, the most modern cogeneration plants can reach 90% efficiency, with some small specialty plants that capture water and CO2 streams in addition to heat and power managing efficiencies close to 100%.
Yet CHP is in many ways a sector running in reverse, or at least neutral.
In 1990, according to IEA data, global electricity production from CHP accounted for about 14% of the total. By 2000, that figure had fallen to around 10%, where it has largely remained ever since. This is despite enormous pressure in the developed world toward greater energy efficiency and carbon emissions reductions over the past two-and-a-half decades.
What’s the problem? According to observers, there are two: policy and infrastructure. Making use of heat from a cogeneration plant requires infrastructure in addition to power transmission, and a plant developer must be able to serve demand profitably in two different markets. In the case of district heating (DH)—one of the primary uses of CHP around the world—and steam-powered district cooling (DC), the infrastructure requirements are substantial and require significant public planning to implement. Meanwhile, energy markets that are not structured for the unique challenge of selling both heat and power often serve as economic disincentives to CHP, even in regions where there is good demand for it.
Still, there is some cause for optimism. The efficiency benefits of CHP have led to renewed interest in capturing those advantages for carbon reduction and new movement toward policy reforms and incentives. The European Union’s (EU’s) 2012 Energy Efficiency Directive requires that CHP be considered for any new or substantially refurbished generation facility. In addition, many European countries have used policy tools such as feed-in tariffs to support CHP or include it in other benefits available to renewable generation. Meanwhile, similar initiatives are under way in Asia, particularly China and Japan.
Another key development is the rise of renewable and small-scale CHP, as older coal-, oil-, and gas-fired plants give way to biomass fuels, and decentralized systems replace larger plants. Technological advances—such as improvements in fuel cells—also promise fundamental changes in CHP’s role over the coming decades.
The EU’s cogeneration initiative has included independent assessments of progress known as CODE, or Cogeneration Observatory and Dissemination Europe. The first CODE, completed in 2011, and CODE2, completed this past December, included country-level reports on progress toward greater use of CHP. The picture drawn by these reports suggests some progress as well as some interesting developments.
When it comes to penetration of CHP and DH into the energy market, few regions can match the countries around the Baltic Sea. According to trade association EuroHeat & Power, Denmark, Latvia, Lithuania, Estonia, and Finland all serve better than 50% of their populations with DH, with Poland and Sweden topping 40% and Russia more than 30%. While Germany, with its large population, serves a smaller fraction of its populace, its DH system is one of the largest in Europe. (Iceland leads the world in serving 92% of its population with DH, but the large majority of it is supplied by geothermal energy rather than CHP.)
Russia. Russia relies extensively on CHP, with more than 500 cogeneration plants in operation and a total capacity of about 50 GW, according to IEA data. In terms of sheer size of DH networks, none can match its mammoth system, which is the largest in the world. But Russia’s huge DH network—which gets about 30% of its heat from large-scale CHP and the balance from boilers and distributed resources—is also the oldest, with some elements of it more than 100 years old. According to the IEA, as much as 60% of the network needs major repairs or replacement, and around 20% to 30% of the heat is lost during transmission.
Russia’s CHP system heavily reflects its Soviet-era history, with about half its CHP plants serving both industrial and DH needs as part of centrally planned industrial and residential projects. CHP in European Russia uses natural gas overwhelmingly, relying on the extensive gas infrastructure built to supply industry and the export market. Eastern Russia, with far lower population density and far less infrastructure, relies almost entirely on coal for CHP.
Though recent data is limited, observers suggest CHP in Russia is handicapped by a lack of government focus, artificially low retail rates, and policies that make distributed CHP resources more economical, all of which limit resources available for upkeep of the major systems.
Perhaps the most interesting development in Russia is the plan for mobile, nuclear-powered CHP in the form of floating nuclear plants. The 70-MW Akademik Lomonosov project, scheduled for completion in 2016 and slated for operations in the Russian Far East, will be able to supply heat and seawater desalination in addition to electricity (Figure 1). Additional units are in development but not yet under construction.
