Economics of Cogeneration A Study
by Larry Coyne, P.Eng.
Technology Directorate
Architectural & Engineering Services
Real Property Services
Public Works and Government Services Canada
March 22, 1999
Economics of Cogeneration
Introduction
Cogeneration is the sequential production of two or more forms of useful energy from a single heat source. Waste is recovered and converted into hot water or steam to meet building or process heating or cooling requirements. The high efficiencies of these components, combined with the use of a low cost fuel, result in significant energy cost savings. Cogeneration sites stabilize energy costs by producing much of their own electricity, thereby shielding users from the potential volatility of the electricity market.
The traditional economic argument outlined above accounts only
for direct project costs during project evaluation. Society and
the environment are left to cope with the physical and financial
effects of by-product emissions. Acid gases (NO´, SO´,
and particulate matter) and its global warming counterpart, greenhouse
gas (CO2 and CH4), comprise a significant portion of process by-products,
each detrimental to the environment. The effectiveness of energy-efficiency
as a means of reducing acid and greenhouse gas emissions can be
increased dramatically when monetary allowance is made for the
actions of the waste streams.
By 2000, most provinces in Canada will have deregulated their electricity industries. When gas and electricity were deregulated in the United States, Australia and Britain, industrial customers were offered savings of up to 20% in the early stages; average actual savings, however, were about 12%.