Carbon Emissions Efficiency and Economics of Combined Heat and Power in New Zealand

Abstract

Combined Heat and Power (CHP) or cogeneration, is a common and often cost effective method to maximise the efficiency and utilisation of fossil fuels. Greenhouse Gas (GHG) emissions from the electricity generated using CHP is also an important factor to consider, especially within the framework of emissions reduction and uptake of renewable generation. This paper will present a detailed analysis of the economics of industrial CHP within New Zealand and examine the potential of CHP to contribute to GHG emissions reduction. An emissions factor from electricity generation using CHP is defined based on the marginal efficiency of electricity generation. The economics of CHP in New Zealand can be favourable under certain conditions although the emissions of generation using fossil fuels in all cases was higher than grid purchased electricity, due to high levels of renewable generation. A reduction in emissions can occur in countries that have medium to high Grid Emissions Factors (GEF) such as the US, UK, Australia, India, and China. Countries with GEF less than around 0.2 t_CO2-eq/MW_el would need to utilise biomass to achieve large emissions reductions using CHP.