Page 175 - Sustainable On-Site CHP Systems Design, Construction, and Operations

148 T h e Fe a s i b i l i t y S t u d y

mid-peak, and on-peak periods. Proper TOU price information allows consumers
to defer energy use until costs are lower. TOU rates are fixed in advance usually
at the time of signing the contract, and are not subject to change during the
contracted period.
• Real-time pricing (RTP). RTP allows rate changes on an instantaneous basis.
Real-time pricing requires both a meter that reads electricity consumption on a
periodic basis (such as hourly), and a pricing structure which correlates that
wholesale electricity cost during the time period in which the meter is read. RTP
allows utility providers to charge more during on-peak periods, the times of the
day when their demand and cost to generate is greatest—and less during off-
peak periods when their demand and costs to generate is lower. RTP provides
consumers an incentive to minimize energy demand during on-peak periods.
Consumers would gain operating savings by shifting consumption from time
periods with high wholesale prices to time periods with low wholesale price.

While energy costs will vary for different locations and utility providers, typical
costs may include some or all of the following:
• Electric energy costs. Portions of this cost may include the generation costs,
distribution costs, taxes and fees, and are billed on a cost per kilowatt basis.
• Electric power costs (demand charges). Portions of this cost may include generation
costs, distribution costs, taxes, and fees, and are billed on a cost per kilowatt
basis, usually for the highest demand in a billing period.
• Standby charges. Some electrical utilities will charge an interconnected facility a
standby charge to guarantee electrical power capacity equal to the installed
capacity of the CHP plant.
• Natural gas or fuel oil charges. Sometimes a special “cogen rate” can be obtained,
or direct contracts can be negotiated independent of the local utility as a result
the quantity of fuel being purchased over an extended time period.

Fuel costs often vary regularly with the market and many CHP plants will contract
a mix of real-time pricing, and short- and long-term (futures) contracts to try to keep
fuel costs as low as possible.
As discussed in Chap. 8, in order to estimate the energy costs, one must first esti-
mate the energy usage. The first step in this process is having a clear understanding of
the facility energy usage profiles. Depending on the detail level of the analysis, one may
look at energy usage anywhere from an annual average to detailed, hour-by-hour usage
for the entire year. Energy usage profiles that are considered in analyzing a CHP plant
are electric usage, thermal usage (e.g., heating, domestic hot water production), and
cooling usage. The interaction of these energy usages determines how the facility will
have its energy needs met under the BAU case, as well as under each of the CHP alter-
natives being considered. Once the energy usage is determined costs can be assigned to
each component of energy used (or saved).
Methods of estimating energy usage and costs may be as simple as looking at
detailed facility data to developing models using purpose-specific modeling programs
or building spreadsheet models. As discussed in Chap. 8 several commercially available
software programs are quite adept at estimating energy usage of many types of CHP
applications. Advantages to software models are ease of use, repeatability, and presumed