Facing ever-fluctuating energy prices, aging electrical grids and increasing concern for the environment, more businesses and facilities are turning to distributed generation as a key component of a successful overall energy strategy.
Dalkia Solutions Blog
Combined Heat & Power
Recently a customer had us model the energy production and financial return for a new 2MW cogen system at their manufacturing site in the United Kingdom.
Our analysis considered their contract cost for kWh and natural gas, the system’s energy production in kWh and therms, its full installation and annual maintenance cost and their UK tax benefits, including a reduced carbon tax from the UK’s Carbon Reduction Commitment. All in, the capital investment had a simple payback of 2.3 years.
When we built the system’s 10 year PPA model there was one big question – what escalation rate for kWh and gas should we use?
In the 1967 movie The Graduate, 21 year old Ben Braddock (aka Dustin Hoffman) received a famous bit of advice – “there is a great future in plastics.” The line has lived on since, like an insider stock trading joke – however, VC’s would call the character who delivered this line “a master of the obvious.” If plastics would be a big market, how would Hoffman have chosen the application area or the start up company that would win?
Combined Heat and Power (CHP) technology is not new – it’s been applied by utilities going back to the days of Thomas Edison. At a utility’s scale it makes so much sense to recapture huge waste heat loads generated during electricity production and apply this energy to a system like a district steam loop for heating within a campus or city.