Finland. Just over the border in Finland, it’s a different story. CHP supplies about 36% of the nation’s overall electricity generation and about 70% of its DH. Roughly 40% of its CHP capacity serves industrial needs, with the rest serving the DH networks and commercial demand. Renewable sources, mainly biomass and solid waste, provide about 20% of CHP heat demand and 45% of electricity demand. Finland’s limited energy resources—it imports about 47% of its total energy needs and 20% of its electricity—have led to a national focus on energy efficiency, which has naturally made CHP attractive. A favorable, transparent policy regime—CHP plants get a 50% reduction in their carbon tax—has also spurred the development of CHP.
But the success of CHP in Finland has been such that penetration may have reached a ceiling. Urban areas are already supplied overwhelmingly with DH: the capital, Helsinki, gets 93% of its heating needs from DH. Industrial CHP is also widely employed because of the prominence of Finland’s forestry, paper, and pulp sector (its industrial CHP capacity is fueled about 75% by biomass). Room for further industrial use is quite limited.
In addition, a drive to increase nuclear capacity is providing competition for power generation, and a need to reduce carbon emissions is placing pressure on fossil-fueled CHP plants. As a result, the CHP sector in Finland has been evolving toward lower emissions. The DH sector has dramatically reduced its reliance on coal and fuel oil, and increased the use of gas and biomass, while the industrial sector has almost completely eliminated the use of coal.
Still, the prevalence of CHP in Finland has meant some interesting technological advances. The Kymijärvi II gasification and CHP plant (shown in the header photo), which went online in 2012 in Lahti, about 100 km north of Helsinki, is the world’s first gasification plant to run exclusively on solid waste. Rather than incinerating its fuel like a traditional solid waste plant, the plant uses a circulating fluidized bed (CFB) gasification system to produce syngas, which is cleaned and burned in a boiler. It supplies 50 MW of electricity to the grid and 90 MW of heat to the local DH network.
Jointly developed by Lahti Energy, the local utility, and Valmet, with the CFB gasifier, boiler, and emissions controls supplied by Metso, the plant annually consumes about 250 million metric tons of post-consumer and post-industrial wood, plastic, and paper materials that cannot be recycled. The use of CFB gasification technology allows the plant to operate at 87% efficiency with about a quarter of the carbon emissions that would be produced by burning coal.
Germany. In Germany, where CHP has been a component of the national energy transition, Energiewende, CHP’s share of total generation grew 1.5% between 2002 and 2010, and is currently at 15.4%. Slightly less than one-third of the total is generated by industrial CHP, with the majority coming from standalone power plants. Small and renewable CHP in Germany, however, has experienced dramatic growth since 2002, though together they remain a small component of the total, about 4%.
Cogeneration in Germany is expected to meet the EU target of 20% of the mix by 2020, growing from 41 GW installed capacity to 48 GW. Still, the report notes, “Over the past few years the pace of investment in large CHP plants has been sluggish,” a situation it blames on continuing uncertainty in the German energy market. The government has set a more ambitious target of 25% by 2020, and the legislation governing CHP is currently being reviewed.
Denmark. This nation, which supplies 63% of its population with DH, expects CHP to continue its “absolutely crucial role” in the national energy mix, according to that country’s report. About 60% of its nonrenewable generation comes from CHP (primarily conventional thermal plants, with some combined cycle plants), making up about 37% of the total. However, while CHP will remain critical for DH—78% of it comes from CHP plants—the government expects that continued growth in renewable generation will shrink CHP’s share of total electricity generation in the future.
Denmark hosts one of the more interesting CHP developments, the solar- and biomass-powered Sunstore facility in Marstal, near the border with Germany (Figure 2). Begun in 1994 as a small-scale demonstration project, it has undergone several expansions, with the most recent in 2011–2012 to enable it to operate year-round and supply better than 95% of Marstal’s DH needs.
|2. Small trendsetter. The Sunstore project in Demark uses a combination of solar heat, biomass, and thermal storage to provide 100% renewable CHP to the village of Marstal. Courtesy: Marstal Fjernvarme|
Though relatively small at 31 MWt and 3.2 MWe, it employs a mix of solar heat collectors, thermal storage, and a wood chip–fired boiler to supply DH and a small amount of grid power. The plant relies on different resources throughout the year, with the solar collectors providing heat during the summer and the boiler most of the heat during the winter. In spring and fall, the collectors, boiler, and heat storage work together as needed. The local DH network uses distributed thermal storage to increase the system’s overall efficiency and reduce heat losses.
