Cogeneration: A future-proof solution for public buildings

Will public buildings still be counting on cogeneration as an important energy efficiency solution to lower their emissions and energy bills in the future? Will combined heat and power generation play a significant role for the building sector in reaching carbon neutrality?

Cogeneration, also known as combined heat and power (CHP), has been an excellent solution for industry and public buildings to reduce their energy bills and emissions. A CHP unit can reach much higher efficiencies than a separate power generator and heating boiler by combining power and heat generation in one unit. In other terms, you need less fuel for the same amount of energy output.

Hospitals, businesses and district heating systems have been relying on cogeneration for decades to cut their use of fossil fuels. However, as the world is looking for alternatives to fossil fuels to counter climate change, is there any future left for cogeneration?

The answer is simple: Yes! The cogeneration sector has put tremendous investments in preparing its systems for the fuels of the future. CHP systems can run now on greens gases and biofuels such as hydrogen and biomass. Furthermore, CHP systems can maintain the same high levels of efficiency when running on carbon neutral fuels. Today, more than 30% of the fuels used in cogeneration are renewable.

As Europe is striving to reach carbon neutrality by 2050, different green technologies and solutions are tested and implemented. Wind and solar power are being ramped up, buildings upgraded, heat pumps installed, and electrical vehicles introduced.

COGEN Europe asked consultancy Artelys to calculate if there is a place left for cogeneration in a 2050 decarbonised society. Will the high efficiencies of CHP still pay off vis-à-vis other decarbonisation technologies, both for the end-user as well as for the energy system?

The Artelys study based its calculations on two decarbonisation pathways outlined by the European Commission in 2018. The study finds that in both scenarios, cogeneration will bring cost reductions to the end-user and will help to integrate different decarbonisation solutions at system’s level.

For example, a hospital can save up to 50.000 euros per year on its energy bills if it installs a CHP unit running on green gas. The CHP unit will run to produce power for the hospital with heat as a valuable side product. Combined with a heat storage unit and a peak boiler, this will be a very efficient heating system for a larger building needing a constant supply of reliable energy.

Moreover, these cost savings do not include the savings from avoided taxes and levies, as well as from avoided network tariffs as no or little electricity will have to be bought from the grid. In the future, cogeneration units might be remunerated for their services to the distribution grid. Thanks to their flexibility, on-site cogeneration can generate electricity for the grid when outputs from wind a solar are insufficient to cover current power demands.

It is expected that buildings with a similar energy profile as a hospital, such as large office spaces, schools, and universities, will enjoy the same benefits. The study also finds that residential areas and industry will continue to benefit from cogeneration in a carbon neutral society.

A single house can save 800 euro every year by installing a domestic cogeneration unit powered by hydrogen and fuel cells. A district heating network can save up to 3 million euro annually when running on renewable cogeneration. Depending on its size, industry can cut its annual energy bill by 1.7 to 10 million euro.

Artelys calculated that cost reductions for the European energy sector vary between 4 and 8 billion euro every year thanks to the energy savings from cogeneration. These energy savings can amount to 220 TWh. Furthermore, the share of cogeneration in the electricity mix will be between 13% and 16%, and in the heat mix between 19% and 27%.

The largest system benefit of cogeneration is that a CHP unit can run at any time. The flexibility cogeneration provides will be invaluable in an electrified system dominated by variable power generation from wind and sun. Alongside batteries, hydro storage and demand-side management, cogeneration will guarantee that electricity supply and demand are in balance. As shown in the graph below, this will be especially relevant when in winter heat pumps will demand extra electricity.

The Artelys study concludes that cogeneration will accelerate the energy transition. By providing sufficient flexibility to the system, the uptake of additional variable power generation will be facilitated. Moreover, the efficient generation of heat and power will continue to translate into significant cost reductions for the users and the system as a whole.

Electrification, renewable energy and efficiency will direct our society towards a successful decarbonisation pathway. As demonstrated by the study, in many cases cogeneration will be the preferred option to decarbonise a building. Therefore, cogeneration will play a crucial role today and tomorrow.

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