CHP Association

Uses of CHP

Since 1980, about 50,000 MW of CHP capacity has been built in the United States. CHP accounts for only 12 percent of electricity generation in the U.S., but almost 60 percent in Denmark. Industry growth and certain drivers indicate promising CHP markets in the following market sectors:


Niche Markets
CHP, like many technologies, finds traction in markets with unique factors that contribute to the technical and economic feasibility of the technologies. “Niche marketing” finds these factors and informs the potential CHP adopters of the benefits from using onsite CHP such as reliable power, available thermal energy, and increased efficiencies. Often, these markets have flat load profiles and high thermal/electric ratios.


Food Processing
Food processing is a promising market. Food safety is a key driver in today’s food & beverage industry, requiring both reliable power and hot water for cleanup in some market sectors. Food & beverage processors are energy-intensive industries, fueled by consumer trends toward highly processed, pre-packaged meals and snacks, and even high protein diets. Food & beverage processors need reliable power to stay online during power grid blackouts and even momentary power sags. Power outages can be very expensive; for example, in the chocolate processing industry, hot chocolate is piped over long distances in the “conch” process. If power is lost, chocolate congeals within 3-5 minutes—and the plant could be down for 2 hours, or entire pipelines may have to be discarded. See for preferred food processing market sector profiles, thermal energy opportunities, etc.


Ethanol Production
USEPA has been focusing on the niche market of ethanol production in the Midwest, a growing market with a significant need for electric and thermal energy. EPA’s CHP Partnership is working closely with DOE’s Midwest CHP Application Center, presenting at national ethanol conference, preparing for workshops in other states, and exploring opportunity for CHP with 5-7 ethanol plants. See for more information.


Hospitals are excellent candidates for CHP systems because they have high electrical and thermal energy needs that generally follow each other and have significant energy demands 24/7/365. CHP also can generate significant cost savings for hospitals. A CHP system can operate in the range of 4 cents a kilowatt-hour. In regions of the country such as New York, where hospitals pay 16 cents per kWh, CHP trims operating costs. Beyond dollars and cents, CHP enhances the quality of power. On a typical day during the peak power period, there may be interruptions in voltages and even fluctuations in frequencies, which wreak havoc on clinical equipment. But CHP can assure smooth, continuous operation of clinical devices. One hospital had between 60 and 70 disruptions of power a year that caused downtime of the laboratory equipment and testing facilities. For more information and links, see


Utilities should themselves appreciate CHP opportunities and consider expanding their conventional view of their businesses to take advantage of the benefits CHP can bring. This could be done by utilities partnering with major energy users or builders who need significant thermal energy for hospitals, shopping centers, with the utility selling thermal energy even as it generates power near that site for its own system purposes as well as local power needs. Downstream power generation can assist utilities in balancing their systems, meeting their need for voltage support, and avoiding more expensive distribution line or transmission line investments at least temporarily. In addition, distributed generation tied into thermal energy supply can help utilities meet air quality objectives in their service territories. By using waste heat, CHP systems can significantly lower power plant emissions of greenhouse gases and other pollutants. CHP has many other benefits as well: it offers affordable incremental power costs, helps optimize natural gas resources, holds gas costs down, and could allow utilities to enter the thermal energy business. Further, CHP systems can often be load-following, in instances where thermal requirements for heating and cooling follow the same load curve as system power requirements.

In many instances, of course, site owners will prefer to own and operate their CHP systems themselves, especially when their primary purpose is to assure the availability of critical steam or other thermal energy, and utilities are then in the position of dealing reasonably with the site owner over the provision of electricity still required from the grid (either on a continuous or stand-by basis) and in purchasing from the site owner any electricity excess to the site’s own requirements. This model, of course, is more problematic for utilities desirous of maintaining an effective monopoly on electricity generation and supply in a given area, but the efficiencies of CHP clearly make it in the public interest to encourage such projects. In addition to the benefits detailed above, such third-party-owned CHP offers an excellent way to move toward a competitive market with numerous new sellers who are not interested in “gaming” the market. If regulators don’t permit CHP projects to proceed on an interconnected basis under reasonable terms, end users will increasingly be inclined to install the onsite systems on an “islanded” basis, leaving their electric utilities altogether, and unable to offer back any of the system benefits CHP can so readily provide. Now is an opportune time for utilities to embrace CHP as part of a national energy security campaign and as part of their own strategic business plans.


