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The Economics of Co-Generation for Commercial Buildings

Posted by Vital Group of Companies on Jan 8, 2019 9:20:00 AM

Commercial property owners looking at ways to reduce their energy spending might have stumbled upon the idea of co-generation as a potential solution. As electricity costs rise in Alberta, the prospect can seem tempting to anyone looking to get spending under control. So, what is cogeneration — and is it right for you?

Generate Electricity Alongside Your Heat

Co-generation, also known as combined heat and power (CHP) is about generating electricity along with your heat. The process uses natural gas to produce steam, which is then used by a turbine to generate electricity. The waste heat produced in the process is captured and used for space or water heating purposes. These dual energy streams can be used to meet your facility’s thermal load, while also covering your base electrical demand. Here are a few benefits:

  • Lower your electricity spending
  • Reduce your carbon footprint
  • Increase your productivity

Co-generation is most practical in industrial contexts where the generators are as efficient as can be and the heat is used for productivity. Examples include mining, food processing, and breweries. In these scenarios, because the heat is an integral part of the process, the economics make installation very attractive. It also makes sense for other larger buildings with big heating needs, like swimming pools and recreation centers.

Are there limits? Yes. If you oversize a co-gen unit, you’ll be left exporting power — and that’s where the economics fall off: you won’t be able to sell it at a worthwhile price. Also, you will  require substantive heating loads that are consistent throughout the year. Co-generation is a powerful tool in some contexts, but you have to get the economics right.

However, that’s not to say that smaller scale properties can’t also benefit from cogeneration.

Where Co-Generation can help Commercial Building Operators

Produce electricity with co-genThere are a plethora of smaller-scale cases for co-generation. Essentially, any time you have a constant sizable year-round heating need, such as hot water, co-generation can help tip the energy equation.

  • Office buildings
  • Condo buildings and assisted living facilities
  • Municipal facilities

In these smaller cases, instead of a boiler, you run the generator to produce both heat and electricity. It can be a very effective way of implementing energy efficiency measures in surprising places.

Even if your building doesn’t currently make sense for co-generation, stay in the loop! There definitely is a trend toward buildings saving money with this technology. It started in industrial and is moving into commercial. In some places like Japan, there’s extensive use of small-scale co-generation that’s worth paying attention to.

How do you Find out if Co-Generation is Right for You?

Like many things in energy efficiency, figuring out if co-generation is an economical option for you starts with an energy assessment.

In the case of co-generation, you’ll need to determine your base electrical demand and what thermal loads you have. This will help you not only understand whether co-generation is an economical fit for your situation, but if it is, it’ll help predict how much you can save, and what the payback period is.

On average, that payback period is in the 10-15-year range — but some installations do get closer to five.

You’ll also understand how co-generation can fit into a larger energy efficiency strategy.

Need a partner capable of not only carrying out that energy assessment, but also following through with the implementation? Vital Group of Companies helps commercial building operators take their goals of energy efficiency to conception to completion. Get started here and find out how much you can save.

Filed Under:

Energy Efficiency

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