LV-11-029 -- Fuel and CO2 Emissions Savings Calculation Methodology for Combined Heat and Power (CHP) Systems

Combined heat and power (CHP) is an efficient and clean method of providing energy services at the point of use. Instead of purchasing electricity from the local utility and burning fuel in an on-site furnace or boiler to produce needed thermal energy, an industrial or commercial user can use CHP to provide both energy services in one energy-efficient step. Consequently, CHP can provide significant energy efficiency and environmental advantages over separate heat and power.
It is becoming increasingly critical that a common approach be established to estimate the fuel and CO₂ emissions savings of CHP. This approach will need to recognize both outputs of the CHP system, and be able to compare the fuel use and emissions of the CHP system to the fuel use and emissions that would have normally occurred in providing energy services to the site through separate heat and power.
A key factor in estimating the energy and CO₂ emissions savings for CHP is determining the nature of the avoided central station generation. Should the calculation of the displaced energy and CO₂ emissions be based on the all-generation average of the region the facility is located in, the allfossil average, the average for some specific fuel type, an estimate of marginal generation, or a projection of future installed generation?
This paper provides a suggested methodology for calculating fuel and CO₂ emissions savings from CHP, and develops recommendations on the appropriate nature of avoided central station generation and the level of regional aggregation for accurate estimates of energy and emissions savings. The methodology for calculating fuel savings is consistent with and equivalent to the calculation of primary energy savings (PES) included in the European Union Cogeneration Directive (EU 2004).