Current Status of Residential Cogeneration

November 01, 2009
November/December 2009
A version of this article appears in the November/December 2009 issue of Home Energy Magazine.
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Almost all of our electricity is produced by large centralized power plants that supply power to the electric grid. Only one-third of the fuel energy supplied to these coal and natural gas power plants is delivered to homes and businesses as electricity. The remaining two-thirds is discharged as waste heat into the environment.

A number of commercial industries have had their own power plants installed on-site so that they can utilize this waste heat while providing their own electricity. These combined heat and power cogeneration plants have an overall efficiency of up to 90% as compared to 33% for conventional centralized power plants, resulting in enormous energy savings. These on-site industrial cogeneration plants are so successful that they currently supply 7% of the power in the United States—far more than all the power produced by all of the renewable solar and wind systems combined.

In 1988, the Gas Research Institute, working with the Kohler Engine Generator Company, developed a natural gas-fueled residential cogeneration system that produced 5 kW of electricity and 45,500 Btu per hour of heat, for an overall efficiency of up to 90%. This showed that the technology could be scaled down for single-family homes, thereby slashing energy costs for homeowners.

Several states have developed a much more attractive buyback tariff for residential cogeneration homeowners.These homeowners are paid a higher rate than those in other states for excess power that is sold back to the utility.
Approximately six years ago, the Honda Company developed a microcogeneration system called Ecowill for the relatively small Japanese homes. The Ecowill unit produced 1.2 kW of electricity and 12,500 Btu per hour of heat from natural gas. Both the Japanese natural gas industry and the Japanese government supported the program. As a result, over 80,000 of these units have been installed in Japan.

In 2007, Honda, working in partnership with the Climate Energy Company of Medfield, Massachusetts, introduced a modified version into the U.S. market under the brand name Freewatt. Unfortunately, a number of factors, including lack of support from the government, the collapse of the new-home construction industry, and the lack of strong support from the electric utilities, have hindered the sale of the Freewatt system. In addition, it appears that the 1.2kW system is undersized for large American homes, since it typically reduces electric utility bills by less than $1,000 per year. If a 2.5kW residential cogeneration system were used on these large homes, the savings would more than double to $2,000 per year. A typical large New England home uses approximately 10,000 kWh per year. At a current rate of $0.21/kWh, this is equivalent to $2,100 per year. In locations where net metering is available, utilities are required to credit consumers at the same price they would have charged during that period.

A potential alternative to the Freewatt system is the higher capacity 4.7kW Marathon Ecopower MicroCHP system. More than 2,000 of these systems have been installed in Europe. The Ecopower system is manufactured by the Marathon Engine Systems Company of East Troy, Wisconsin. Using current electric and natural gas rates, (namely, $1.57 per therm of natural gas and $0.21/kWh for electricity), the savings per year on a 2,500 ft2 home with a 10,000 kWh annual load in the Boston suburbs would be $2,700.

German microcogeneration manufacturer Senertec has produced and installed more than 10,000 of its own units in residential and commercial buildings in Europe. The Senertec system has an overall efficiency of approximately 90%. It uses a natural gas-fueled internal combustion engine to produce 5.5 kW of electricity and 42,650 Btu per hour of heat. Through the combined production of heat and electricity, these units reduce electricity costs significantly, and they emit less greenhouse gas than coal-fired power plants. Senertec believes that the European market may be as big as several million installed units. Senertec has postponed entering this country until the U.S. residential market recovers and stimulus money is released for the renewable and alternative energy industries.

In most states, these residential cogeneration systems are classified under decentralized distributed energy. As such, they sell excess power back to electric utilities under the Net Metering program, which is in place in most states, at the same rate that the utility charges the homeowner for electricity. Excess power exported to the grid causes the electric meter to run backward. Under the net metering regulations, the homeowner receives a credit instead of cash for power sold back to the utility. In a few programs, the utility also sends the homeowner a check.

Several states have developed a much more attractive buyback tariff for residential cogeneration homeowners. These homeowners are paid a higher rate than those in other states for excess power that is sold back to the utility. This program, known as Feed-In Tariff (FIT) was initially developed to offset the very high costs associated with the installation of renewable energy solar and wind systems at residential sites. For example, Gainesville, Florida has implemented a FIT program for solar power that pays double the retail price for excess power. One Gainesville resident has installed a large system that brings in almost $15,000 per year.

FIT programs have also been initiated in California. In 2008 the California Public Utilities Commission passed a law (AB1613) that requires utilities to file a tariff (FIT) with the California Public Utilities Commission (CPUC) for CHP units meeting certain requirements, such as begin operation after January 1, 2008, sizes to meet on-site customer thermal load, and meet certain efficiency standards.

This law includes residential cogeneration units that meet certain efficiency and nitrogen oxide reduction standards, and that can be sized to meet customer generators’ on-site thermal demands. This allows customers to install higher-capacity cogeneration systems, since the thermal energy can be used for heating or cooling, provided the system is fueled from a single natural gas fuel input. This law would, for example, allow a homeowner to have a 20kW residential cogeneration system that could produce and sell power to the grid on an almost continuous basis, since the system would supply approximately 4,000 hours of heat per winter season and several thousand hours of heat per summer season for absorption A/C.

According to a recent feature article in the Wall Street Journal, a massive natural gas discovery in northern Louisiana heralds a big shift in the nation’s energy landscape. “After an era of declining production, the U.S. is now swimming in natural gas … Huge new fields also have been found in Texas, Arkansas and Pennsylvania …One industry-backed study estimates the U.S. has more than 2,200 trillion cubic feet of gas waiting to be pumped, enough to satisfy nearly 100 years of current U.S. natural gas demand.” In addition, the June 11, 2009 Marketwatch, article entitled “Exxon Mobil Confirms Role in TransCanada Pipeline,” Exxon Mobil has said that it will join an estimated $26 billion pipeline by TransCanada to bring natural gas from the North Slope of Alaska to the continental United States. Exxon Mobil is also spending $100 million on a plant to demonstrate its technology for removing C02 gases from natural gas.

It follows, then, that natural gas prices are likely to decline, since this new huge supply  will significantly exceed the demand for many years, thereby making residential cogeneration systems even more attractive. In a recent report on the natural gas act, T. Boone Pickens states, “What’s also amazing about natural gas is that our country’s reserves are not just in traditional energy states such as Oklahoma, Texas, and Alaska, but rather they’re spread out from coast to coast. You’d be surprised to learn what sort of production comes out of Kansas, Pennsylvania, Michigan, and Alabama. Recent research shows that these deposits have more than 100 years worth of natural gas—right here in America. Also, the United States has more natural gas than Saudi Arabia has oil.”

The future of home energy supply for at least the next five to ten years will, in many cases, include residential cogeneration systems that provide both heat and power in a cost-effective and environmentally friendly manner. High overall efficiency and low emissions are the major benefits that homeowners will derive from these systems. 

Nicholas Christopher is a registered professional electrical engineer with 24 years of experience in all aspects of remote power generation and distribution. He worked on the most respected handbook for Third World Remote Telecommunications Power Systems (“International Telecommunications Union Primary Sources Of Energy And Their Conversion” [Gas 4 Manual], Geneva, Switzerland), and has held other important leadership roles within the industry. 

For more information:
Pickens, T. Boone. “From the desk of T. Boone Pickens” e-mailed to his army dated July 31, 2009.
Wall Street Journal, “U.S. Gas Fields Go from Bust to Boom,” April 30, 2009.  
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