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Subsections

COGENERATION

Introduction

Cogeneration is a field of growing interest in the energy conscious climate prevalent in today's industry. It can satisfy both electrical and process heat needs of a plant. A plentiful supply of natural gas combined with a decreasing cost of small gas powered electric generators has made it possible for small industries to produce power at a cost comparable to local utilities, and since the thermal energy normally disposed of in the production of power is captured and used, energy utilization efficiencies of 80% are attainable.1 In particular, hospitals, prisons, and universities are ideally suited for small to medium sized cogeneration systems.2

The most basic definition of cogeneration is the generation of power and the recovery of the remaining thermal energy from a single prime mover.3 Obviously there are a number of ways this can be accomplished. The most often encountered are a gas turbine generator or reciprocating engine generator coupled with a waste heat recovery boiler, or a steam boiler coupled with a steam turbine generator. The main difference between the two types of systems is the order in which the electricity is obtained. The gas turbine and reciprocating engine produce electricity first, then the hot exhaust gases are sent to the waste heat boiler to generate steam, a process known as a topping cycle. When a boiler produces steam first, then some (or all) of that steam is sent to a steam turbine to generate electricity, the process is considered a bottoming cycle.4

Depending upon the nature of the installation using these cogeneration systems, each has its advantages. The gas turbine and reciprocating engine systems are much better for new installations. The amount of power produced for a given heat demand is superior to that of the boiler/steam turbine system. For retrofit applications, where a boiler is already installed and running, the steam turbine may be ideally suited. Many installations generate steam at a higher pressure than necessary then throttle the steam to a lower pressure before sending it to process. Replacing the pressure reducing valve with a steam turbine recovers the energy wasted in the throttling process and converts it to electricity. And, since steam turbines are relatively inexpensive, the first cost is minimal.

Federal Legislation

It is only in the past several decades that cogeneration has gained popularity. Since utility companies have been forced through legislation to favorably deal with facilities that generate their own power, cogeneration has become ever more attractive. The Federal Energy Regulatory Commission (FERC) has acted to establish rules and guidelines for the development of a cogeneration facility. If these guidelines are satisfied, the facility qualifies for protection under the Public Utilities Regulatory Policies Act (PURPA) passed in 1978. Specifically, PURPA mandates the nondiscriminatory purchase of electricity from all cogenerating facilities. Additionally, it requires utilities to purchase all excess electricity at the "avoided" cost of the utility. The avoided cost could include not only the fuel cost and capital cost incurred in generating electricity, but also the cost offset by eliminating the need to increase the utility's electrical capacity. All of these costs are not universally included in the avoided cost, and the qualifications governing inclusion of each one is often left to the energy commissions of the states to determine.6

The oncoming process of electric utility industry deregulation will cause a period of uncertainty in the cogeneration field. Figure 1 shows a random sampling from around the country of the average retail rates in the electric utility industry for 1995. The extreme disparity in the rates shows to some extent the need for deregulation in the industry and the driving force behind industrial cogeneration. But the difficulties arising from dealing with a deregulated utility industry will greatly complicate the task of forecasting future prices of electricity, making any economic analysis of a cogeneration system extremely difficult. Both the buying and selling prices of electricity will be affected, because not only will an electrical consumer be able to contract for the purchase of electricity at the best possible price, it will also be able to contract for the sale of electricity at the best possible price. When performing an economic study to determine the feasibility of a cogeneration system, conservative estimates for all assumed quantities should be used to minimize the effects of market fluctuations.

Figure 1 - Average 1995 retail electric rates.5