In: Social Issues

Submitted By sanahina
Words 602
Pages 3
Combined heat and power (CHP) can offer a variety of economic benefits for large energy users. The economic benefits of CHP can include: * Reduced energy costs: The high efficiency of CHP technology can result in energy savings when compared to conventional, separately purchased power and onsite thermal energy systems. To determine if CHP is likely to offer a compelling return on investment at a particular site, the costs of the CHP system (capital, fuel, and maintenance) should be compared to the costs of purchased power and thermal energy (hot water, steam, or chilled water) that would otherwise be needed for the site. * Offset capital costs: CHP can be installed in place of boilers or chillers in new construction projects, or when major heating, ventilation, and air conditioning (HVAC) equipment needs to be replaced or updated. * Protection of revenue streams: Through onsite generation and improved reliability, CHP can allow businesses and critical infrastructure to remain online in the event of a disaster or major power outage. Determining the economic value of CHP as backup power is explored in the white paper, Calculating Reliability Benefits. * Hedge against volatile energy prices: CHP can provide a hedge against unstable energy prices by allowing the end user to supply its own power during times when prices for electricity are very high. In addition, a CHP system can be configured to accept a variety of feedstocks (e.g., natural gas, biogas, coal, biomass) for fuel; therefore, a facility could build in fuel switching capabilities to hedge against high fuel prices.
Analyzing Economic Feasibility
The economic benefits of any CHP project are dependent on efficient design, fuel and offset electricity costs, and capital costs. The value of these benefits will depend on the needs and goals of the investor. A feasibility analysis to determine the…...

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