Cogen Economic Benefits

How to assess the economic benefits of cogeneration

There are wide and varied reasons why you would consider cogeneration; such as environmental (eg. Biogas from Organic Waste) or the need for reliable, stable electricity. But whatever your motivation, there will always be the underlying need for it to make economic sense. So how do you work out the economic feasibility of installing a cogeneration power plant?

Benefits of Cogeneration

Some of the benefits of a chp cogeneration system include:

• Power generation
• Thermal energy generation
• Reduced grid demand charges as your peak power demand is reduced
• Power Factor Correction
  – Offsetting the capital cost of stand alone power factor correction equipment
  – Offsetting the mains power cost for reactive power
• Phase balancing
• Backup power supply
• Possible Renewable Energy Certificates for both heat and power produced
• Greenhouse Gas abatement from transmission losses compared with grid power.

Assessing the economic feasibility of Cogeneration

The first step in assessing the economic feasibility of installing a chp cogeneration system is to review your power bill. Check for:

• Peak Power Use and Cost
• Off Peak Power Use and Cost
• Network Charges/Market Charges inc VEET, SRES, LRET, AEMO Charges
• Administration costs

Check to see if your costs are constant with use or affected by demand changes on the network.

Now you need to consider the possible savings you can get to create a return on your investment. Some of these savings will come from:

• Reduced grid power purchases
• Reduced grid reactive power charges
• Reduced grid network changes
• Reduced heating costs
• Rebates and renewable certificates claimable for heat and power
• Reduced or eliminated costs for running backup diesel generator
• When considering these savings, remember to allow for the continued escalation in energy costs and the impact this may have on your business.

Lastly, you need to look at the overall investment cost in installing a cogeneration system. It’s important that you consider not only the initial investment in installing the cogen plant, but also the ongoing maintenance costs.

If you do not want to export excess power but you still have a higher thermal energy demand, simply run the generator in thermal priority mode to produce as much heat as possible with a reduced amount of power. This is made possible in the Inoplex inverter CHP as we have de-coupled engine speed, with power and heating outputs. In this mode, you can produce the maximum heat and minimum power, and optimise your return on the fuel.  We’ve had clients who actually produced heat without any power for months as this is what their business needed.

The Inoplex Cogenerators can have a higher upfront cost than many of our competitors, but the ongoing maintenance costs are kept a lot lower, meaning the total cost of ownership (Investment) is lower over time.

Feel free to contact Inoplex if you’d like help to get a clearer idea of what your return on investment will be. Our team will work through this process with you and then present you with the best cogeneration solution for your business (if viable).