Modeling the Impact of Flexible CHP on the Future Electric Grid In California

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Abstract

Combined heat and power (CHP) systems provide electricity and process heat at more than 4,400 industrial and commercial facilities across the United States. Typically fueled with natural gas, a CHP system combines a prime mover (such as a reciprocating engine) with a generator and heat recovery equipment, allowing operation at very high efficiencies (65–85%). Traditionally, CHP systems have been configured to serve local electrical and thermal loads at the sites where they are deployed. Units are sized to ensure a high capacity factor for the equipment, and the electricity generated tends to be used on site. CHP units in the United States already generate over 12% of the nation’s electricity. However, CHP’s potential benefits could be much greater if power generated could be used beyond the site, because the analysis was performed under the assumption that sites could use all the thermal output. Analysis of a few key sectors confirmed that this assumption is valid (for more information, see Appendix E). Those benefits could include improved grid reliability and resilience, as well as lower-cost options for providing energy and other grid services. The potential benefits also align well with grid modernization objectives, as shown in Combined heat and power (CHP) systems provide electricity and process heat at more than 4,400 industrial and commercial facilities across the United States., and greater electrification of loads, driven by carbon reduction priorities.

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