Establishing conditions for the economic viability of fuel cell-based, combined heat and power distributed generation systems

Combined heat and power (CHP), distributed generation (DG) technologies have the potential to provide economic savings to commercial building owners in certain markets, if the system is appropriately configured, sized, and operated. Numerous optimization models exist for determining the design and dispatch of a DG system, and some require a great deal of time and computing power to determine building-market scenarios for which the optimal solution includes the acquisition of CHP technologies. Thus, it is beneficial to identify which scenarios are likely to be economically viable prior to solving an optimization model that determines the lowest-cost system design and dispatch. Accordingly, we derive conditions for the economic viability of a CHP DG technology by comparing the total operational savings afforded by the technology to its total installed cost. We demonstrate these conditions numerically in eight distinct scenarios that include the installation of a fuel cell-based CHP system for various building types and energy markets. Using these scenarios, we examine the energy, emissions, operations and maintenance, and peak demand savings provided by the DG system, and determine which scenarios are likely to result in total savings that exceed the total installed cost. Results indicate that the combination of building type, energy market, and system design and dispatch in a given scenario have a significant impact on the economic viability of the CHP system.