Sweden. Sweden, which has the largest DH system in Europe after Russia’s and a modern, high-efficiency fleet of CHP plants, faces a similar situation as Finland. With its long history of relying on DH and CHP, room for further improvements is limited. While the total amount of electricity generated by CHP nearly doubled between 2002 and 2010, reaching about 10% currently, national investments in nuclear, wind, and hydroelectric generation act as a ceiling on significant further growth in market share. However, policy incentives are expected to increase the use of biomass—already the primary CHP fuel in Sweden—through 2030, while gas-fired cogeneration is expected to be retired completely.
Although much of the future focus on CHP in Europe is on biomass and other renewable generation, conventional CHP plants are still being built. Verbund’s Mellach combined cycle plant in Austria, which was a turnkey project from Siemens that came online in 2012, is a high-efficiency gas-fired plant that produces 838 MW of electricity and 400 MW of district heating output. Still, the Mellach plant also illustrates the limitations on future growth. Though the plant is new, it tied into an existing DH system and replaced several older coal- and oil-fired CHP plants.
As might be expected, Asia is a growth market for CHP, as it is for every sort of energy development.
China. China has the largest CHP fleet in the world, and its installed CHP capacity has expanded alongside the dramatic growth in overall national capacity. From about 30 GW in 2000, CHP capacity reached 80 GW in 2006 and 167 GW in 2010, accounting for 23% of total capacity, according to data from the IEA and Chinese consulting firm GCiS China Strategic Research. In fact, the largest share of global growth in CHP over the past few years has taken place in China.
As with the overall power mix, the large majority of Chinese CHP is coal fired, though gas-fired CHP, primarily combined cycle, has seen recent growth (Figure 3). The most recent Five-Year Plan specifically calls for an increase in gas-fired CHP.
|3. Trailblazer. The 691-MW Shanghai Cao Jing Cogeneration Plant was one of the first large-scale modern cogeneration plants in China. It supplies power and steam to the Shanghai Chemical Industrial Park. Courtesy: Sembcorp|
Most CHP in China serves the industrial sector. Still, China’s DH network is the second largest in the world after Russia’s, most of it serving the densely populated northeast regions, which frequently face severe winters. About one-third of these DH needs are served by CHP, with the rest coming from heat-only boiler stations. The need to reduce air pollution caused by these mostly small, overwhelmingly coal-fired boilers has been part of the incentive to increase the use of more efficient CHP.
For more on the development and future of CHP and DH in China, see “Optimizing Combined Heat and Power in China” in this issue.
Japan. Japan and South Korea both represent potential growth markets for CHP and DH because of their dense populations, cold winter climates, and national concern with energy efficiency, but in both countries, CHP has lagged behind other resources.
The upheaval in Japan’s energy markets following the March 2011 earthquake and tsunami has also roiled plans for expanded use of CHP. According to IEA data, Japan’s installed CHP capacity has remained stagnant at around 9.5 GW since 2007, which has meant a shrinking share—now about 4%—of the national mix as other resources have grown. Unlike other developed nations, Japan’s electricity demand has remained flat since 2000, and high costs of imported fuel—especially liquefied natural gas (LNG)—remain a challenge for thermal generation.
Still, observers believe CHP has room for expansion in Japan because of ongoing needs to improve efficiency, thus reducing fuel needs and carbon emissions. Most CHP capacity in Japan is either gas turbine– or engine-based, with 85% of applications relying on gas or oil. Fossil fuel–powered CHP does not qualify for incentives designed to encourage renewable energy development.
