A type of emerging technology (that has been around for much longer than many think) that’s gaining attention and weight in the energy sector, in no part thanks to the varied advantages it has in terms of sustainability and efficiency, is cogeneration.
Our article below will cover what cogeneration is, the benefits it can bring to energy efficiency, sustainable energy contributions, and where it might land in the future of energy and what we can do to help further renewable and sustainable energy in the future.
Cogeneration or CHP as it’s known in abbreviated form, can help save businesses money, leave a much lesser environmental footprint, and can cause much less stress overall as the cost and uncertainty of transporting energy from a distance to run several machines, can all be done in one place locally, all at once – while the upfront costs can be high, the overall benefits can make it back in the long run. This, of course, depends on a variety of factors that we will cover in this article below, including what a cogeneration plant is, the benefits, disadvantages, and more.
What is a cogeneration plant?
At its simplest definition, cogeneration is a process where both electricity and heat are produced simultaneously using a single primary energy source, instead of having to utilize more energy than is necessary to function without wasting resources, time, and sources that could be better utilized. It reduces losses and increases the overall efficiency of the energy system.
Cogeneration is an approach that ideally allows for maximum energy utilization, and this extends outwards from large industrial sectors to smaller constructs such as greenhouses that can also benefit from CHP systems. Historically speaking, cogeneration was solely for large industrial facilities, and they were the only ones considered to use it. Most CHP systems in use today in Canada were implemented by large industrial facilities during the late 1980’s through into the early 2000’s – Today’s markets are a very different beast, as a much wider range of industries are starting to adopt cogeneration systems, including smaller commercial facilities instead of simply large ones such as paper mills or the oil sands. Many reasons behind this shift are due to the various benefits associated with CHP systems, but there are, of course, more factors at play as well.
Installation and design are much simpler and easier to maintain than they were decades ago, and standardized CHP systems are now available, eliminating time, effort, stress, and everything else that is generally involved with setting up a new cogeneration plant. It’s become a much easier process for even smaller commercial businesses.
Is cogeneration renewable energy?
Cogeneration energy may or may not be renewable energy, based on the fuel that it’s using in any particular instance, as the energy used for cogeneration may be renewable itself. However, even when fossil fuels are being utilized, such as natural gas, cogeneration exceeds the efficiency of conventional energy production and, in many cases, far exceeds the regular use of one type of energy alone.
Does cogeneration increase energy efficiency?
Cogeneration is more efficient due to the levels of fuel being used, and the systems can improve the overall efficiency of energy usage by combining the production of heat and electric energy in a single generator, instead of only using one type each for every system. It reduces energy costs and lowers emissions.
In cogeneration, only around 8% of fuel is lost to the process, and the fuel used is 92%. Comparing this to traditional methods, only around 40% of fuel is being utilized properly, and it suffers around 60% losses. The more losses, of course, the less efficiency when it comes to using fuels.
Can cogeneration make a business more sustainable?
At its core, cogeneration plays a fundamental role in promoting and utilizing sustainable energy, and in turn, sustainable businesses and business practices. Reduction of greenhouse gas emissions by using waste heat for other useful purposes, cogeneration reduces the need to use fossil fuels for building heating or industrial processes. It’s an effective way to meet the demands of environmental regulations and enables businesses to operate more sustainably, while also saving money in the long run by way of maintenance, ease of use, and overall efficiency by cutting losses.
Pros and cons of cogeneration: advantages and challenges
The pros and cons of cogeneration do depend on a variety of factors, but overall, they stay the same, as certain qualities will always lean one way or the other.
Pros of cogeneration are:
- Energy autonomy: the ability to use different energy sources to produce electricity and thermal energy, which will reduce dependence on external energy sources.
- Supply security: Providing a stable energy base to the electrical grid and allowing the adaptation of the supply to market needs will provide electrical stability to associated industries.
- Cost reductions: By increasing efficiency, companies and businesses will reduce their own energy bills, and overall, it will become more competitive, in a similar way that citizens can reduce their energy consumption and improve their quality of life – so can cogeneration for companies, but on a much larger scale.
- Improved energy efficiency: Cogeneration as a technology saves 14 million barrels of oil per year. It also brings greater performance values, less consumption, and far fewer emissions. All of these can save money in the long run, while also improving efficiency and workloads.
