Encouraging Combined Heat and Power in California Buildings

Governor Brown's research priorities include an additional 6.5 GW of combined heat and power (CHP) by 2030. As of 2009, roughly 0.25 GW of small natural gas and biogas fired CHP is documented by the Self-Generation Incentive Program (SGIP) database. The SGIP is set to expire, and the anticipated grid de-carbonization based on the development of 20 GW of renewable energy will influence the CHP adoption. Thus, an integrated optimization approach for this analysis was chosen that allows optimizing the adoption of distributed energy resources (DER) such as photovoltaics (PV), CHP, storage technologies, etc. in the California commercial sector from the building owners' perspective. To solve this DER adoption problem the Distributed Energy Resources Customer Adoption Model (DER-CAM), developed by the Lawrence Berkeley National Laboratory and used extensively to address the problem of optimally investing and scheduling DER under multiple settings, has been used. The application of CHP at large industrial sites is well known, and much of its potential is already being realized. Conversely, commercial sector CHP, especially those above 50 to 100 kW peak electricity load, is widely overlooked. In order to analyze the role of DER in CO₂ reduction, 147 representative sites in different climate zones were selected from the California Commercial End Use Survey (CEUS). About 8000 individual optimization runs, with different assumptions for the electric tariffs, natural gas costs, marginal grid CO₂ emissions, and nitrogen oxide treatment costs, SGIP, fuel cell lifetime, fuel cell efficiency, PV installation costs, and payback periods for investments have been performed. The most optimistic CHP potential contribution in this sector in 2020 will be 2.7 GW. However, this result requires a SGIP in 2020, 46% average electric efficiency for fuel cells, a payback period for investments of 10 years, and a CO₂ focused approach of the building owners. In 2030 it will be only 2.5 GW due to the anticipated grid de-carbonization. The 2030 result requires a 60% electric efficiency and 20 year life time for fuel cells, a payback period of 10 years, and a CO₂ minimization strategy of building owners. Finally, the possible CHP potential in 2030 shows a significant variance between 0.2 GW and 2.5 GW, demonstrating the complex interactions between technologies, policies, and customer objectives.