Micro CHP – Creating Opportunities of a Different Scale

Micro combined heat and power technology, or micro CHP, is on the brink of changing how Canadians power and heat their businesses and homes. Micro CHP technology is based on the same concept as cogeneration, where both heat and electricity are generated using a single fuel – most commonly natural gas. But whereas cogeneration plants have been limited by their size and output to industrial or institutional applications for the past 40 years or so, new technology has created opportunities on a different scale.

“Micro CHP technology is based on the same concept as cogeneration.”

“Micro CHP technology is based on the same concept as cogeneration.”

Over the last decade the number of installed small scale natural gas fueled micro CHP systems has increased in North America driven by low and stable natural gas commodity prices, rising electricity prices and a need for many building owners to have access to reliable on site electricity supply in the event of a power outage.

“It’s becoming more economic in the smaller applications.” says Richard Chan, manager of power market development with Union Gas. “It’s just like buying a car today versus 10 years ago. You get better mileage now because of improved components of the engine, better air mix, that sort of thing.”

“We’re not at the residential level yet, we are targeting the apartment buildings, nursing homes, and commercial applications.”

“We’re not at the residential level yet, we are targeting the apartment buildings, nursing homes, and commercial applications.”

Natural gas-fueled micro CHP models, described as producing 50 kilowatts of power or less, use internal combustion engines or chemical reactive fuel cells to generate electricity and heat. In engine-based models, up to 80 per cent of the energy value of the fuel is converted into heat, with between 10-25 per cent converted into electricity.

Union Gas, which services about 1.2 million customers in Ontario, is targeting small commercial outfits rather than private residences for micro CHP use. Abundant, cheap natural gas in Canada placed against rising electricity prices in Ontario, the country’s most populous province and market, make a good business case for the technology, on a commercial level, Chan says. “We’re not at the residential level yet, we are targeting the apartment buildings, nursing homes, and commercial applications.”

“A micro CHP system sized at 2 kilowatts can meet the electricity demands of a household 85 per cent of the year. “

“A micro CHP system sized at 2 kilowatts can meet the electricity demands of a household 85 per cent of the year. “

A micro CHP system sized at 2 kilowatts can meet the electricity demands of a household 85 per cent of the year. The remaining 15 per cent of the year is peak household electricity demand, typically in the morning and evening, when grid power is needed to compliment the micro CHP unit. An added benefit of micro CHP is that it can lessen the stress on provincial power systems, say proponents. Measuring about a metre high and 70 centimetres by 40 cm wide, they don’t take up much space, and can start up immediately to provide back-up power and heat. So why aren’t more homeowners or even businesses buying into the technology?

The number one hurdle for adaptation of micro CHP in North America is price, says Yoshi Sekihisa, manager, life and energy department of Aisin World Corp. of America. Based in Japan, auto part manufacturer Aisin also manufactures micro CHP units, which are subsidized in the energy-constrained country. Units sell for $12,000 to $13,000 each, with a payback of about two years in the United States, but “if we can get them down to around $6,000, more will be sold.”

Currently the company is tweaking its technology for Canadian/U.S. consumers, boosting electrical output to 2 kW or 2.5 kW from the more modest 1.5 kW demands of Japanese households, where awareness and use of micro CHP technology is more advanced, he says.

“If the unit can be properly configured for the user, it becomes cost-effective.”

“If the unit can be properly configured for the user, it becomes cost-effective.”

Currently, some of the ideal end users for micro CHP include entities like food processors because they use the thermal energy to cook with, or to heat water or air to sanitize equipment, adds Chan.

The hurdle for them is the capital investment, around $40,000 for a 19 kW unit. “Even though the economics make sense – and this is just my take on it – they may not spend money in this area. They would probably spend a million dollars on new machinery that is related to the food processing industry. But this investment is a back shop service rather than a front shop service, so there is usually a reluctance or lack of understanding of spending money in that area.”

Although Union Gas has only installed five micro CHP units in the past two years, and about 200 CHP since 1995, Chan is optimistic it will catch hold in the future; making the technology plug and play, instead of needing special electrical work to connect, will help advance micro CHP, as will the drive for energy efficiency and conservation in higher-priced environments, he predicts.

“Making the technology plug and play, will help advance micro CHP.”

“When micro CHP first came out the price was not attractive. But like any new technology, now it is slowly coming into where the price is more economic.”

In Ontario, another big hurdle for MCHP adoption is net metering legislation, which allows for people who use alternate fuels to feed back into the power grid excess electricity. However, the province does not consider natural gas to be an alternative fuel, just solar, wind and biomass. So the premise of saving money by selling excess power back to the province doesn’t yet work, notes Tim Short, manager of distributed energy market development for Enbridge Gas Distribution.  Enbridge Gas Distribution delivers natural gas to over 2 million customers in Ontario.

“If the unit can be optimally configured for the user, becomes cost-effective, and Ontario’s net metering legislation can be changed, MCHP technology could help customers meet cost, reliability, and efficiency objectives.”

Dina O’Meara is former business writer with the Calgary Herald and is now a communications consultant.