Approximately 79% of CHP capacity in Japan is industrial, and CHP remains a minor player in supplying DH, with an estimated 300 MW in total CHP-powered DH. (DH in general is not commonly used in Japan.) Still, the trend for CHP in Japan is downward in size: According to IEA data, the average size of new CHP installations has fallen to 0.25 MW, with most being commercial and residential rather than industrial or utility. Much of this reflects concerns of end users—driven by the 2011 earthquake—for keeping the lights on in the event of a loss of grid power.
Another encouraging trend for CHP in Japan is the development of micro-CHP technologies designed for residential use. Though these engine- and fuel cell–powered systems are very small, around 5 kW, and though total installed capacity is around 200 MW nationwide—maybe 3% of installed CHP capacity—the total numbers are impressive: Japanese gas companies have installed almost 200,000 such systems.
Fuel cell micro-CHP is believed to be a potentially large growth market because of its greater efficiency and low emissions, and it is rapidly taking market share from traditional engine-based systems as the technology improves and costs continue to decline. Domestic manufacturers such as Panasonic have thus far dominated the market, but foreign firms such as Ceres Power Holdings are looking at expanding into Japan. The national government has set a goal of equipping 10% of households nationwide with fuel cell CHP by 2030, which would represent more than 5 million systems. However, experts believe fuel cell costs will need to decline substantially to meet this ambitious target.
South Korea. This nation’s energy market has seen similar upheavals in recent years, but unlike Japan, they have been driven by skyrocketing demand rather than natural disasters. The national utilities have been adding capacity at a breakneck pace to stay ahead of the curve, efforts that have not always been successful.
Much as in Japan, CHP has lagged in South Korea at about 7% of the national mix since the late 2000s. Capacity has expanded, however, and currently stands at 7.7 GW. Unlike Japan, most CHP in South Korea—about two-thirds of the total—is integrated into DH applications, which represent the main source of growth in recent years. The nation currently supplies about 15% of its population with DH.
One good example of where South Korea is headed with CHP can be seen in the new 834-MWe and 290-MWt Ansan combined cycle plant, which came online in early January. Built by Siemens and POSCO, the two-unit LNG-fired facility supplies both power and DH for the city of Ansan and was completed in just 24 months.
Meanwhile, industrial CHP growth has been stagnant largely because of high LNG prices. DH already supplies many of the large urban areas in South Korea, so future growth in that area may be limited (for another example, see “KOMIPO Relocates an Entire Combined Cycle Plant” in the August 2014 issue). South Korea has an unusual approach to gas imports for Asia, in that large users are allowed to directly import LNG themselves, which has increased the cost effectiveness of large-scale gas-fired CHP.
South Korea has its own national fuel cell CHP initiative, though on a smaller scale, with a target of 100,000 systems by 2020. FuelCell Energy is currently one of the major suppliers of fuel cells in South Korea, with several projects under way. Total installed capacity of fuel cell CHP stands at 62 MW.
The small-scale CHP/DH market is already fairly saturated, and this is not seen as an area of significant future growth. Renewable CHP is gaining attention, however, with several biomass-, biogas-, and solid waste–fueled plants in operation.
India. With its mostly mild climate, India’s CHP sector is overwhelmingly industrial. The perennial unreliability of the national grid means captive generation is an important element of the national mix, representing about 15% of total capacity and 43 GW of installed generation. Though nationwide data is difficult to come by, it is thought that a significant percentage of CHP capacity in India, about 3 GW, is biomass-fired, since the sugar industry is the largest user of CHP. Fertilizer and petrochemical plants are also users of CHP, but CHP is thought to be underutilized in Indian industry, with IEA estimates of around 14 GW of potential expansion.
Small-scale CHP, especially for use in DC, is limited in India but growing. These applications have been increasingly seen in large residential and commercial projects, according to the IEA.
Government support at the federal level for CHP is mostly concentrated on the sugar industry. Support at the state level varies, though some states, such as Tamil Nadu, are actively promoting cogeneration through feed-in tariffs.
In the Americas, CHP continues to serve predominantly large industrial users.
