Monday, November 20, 2006

Time to invest in micro CHP?

Maybe. But first it would be nice to know what it is.

CHP is "combined heat and power". It's really old news in industrial settings that use a lot of heat and power, but the typical implementations require lots of capital, space and skilled attention. And the proportions of heat and power are essentially fixed - one or the other will be either supplemented or wasted to match the actual demands.

Micro-CHP is an prepackaged implementation, like an appliance, designed for residential application. See this for an example.

Why buy it? You can generate your own heat and power for prices comparable to that for heat alone using readily available gas. And although the systems are not available yet, around 2007 they should be available as residential backup power systems.

Drawbacks: capital costs mean you'll wait a while for your full payback. And it still uses fossil fuels.

Electric utilities have mixed emotions about these devices. To understand why it helps to recognize a couple of things about the power business.

It's the peaks in load that are expensive to service - power generating companies must have the capacity to service it yet they can only use this capacity at peaks, which means high costs. Imagine if you could get by with a Beetle 99% of the time, but the rest of the time you might have to drive into a swamp or need to travel over 100 MPH, so you had to have a Land Rover and a Maserati on standby. It might be fun, but it's not something you make money with.

And these higher costs can be exacerbated when power distribution companies are forced to bid against each other for power during the very highest peaks. In severe cases businesses will shut down deliberately to reduce load, which of course is an economic hit to the business and community. At the worst there will be blackouts when utilities find themselves incapable of delivering power.

In short, electric utilities want to mitigate peak demands when they can. Micro-CHP can help if the peak demand is in heating season.

In cooling season? The heat must be rejected somewhere, which both adds capital costs and reduces the usable energy output for a given input. Under exceptional circumstances this might be worthwhile, but I wouldn't expect much of this.

Anyway, this might be the Next Big Thing, if only for the kind of people who like to buy hybrid cars nowadays. And it shows potential to do much more. Check out more here.

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