- Reduction of losses and distributed generation: Since cogeneration itself is being generated at the production center/level, it doesn’t have to be transported, meaning it avoids all electrical losses and inefficiencies that otherwise come up with needing to transport energy around.
- Boosting innovations: cogeneration of energy acts as a driving force for future investments, economic development, and job creation.
The disadvantages or cons of cogeneration will depend on a few factors, but many of which share a similar tone.
Disadvantages/Cons of cogeneration are as follows:
- Installation costs and challenges: The installation of a CHP (combined heat and power/cogeneration) requires a large upfront capital investment and requires a large space for the cogeneration ‘energy center’ area. This can be limiting for areas that don’t have a lot of space, such as countries like the UK, especially when compared to Canada and the usable space we have.
- Large diameter, heavily insulated metal piping for the hot water network.
- Heat losses to the ground can be a suffering point.
- Set up costs to administer and run the central energy center over the entirety of the system’s life.
- Set up costs to run an accounting system to charge tenants and collect substantial fees each quarter.
- Risks that clients may not want to sign longer-term heat contracts.
- Risks are that if some clients fail to meet any obligations, others may need to contribute more to even out the issues.
- Many modern buildings will need cooling, along with heating.
- Heat generated in the summer months may go more towards waste than being used.
- It’s not practical to scale the cogeneration system to meet changes in demand or to expand the network.
- Combustion within cities can be a cause for air pollution if it’s too close to large cities.
Who is cogeneration designed for, and who benefits from cogeneration?
While cogeneration has always been linked to large industrial processes and businesses, which is where it can make the most impact, a lot of heat is required in their transformations or heat-intensive food, chemical, or even ceramics industries as examples – the installation on a smaller scale has allowed its use in urban centers that have a high demand for thermal energy, such as residential buildings, sports centers, heated swimming pool, hospitals, and housing blocks – just to name a few.
Everyone will benefit from cogeneration, and that isn’t an exaggeration. From the industrial businesses side, to the health and well-being of everyday citizens going about their day, cogeneration can have a large hand in how energy is processed. Improved energy efficiency, cost reductions, supply security, energy autonomy, and boosting innovations are a few of the benefits that can come from switching to cogeneration for companies.
The status of cogeneration in Canada
Canada has many cogeneration plants, some have been in working order since the early 1990s. Across the country, we benefit from having large spaces and large industrial businesses that benefit from adopting cogeneration, including being able to generate their own power, which eases stress and costs, especially during bouts of bad weather or during the winter, as examples.
Examples of cogeneration plants in Canada
Cogeneration plants in Canada do already exist, such as the Bear Creek Cogeneration Plant, which is a great example of how power innovation can benefit communities and benefit industry and value for shareholders. The plant produces up to 100 megawatts of electricity for both Weyerhaeuser’s Grande Prairie Pulp and Sawmill, and Alberta’s competitive energy market as well.
It is an industrial cogeneration plant situated on the International Paper Grande Prairie pulp mill and International Saw Mill complex. The power plant itself is configured around a 58 megawatt (MW) natural gas turbine. Bear Creek imports biomass-derived steam from the pulp mill to augment its power output, enabling International Paper to significantly reduce the amount of wood waste that gets sent to the landfill, while keeping its energy efficiency and costs lower.
How much power does the Bear Creek Cogeneration Plant produce, and how does it work?
Bear Creek Plant has a capacity of up to 100 megawatts of electricity and 75 tonnes per hour of steam. The steam is recaptured and used as part of the power generation process. It uses a combination of clean-burning natural gas and wood waste to power its turbine. Another perk of cogeneration is that otherwise, all of the wood waste would be sent to a landfill to take up space and not be used.
The cogeneration plant is configured around a single 58 MW natural gas-fired Rolls-Royce Trent gas turbine generator equipped with a wet low-emissions system. The turbine exhaust passed through a heat recovery steam generator to produce high-pressure and low-pressure superheated steam. That steam combines with steam from International Paper’s wood waste-fired boiler to power a 32 MW condensing steam turbine generator.