Mexico. Congeneration in Mexico has long been hamstrung by the state-owned character of the grid. With 75% of total generation and the entire transmission and distribution network being owned by national utility CFE, CHP plants had only one customer for their excess power, and only if they were smaller than 20 MW. That’s kept installed capacity under 4 GW nationwide, even though CHP potential is thought to be several times that. Of that total, most is owned by national oil company Pemex, which operates more than 2 GW of captive industrial CHP at its fleet of refineries and petrochemical plants.
But there is room for growth and optimism with the recent reform of the Mexican energy market (see “Can Mexico’s Electricity Reform Deliver on Its Promise?” in the January 2015 issue), which includes the breakup of CFE. Both large CHP providers like GE and small-scale CHP firms like Tecogen are said to be eyeing Mexico as a prime growth opportunity.
The nation’s largest CHP plant to date, the $550 million, 300-MWe, 430-MWt Nuevo Pemex plant in Tabasco, came online in 2013 (Figure 5). The two-unit combined cycle plant, built by Abengoa and GE, sends power and process steam to an array of Pemex facilities nearby, with excess power going to the grid. Pemex’s long-term goal is to develop enough cogeneration to become self-sufficient in its heat and power needs.
|5. Captive power. Pemex’s 300-MWe, 430-MWt combined cycle plant in the Mexican state of Tabasco supplies power and steam to several nearby industrial facilities. Courtesy: Pemex|
CHP is considered to be renewable energy under national law and enjoys benefits available to other renewable resources.
Canada. As a mature energy market in a cold climate, Canada has long found uses for CHP. According to data from the Canadian Electrical Association, CHP supplies about 7% of national electricity consumption. Of the approximately 6.5 GW of installed CHP capacity—comprising about 200 facilities—two-thirds are in Alberta and Ontario. In Alberta, most CHP serves the province’s large oil and gas sector, while in Ontario it serves a mix of industrial and commercial needs. Nearly all of the rest is in British Columbia and Saskatchewan, mostly serving the forest products sector. Canadian utilities own about 45% of the capacity, with 23% operated by the paper industry and 16% by the oil and gas industry.
Installed Canadian CHP capacity has doubled since 2000, though growth has slowed in recent years. Much of this growth is attributable to increasing willingness by Canadian utilities to purchase power from independent generators. High gas prices in the late 2000s are thought to have put the brakes on much CHP development, but this may change as prices have fallen. The Ontario Power Authority continues to encourage small-scale CHP projects and recently issued a call for up to 150 MW of submissions.
Brazil. Brazil’s huge sugar industry has long operated biomass-fired CHP plants, which constitute the majority of the country’s installed CHP capacity, making up about a quarter to a third of the total. The plants operate on by-products of sugarcane processing (known as bagasse), and so much of it is available during harvest time that the Brazilian sugar industry has long been virtually self-sufficient in its power needs. Advances in efficiency have increased the amount of power generated by the sugar industry (including the ethanol sector), and new discoveries of natural gas offshore of the country are expected to drive further growth in CHP.
Globally, the requirements for future growth in CHP are similar to those in the U.S., namely policies and incentives that give CHP appropriate credit for its efficiency gains and carbon emissions reductions over conventional thermal generation (see “CHP: A Rocky Path for a Promising Approach” in this issue). However, classifying fossil fuel–fired CHP as renewable energy or allowing it to participate in renewable incentives, though a popular approach in some regions, remains controversial.
Environmental concerns and increased availability of natural gas are likely to mean that most future CHP capacity in the developed world, and a growing portion in the developing world, will be gas fired. Biomass- and biofuel-fired CHP should see continued growth but will be constrained to areas where such fuel is readily available. Solar-powered CHP shows potential, but it remains to be seen if it can become competitive with other resources.
Technological advances in the near term are likely to be confined to incremental efficiency improvements. Next-generation CHP, such as that relying on fuel cells, and more advanced approaches such as supercritical CO2 (see sidebar), offer possibly but will remain niche resources until costs become more competitive. ■
—Thomas W. Overton, JD is a POWER associate editor.