The supply of electricity from the grid incurs various losses – energy wasted through the inefficiencies of the generator and distribution infrastructure. Additionally, power stations and distribution networks are expensive to build and operate. These facts all lead to electricity costing significantly more per kWh than the fuel used to create it. One way for businesses and homes to avoid some of these costs is to generate the electricity on site. Given that many of these sites already use mains gas to provide heating, it can make sense to use the same energy source to generate electricity as well. The main problem with this idea is that a small-scale electricity generator fueled by mains gas can waste as much as 70-80% of the energy input in the form of heat, so for every 3-4 kWh of gas burned, only 1kWh of electricity is generated. This would mean that the cost of generating the electricity would be almost the same as if it was simply imported from the grid.
The key to improving this situation is to make use of the wasted heat. If a site already uses gas for hot water, space or process heating, the waste heat can be put to good use, reducing the gas burned elsewhere. This can mean that overall, a gas powered generator can be 90% efficient, making the electricity generated far more cost effective. Such a setup is known as combined heat and power, or CHP. The technology comes in various forms and can use a variety of fuel sources. The key to maximizing the savings from such a system is to have a consistent need for heat as well as electricity year-round. Sites that are well suited to CHP therefore include hospitals, hotels, swimming pools and some industrial processes. A CHP system can be combined with conventional boilers so that peaks in heat demand can be met without oversizing the generator. Large systems can be setup to provide power and heat to a network of buildings, and absorption chillers can be added so that the system can provide cooling as well as heating.
As CHP systems generally rely on combustion to generate power, they emit CO2 in the process. Where gas is the fuel source, they are not a renewable energy system and are only an improvement on grid electricity in terms of greenhouse gases as long as the grid also relies primarily on fossil fuels. As more renewables, such as solar and wind, replace fossil fuels for grid supplied electricity, gas fired CHP will become less attractive as a source of low carbon energy. Other fuel types are sometimes used which are considered to be lower carbon options. These include biomass, biogas, municipal waste and hydrogen fuel cells. In any of these cases, there is a great amount of detail to consider in order to understand their real environmental impacts, including how cleanly the fuel burns, how far the fuel has to be transported to site, how much processing is involved in preparing the fuel, to name just a few.
Economic viability of a CHP scheme will depend not only on the capital investment required but also on maintenance costs, the availability and price stability of the fuel over time and the whether or not any grants or incentives are available. There may also be planning restrictions, local emissions regulations, grid limitations and local opposition to any large-scale schemes which can add further complication and cost. It is therefore worth seeking independent expert advice at the earliest stages of any proposed CHP project.