TransAlta has 17 natural gas-fired cogeneration facilities in its fleet, generating 2,775 MW of energy. They leverage decades of experience and industry-leading expertise in providing innovative, reliable, and cost-effective energy solutions. The power and steam from their cogeneration plants are delivered to customers in various industries, including but not limited to mining, petrochemical, automotive, fintech, hospitals, district energy systems, local electricity utilities, and oil & gas.
They create customized on-site cogeneration solutions to reduce transmission, distribution, power, steam costs, and carbon footprints. TransAlta works through a long-term power purchase agreement (PPA) contract, and they will develop, own, operate, and maintain a new behind-the-fence cogeneration plant collocated with companies’ industrial facilities. The PPA provides operations with an offtake of the steam and power generated by the facility at a fixed price. Their renewable developments bring clean energy to communities, businesses, and industries. They’re responsible for reducing annual emissions by 29 million tonnes from 2005 levels. This is the equivalent of planting 80 million trees or taking 660,000 cars off the road. They are also one of Canada’s largest publicly traded power generators.
Examples of cogeneration plants in Alberta
Alberta has a fair number of cogeneration plants, and it has the most capacity in the country. Alberta has 32 industrial cogeneration facilities with an installed electric capacity of 4,528 MW, and of that total, 3,343 MW is used in the oil sands. 942 MW is used in petrochemical operations, and 243 MW is used by utilities and other operations across the province. As oil sands production increased in 2015, so did the cogeneration electric capacity from 1,813 MW as early as back in the year 2000 to 4,528 MW in 2015. The numbers since then have risen even more upwards to above 5,353 since 2023, as expected by AESO.
What should large consumers consider when it comes to cogeneration?
When it comes to considering cogeneration for large consumers and industries, there are a few notes that should be taken into account, such as space available, upkeep, upfront costs, and other important factors that may not be thought of right off the bat, such as initial investments vs savings in the long term, rebates that may be available, financing options in case the cost may be too much for your business upfront or even more. This section will help cover a few questions that should be considered.
Benefits for industries for cogeneration can and do include extremely high utilization rates, independent production of economical and eco-friendly electricity, increased energy and supply security thanks to decentralized power production, enhanced added value and competitiveness, and investments eligible for subsidies according to available policies (when they are available)
Initial investment vs long-term savings
The initial investment vs the long-term savings are a major factor in the debate about cogeneration. Setting up and installing the turbine, the large area needed for everything necessary, and the costs can be under thought out.
In the long term, savings can and have been shown to be worth the initial costs, especially in Canada, where cogeneration can thrive, as natural resources and space for cogeneration plants and generators can easily fit into industrial factories and setups, even ones that have already been established. Initial investments are pricey, but there are rebates and financial planning available depending on a variety of factors for any businesses that are willing to invest and look into the options available to them.
Incentives and rebates
Incentives and rebates for cogeneration plants and setups are available, depending on the province and other factors such as what kind of cogeneration the industry needs or what type of plant needs to be built, along with the size of space needed and where. Alberta, for example, or other provinces that are less densely populated but still have a lot of other industries, such as paper mills and the oil sands, highly benefit from cogeneration.
Energy price volatility
A major benefit of using cogeneration is that the worry and stress of basic energy costs and volatility is reduced by a significant margin, since the energy produced by the cogeneration turbines is reused in the industry they’re set up. Since energy won’t need to be transported from elsewhere or be dependent on the market or electrical grid, which are otherwise expensive, especially in such a volatile market and time.
Natural gas, electricity, heating oil, etc., are all the most volatile in price compared to other commodities. Substituting other fuels and transporting them is difficult, but with a cogeneration plant, businesses can use their own generated energy and benefit highly from that alone, not having to worry about the constantly fluctuating market, and can instead focus on their own generation.
Financing options
Financing options are heavily dependent on the province, municipalities, and what is available as the market changes, dependent on Federal and provincial laws across the country in Canada.
Understand your industrial energy options
If you are a large business or industrial energy consumer that is interested in learning more about cogeneration, its benefits, VPPAs (Virtual Power Purchase Agreements), commercial electricity or natural gas, and other related subjects that you may be curious about – EnergyRates.ca can help parse through the myriad of information that’s available online, in concise and easy to follow energy guidance.
