The Importance of Heat in the Energy Efficient Microgrid

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energy efficient microgrid

Credit: Hinode JAXA/NASA

The following is an excerpt from new our report, The Energy Efficient Microgrid.

It can be difficult for microgrids to compete on cost alone if they provide only electricity.  However, when combined heat and power (CHP) is added to the equation, microgrids become more competitive based on economics alone.

Why? Most power generation technologies involve production of heat.  CHP recaptures this heat for productive uses.

As discussed in our report, The Energy Efficient Microgrid: What Combined Heat & Power and District Energy Bring to the Microgrid Revolution, CHP reuses waste heat to:

  • Provide heating and domestic hot water services and eliminate the need for  boilers and associated equipment  within a building
  • Produce chilled water for air conditioning and eliminate the need for customers to install, maintain and repair chillers, cooling towers and associated equipment
  • Reduce fuel costs and consumption, since the same fuel that produces the electricity produces the heat

“By harvesting and using the heat produced when making electricity, you are establishing a much more bankable, financeable and economically attractive asset,” said Robert Thornton, president and CEO of the International District Energy Association.

A CHP district energy microgrid can optimize the production of electricity, power and cooling as needed to meet the heating, cooling and power loads of the connected buildings. With advanced controls and forecasting technologies, the system can operate more efficiently as loads vary seasonally and daily. Very cold and very hot days put strain on the grid as consumers increase use of air conditioners or electric heating systems. Electricity prices skyrocket. Further, grid operators often must turn on their last-choice, highest polluting generators when demand runs high. CHP/DE microgrids can help mitigate the strain by shifting their heating and cooling loads off the grid and instead using their on-site resources. This reduces cost and reduces emissions.

Sometimes during severely cold periods, fuel supplies deplete. The US Northeast has run short on natural gas because of pipeline constraints during recent winters. At times the electric system has teetered close to outages because of the shortages. With demand great and supply low in winter 2013/14, fuel prices spiked, which translated into hikes as high as 38 percent in consumer generation costs in 2014. (Hartford Courant, December 17, 2013).

Other areas in North America have experienced shortages in coal during recent winters because trains lacked room to take deliveries, as oil and other commodities competed for space. Propane for home heating also was in short supply in winter 2013/14 for a variety of reasons, including competition for the fuels used for other purposes.

CHP district energy systems often operate on multiple fuels and can switch primary fuel supply depending on cost and availability. These fuel shortages underscore why it is important to have more CHP/DE microgrids, with their highly efficient use of fuel, integrated into the North American grid.

“When you locate the generating source closer to the load, you can reduce congestion, enhance reliability and lower the total cost of delivering that electricity. When the asset also provides integrated heating and cooling services, you can change the demand and load shape on the grid. As a result, you have a more resilient, reliable grid because you have reduced strain and taken some of the load off the wires,” Thornton said.

The Energy Efficient Microgrid: What Combined Heat & Power and District Energy Bring to the Microgrid Revolution is provided as a free download, courtesy of Solar Turbines and the International District Energy Association.


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About Elisa Wood

Elisa Wood is the chief editor of She has been writing about energy for more than three decades for top industry publications. Her work also has been picked up by CNN, the New York Times, Reuters, the Wall Street Journal Online and the Washington Post.


  1. Elisa. CHP can be operated so much more efficiently. It’s not only about producing electricity, there is a lot of heat energy created in the engine or turbine, and then there is the heat energy in the exhaust that is recoverable.
    America’s power plants have operated in the 35% efficiency range for decades. It was all about producing America’s electricity needs. Today the Climate Change attitudes are changing this.
    Why are we wasting all this combusted heat energy ? = Global Warming
    How much CO2 is in all these power plants exhaust across America. What is this doing to our environment?

    If this heat energy can be recovered and utilized, reducing Global Warming, why is it not being done?
    If doing this CO2 emissions will be Greatly reduced, why is it not being done?

    Who is In Control? The EPA? Do they know of this technology? If this is a real technology, and America and the World is on this Time Line to Make a Difference, why is it not already being tested and approved?

  2. It is in process and will become widespread over the next 5 years.
    We are using this approach in out Texas pilot facilities but we are waiting to announce this til we’re actually financed and in implementation stage.

  3. Is there any news about this technology in Tennessee?

  4. I guess it’s high time we look forward to more renewable energy sources for the heating and cooling systems. Investments in solar energy have soared high. I guess a solar kit at every home is the ideal solution to increase efficiency, especially during summers.

  5. What’s up,I read your blogs named “The Importance of Heat in the Energy Efficient Microgrid – Microgrid Knowledge” daily.Your writing style is awesome, keep up the good work! And you can look our website about تحميل اغانى.

    The power plant operates with Natural Gas engine with a power of 2.000 kW.
    It consumes 400 m3 / hour Naturel gas to operate the 2,000 kW generator, steam from exhaust waste heat is obtained, 1,000 kW of electricity is generated by sending it to the steam turbine and a total of 3,000 kW of electricity is produced. Plus, 3,600 Mj / h (1.000 kWh / h) hot water is produced and 94% efficiency is achieved in total.
    According to the demand, the power plant can be installed at the desired power.


    Factories, Hospitals, Hotels, Office and Residential buildings Using 3.000 kWh Electricity and 1.000 kWh Heat per hour Investment and earning information that will occur if they make this energy investment.

    ABD Average Energy Prices 2020: Electricity 1 kWh = 10 cent/USD, Natural Gas: 1 m3 10 cent/USD

    Current energy use of the facility: 3.000 kWh Electricity per hour and 100 m3 / h Natural Gas.

    Working 2,500 hours per year; Electricity consumption 7.500.000 kWh x 10 cent = 750,000 USD,
    Natural gas 250,000 m3 x 10 cents = 25,000 Euro. Total expenses 775.000 USD / year

    Working 8,000 hours per year; Electricity consumption 24,000,000 kWh x 10 cent = 2.400,000 USD,
    Natural gas 800,000 m3 x 10 cents = 80,000 USD. Total expenses 2.480,000 USD/year

    Hourly Expense After Investment:
    Natural gas 400 m3/hour x10 cent / m3 = 40 USD + Overhead 10 USD = Total 50 USD (1,7 cent / kWh)
    Hourly Savings After Investment:
    250 USD from electricity costs + 100 m3 without heating Natural Gas 10 USD = 260 USD/hour in total

    Expense and Savings After Investment:
    2.500 hours x 50 USD/hour=Expense 125.000 USD/year. Savings 650.000 USD/year, Depreciation 6 year
    8.000 hours x 50 USD/hour=Expense 400.000 USD/year. Savings 2.080.000 USD/year, Depreciation 2 year

    Power plant investment cost: Total 4 MW Electricity and heat power plant = 3.800.000 USD

    The systems to be used in the power plant are: GE Jenbacher, Wartsila or equivalent gas engine,
    Siemens Steam turbine and alternator, ALKILINC waste heat boiler, electricity and heat control panels.

    Note: In addition to their financial gains, the investing enterprises will be the 1st choice of their customers by reducing their carbon footprint (emission) and will have a significant competitive advantage.

    [email protected]


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