Integrating CHP and Battery Storage: The Financial Case for Hybrid Solutions

Written by:
Aksheya Chandar


An introduction to the concept of hybrid CHP and BESS configurations

Combined Heat and Power (“CHP”) systems, or Cogeneration (“cogen”) systems, are a tried and tested solution for efficient, reliable on-site generation.  At its core, CHP involves the burning of fuel to drive a prime mover that generates electricity, whilst simultaneously capturing the heat generated during the process for domestic hot water, process use, and space heating applications. These systems have a few key characteristics that lend themselves well to resiliency use cases, such as:

  • the ability to load-follow effectively
  • relatively short ramp up time in case of emergency response
  • black-start capabilities
  • continuous power limited only by the fuel supply

In addition to this, CHP solutions increase efficiency since they can displace or ramp down the need of a boiler while providing a significant portion of a building’s thermal needs, in the form of steam, hot water, or chilled water. In regions with high electric demand pricing such as the Northeast and West Coast of the US, CHP systems are therefore synonymous with electric bill savings, improved efficiency, and resiliency.

However, in some situations, CHP alone is not the perfect technology solution. There may be several factors that impede the optimal performance of a CHP system. Integrating a Battery Energy Storage System (“BESS”) to the CHP solution seeks to address these factors. In a CHP-BESS hybrid solution, a BESS is deployed behind the meter alongside the CHP. It may or may not be collocated in the same physical space. The BESS “charges” from the CHP by acting as a load on the building which is eventually fed by the CHP. It can discharge this energy later when it is most beneficial for the building. The following are some of the scenarios faced by CHP systems which a hybrid solution seeks to mitigate:

Mismatched electrical and thermal load profiles and magnitudes

A CHP system’s primary goal is to offset electricity with thermal energy offset being a by-product. In other cases, the CHP is primarily used to offset thermal energy with the electrical energy considered as the by-product. Since both electrical and thermal energy is being produced simultaneously, highly coincident electric and thermal load profiles are best suited for CHP applications. In either case, if the magnitude and timing of peak electrical and thermal demands is not aligned, a BESS can act as a regulator and time-shifter of electrical energy to when it is needed.

Figure 1: Illustration of mismatched thermal and electrical loads

This is illustrated in Figure 1 above. The load profile represents a commercial office tower in Westchester, NY (Con Edison territory) that has simultaneous thermal and electrical demand from 5 am to 6 pm. However, the HVAC loads begin to drop off later in the evening while the need to supply electricity in order to avoid demand charges continues through 10 pm each weekday. This is largely because of the structure of tariffs and time of use windows in Con Edison territory. Mismatched thermal and electrical profiles can hamper the efficiency of CHP, which can have negative impact on Measurement and Verification (“M&V”) processes and incentive funding. This is illustrated in Figure 2 below.

Figure 2: Fuel conversion efficiency of CHP

A BESS could allow the CHP to cycle daily with the HVAC loads (that is, start up and shut down) and continue offsetting utility electricity to avoid demand charges, thereby maintaining overall CHP efficiency standards and optimizing economic savings.

Space and financial constraints for siting a large CHP system

Often, it is most advantageous to site a CHP in the mechanical room or a location close to the electric and thermal points of interconnection with the host facility. It may not always be feasible to site the required CHP capacity if the mechanical room space is limited. Alternatively, a large CHP system may not be the most cost-effective solution if it requires significant construction and structural modifications. In this scenario, a BESS may be located at another suitable location and act as a “load” in the building, thereby being able to charge up through the CHP and discharge during peak hours. Through this arrangement, a smaller CHP system may be installed with the BESS acting as a suitable “bank” for energy.

Minimum rated operating threshold for CHP engine

CHP systems are designed to run above a minimum threshold which is typically 40% of its rated capacity. In buildings where the load is highly erratic, the CHP alone may not be able to sustain operations and run efficiently. In such a case, a BESS can act as a governor for the CHP system.

Minimum rated utility import requirements

Several utilities impose a minimum import requirement on buildings with on-site energy in order to ensure safety of the grid and prevention of unwanted backfeed of energy. This factor works closely with the minimum rated operating threshold for CHP engines. The battery can act as a governor and allow the CHP to run smoothly whilst intelligently time-shifting energy to when it is more expensive to purchase from the grid.

A hybrid system thus serves to solve two key issues faced by standalone CHP systems: they correct for mismatched coincidence of electric and thermal loads, and they help smooth the operations of a CHP plant by smoothing erratic electric demands on the CHP. It is important to note that the factors listed above often work together, creating a complex and site-specific solution need. Energy managers may consider improving a CHP solution by attempting to integrate it with BESS. Integrating BESS with CHP can ensure optimal system performance at the highest possible economic value. 

Should you consider a hybrid solution?

Consumers with high electric demand charges and highly coincident electric and thermal loads are suitable candidates for CHP solutions.

Integrating gas-fired assets with BESS may bring about added savings and improved efficiency of operations. By enabling smooth and predictable performance of a CHP asset, the annual operations and maintenance budget can more accurately be determined. The battery may also assist a CHP system configured to provide backup power in island mode.

Simply put, a battery can help “time-shift” the electrical generation to when it is needed, much like what battery storage can do for solar PV. This function can help mitigate the obstacles to optimal performance highlighted above.

In the next segment in this series, we will explore the technical use-case of integrating a BESS with CHP by studying load profiles and identifying opportunities for the BESS to enhance operations.

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