This study showed that more diversified thermal demand profiles result in lower utility savings and longer simple pay back periods. This means that the smaller the standard deviation, the better the economic characteristics of the system. This makes sense because for a more widely varying thermal load, the cogenerator runtime per year is less. The break-even point for economically running the cogenerator was found to be $0.0116/kW-hr. Therefore, as long as electricity costs more than that, it is profitable to run the cogenerator. When the cogenerator runtime is decreased, costly equipment sits idle when it could have been producing savings.
Large athletic clubs would benefit economically from implementing new cogeneration technology. Taking the Athletic Club Northeast in particular, three 28-kW micro-turbine generators with exhaust heat recovery would satisfy over 95% of their water heating needs, and supplement their electrical needs. Producing some of their own electricity decreases the amount of electricity purchased, thereby decreasing the electricity costs. At the same time, the environment would benefit from the decrease in carbon dioxide emissions.
The simple pay back periods for cogeneration systems in the facility studied consisting of one, two, three and four turbines were found to be 6.4, 6.4, 6.8 and 7.4 years, respectively. However, it was also found that a system consisting of only one or two turbines would not satisfy a significant portion of this facility’s hot water demand. The thermal output of a four-turbine system far exceeds the thermal demand and would be redundant. It appears the best economic tradeoff for this facility to use three 28-kW micro-turbine generators.
By implementing a cogeneration system, the facility does not need to purchase as much electricity. Because of the way Georgia Power’s electric rate structure is set up, this results in an effective increase of the average cost of the electricity purchased by the facility. The peak demand of the purchased electricity is lowered, but not as much as the average usage is lowered. The electric rate structure favors larger high load factor electricity purchase. The more electricity is purchased, the cheaper it becomes. However, the facility saves so much on electricity by running the cogenerator, even though what they do purchase has a higher average rate, the benefits of the cogeneration system more than compensate for the increase in the amount of natural gas purchased from running it instead of the water heaters. The fuel cost for the on-site generated electricity is only $0.0124 per kW-hr while the avoided electricity purchased would have cost $0.0667 per kW-hr.
This analysis also demonstrated that carbon emissions reduction could be profitable when accomplished by means of new technologies, such as small gas turbines. In the United States, 55.74% of electric power generation is fueled by coal, which emits 57 lb C/MBtu whereas natural gas only emits 32 lb C/MBtu. Further, utilities waste energy at a central site by rejecting the thermal energy in the exhaust to their surroundings. Reducing carbon emissions by means of cogeneration results in a profit of $146.51 per ton if the system lasts 20 years. The profit is higher if the system life is longer. It is much better for economics, for fuel resource conservation and for global warming control to decentralize power generation.
It is also interesting to note that during the time of this study, the cost of small gas turbines went down. This probably is representative of future trends in industry. As time goes by and the cost of a small gas turbine decreases, the economic benefits of the cogeneration system will continue to improve.
The economic benefits of the cogeneration system would also be better in places where the cost of electricity is higher, such as New York and California. Facilities in those areas would definitely profit from cogeneration technology.