High electric demand and peak energy usage charges
Matched Thermal and Electric Demand
CHP systems provide a very effective synergy between electric generation peak demand and building cooling peak demand; they both tend to occur on the hottest summer days. With CHP the load can be effectively leveled with rejected heat from the electrical generator being used to drive the cooling system; the electric demand from the grid is offset by the electric generated and by the electricity not being used to run cooling equipment.
Reasonable Thermal Demand
Those facilities that have high-energy consumption rates, for both electric and thermal, are the best suited for CHP applications.
High Occupancy Rates/Operating Hours
Many applications can be financially viable when occupancy coincides with peak charges associated with electric utility rates. In these cases it may be possible to quickly recover the capital cost of the CHP by the combined peak shaving effects from the on-site electric generation and the electricity offset from operating the thermally activated cooling equipment.
The financial viability is further improved if the building is operated/occupied more hours and has high energy demand such as a hospital or hotel.
High Quality or Back-Up power Coincident with Thermal Demand
If a facility requires high quality power or back-up power, such as in the computer/data center or grocery store, respectively, there may already be a requirement for electric generation equipment. Since a significant amount of the cost of a CHP system resides in the purchase, installation, and interconnection of the electrical generation system, if a generator is already available or planned as part of the facility it is easier to cost justify the transformation to a CHP system because only the cost of the thermal recovery equipment would need to be justified. Depending on the facility and the other factors discussed in this section, taking these generation costs out of the CHP financial equation often makes inclusion of the thermal recovery component of CHP more financially attractive.
New Construction or Major Renovation
An obvious potential market is new and facilities that are undergoing major renovation. In these instances, the cost of a CHP system need only be justified based on the cost differential from a more conventional system. This shortens the payback period in which the CHP system will be paid back.
Central Heating/Cooling Facilities
The best candidates for CHP system are those facilities that have central heating and cooling facilities because the infrastructure exists and therefore reduces installation costs.
Longer Term Financial Returns Acceptable
In today's economy, companies are looking for payback periods of 3 years or less. At the current time, the costs of much of the equipment as well as engineering and interconnection costs are likely to result in CHP system payback periods of 4 to 5 years.
Summer Peak Electrical Rates
In areas where the air conditioning load is high and the season is long, CHP systems can be financially more viable than in areas where the weather conditions are more moderate. In areas where high humidity exists, the use of a desiccant dehumidification system to reduce humidity (latent heat load) in combination with an absorption chiller to reduce temperature (sensible heat load) can be a financially attractive when operated off of rejected heat from the electric generation equipment.
High Electric Demand and Peak Energy Usage Charges
The financial attractiveness improves in areas where the electric utilities charge higher summer rates and peak load energy and demand charges. As discussed above, CHP can have a double impact in reducing electric load and associated peak energy charges because the electric demand from the grid is offset by the electric generated on-site and by the electricity not being used to run cooling equipment. CHP systems can significantly reduce the electrical usage during the peak time when demand and energy charges are high, which translates into lower electricity costs. In many areas, the utility charge for "standby demand" (charges for the possibility that the customer may need to use electricity from the utility) can in itself be financially offsetting if onsite generation equipment is not available at peak energy demand times.
