CHP Sizing, Standby Charges, and Thermal Credit
A 500-bed hospital has a base electric load of 1,200 kW and a base thermal load of 4.0 MMBtu/h for 8,000 hours/year. It is considering a 1.5 MW reciprocating CHP unit with a heat rate of 7,000 Btu/kWh and 3.5 MMBtu/h of recoverable heat. Natural gas costs $7.00/MMBtu; purchased electricity is $0.10/kWh; the existing boiler is 80% efficient and uses gas at $9.00/MMBtu. CHP O&M is $0.015/kWh. The utility’s standby tariff charges $8/kW-month on the CHP capacity and requires a 15-minute interruption. The hospital’s peak is 1,800 kW.
1. Calculate the CHP net cost per kWh after thermal credit and the annual savings before and after standby charges.
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Fuel cost per kWh = 7,000 Btu/kWh × $7.00/MMBtu / 1,000,000 Btu/MMBtu = $0.049/kWh. Add O&M $0.015/kWh = $0.064/kWh.
Thermal credit: recoverable heat per kWh = 3.5 MMBtu/h / 1,200 kW = 0.0029167 MMBtu/kWh. Boiler fuel displaced = 0.0029167 / 0.80 = 0.0036458 MMBtu/kWh; at $9.00/MMBtu = $0.03281/kWh. Net CHP cost = $0.064 - $0.03281 = $0.03119/kWh.
Savings versus purchased power = $0.10 - $0.03119 = $0.06881/kWh. Annual output at 1,200 kW × 8,000 h = 9,600,000 kWh; gross savings = $660,576/year.
Standby charge = 1,500 kW × $8/kW-month × 12 = $144,000/year. Net savings = $660,576 - $144,000 = $516,576/year. This is attractive, but the calculation assumes all recoverable heat is used and the unit runs at full electric output for 8,000 h.
2. Is the 1.5 MW unit correctly sized for the hospital? Consider electric load, thermal load, and reliability.
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The unit is oversized relative to the 1,200 kW base electric load. At full output it would export or curtail 300 kW unless the hospital can use it; running at 1,200 kW lowers electric output and changes the heat-to-power ratio. The 3.5 MMBtu/h recoverable heat fits within the 4.0 MMBtu/h base thermal load, so thermal use is plausible, but the unit must follow electric load or thermal load, not both perfectly.
A better size may be near 1,200 kW electric, or a 1.5 MW unit operated at part load with a clear export/standby agreement. Reliability also matters: the standby tariff requires 15-minute interruption capability, so the hospital needs automatic transfer and a plan for CHP outages. If the CHP is the only source during an outage, it must be able to island safely. The 1,800 kW peak means the CHP cannot carry the whole hospital; it is a base-load resource, not full backup.
3. What additional economic and carbon factors could reverse the conclusion?
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Several factors could reverse it. First, the standby charge may apply to total service capacity or include ratchets and reservation charges beyond the simple $8/kW-month; if the utility also charges for exported energy or requires costly interconnection, net savings fall. Second, gas price escalation or a lower electric rate reduces the spark spread. Third, if the hospital cannot use all 3.5 MMBtu/h of heat in summer, the thermal credit shrinks; at zero thermal credit the CHP cost is $0.064/kWh, still below $0.10 but much less attractive.
Carbon: natural gas CHP emits about 53 kg CO2/MMBtu. The annual fuel input is 9.6 million kWh × 7,000 Btu/kWh = 67,200 MMBtu, or roughly 3,560 tCO2. It displaces grid electricity and boiler gas; the net carbon benefit depends on the grid emission factor and boiler efficiency. If the grid is very low-carbon, the carbon case weakens even if the cash case remains positive. O&M escalation and major overhaul costs also need to be included.