This sector represents the largest share of the current installed CHP capacity in the U.S., and is the segment with the greatest potential for near-term growth. To date, CHP has been most successful in large industrial applications that require large amounts of steam. Typically found in “process industries” such as petroleum refining, pulp and paper, and chemicals, these systems have installed electricity capacities greater than 25 MW (often hundreds of MW) and steam generation rates measured in hundreds of thousands of pounds of steam per hour.
Some facilities of this type are merchant power plants using combined cycle configurations. They are owned by an independent power producer that seeks an industrial customer for their waste stream and sells excess electricity on the wholesale market.

Thousands of boilers provide process steam to a broad range of U.S. manufacturing plants. These boilers offer a large potential for adding new electricity generation between 50 kW and 25 MW by either modifying boiler systems to add electricity generation (e.g. repowering existing boilers with a combustion turbine), or replacing the existing boiler with a new CHP system. Small manufacturers represent an important growth segment over the coming decade.

Various industrial markets, including petrochemical, food products, bio-products, and biotech, rank as the highest priority markets for future industry growth. The petrochemical market is the largest CHP market sector nationally, representing about 40% existing CHP capacity. Bulk chemicals are in economic decline domestically though some subsectors (pharmaceuticals, specialty chemicals, and bio-products including ethanol and bio-feedstocks) are continuing to experience significant growth.

Food products manufacturing is a fast growing and stable market with demonstrated opportunity for CHP. ACEEE has identified food products as one of the most geographically dispersed industry groups, with a significant presence in almost all states. In contrast to pulp and paper industry and bulk chemicals that are in economic decline domestically, the food products industry is among the fastest growing industry groups.

The growing biotech industry has overtaken the computer and semiconductor industry as a leader in projected economic growth. Both sectors have similar power reliability and thermal management needs.


District Energy
District energy systems may be installed at large, multi-building sites such as universities, hospitals, and government complexes. District energy systems also can serve as merchant thermal systems providing heating (and often cooling) to multiple buildings in urban areas.

District energy systems are a growing market for CHP because these systems significantly expand the amount of thermal loads potentially served by CHP. District energy also has a major added benefit of reducing the requirement for size and capital investment in production equipment due to the “diversity” of consumer loads. In addition, they tend to use larger and more efficient equipment and can take advantage of such things as thermal energy storage that aren’t economically effective on a small scale. Moreover, district energy systems aggregate thermal loads, enabling more cost-effective CHP.

According to the International District Energy Association (IDEA), there are three primary markets within district energy:

  • colleges and universities,
  • downtowns, and
  • airports.

The college and university market seems to be the most promising, due to several factors. Colleges and universities are installing CHP in response to campus load growth, asset replacement of aging boiler capacity, and the favorable economics from fuel efficiency improvements with CHP. View the Census of Central Plant District Energy and CHP Systems at Colleges, Universities, Hospitals, Healthcenters, and Airports: Data Collected on U.S. Colleges and Universities, by IDEA with DOE/ORNL (Summer 2002).

Major urban centers are also a very promising market for adding CHP to existing district energy systems. Many district energy steam plants were originally CHP facilities that generated both power and steam when owned by the local electric utility. With a growing need for local grid support and in light of utility divestiture of generating capacity, coupled with solid market growth in downtown district energy systems.

Airports represent another promising opportunity; these facilities are often in NOx nonattainment areas and face significant emissions pressure from both regulators and the community. With large space conditioning and electrical load with long hours of operation, airports are often well suited to add CHP to their district energy systems. View the Census of Central Plant District Energy and CHP Systems at Colleges, Universities, Hospitals, Healthcenters, and Airports: Data Collected on U.S. Airports, by IDEA with DOE/ORNL (Summer 2002).


The Federal government is the largest energy consumer in the United States, with new mandates to meet increased demand, reduce peak operating costs, enhance energy security, and improve the reliability of electric power generation through DG and CHP.

The Federal Energy Management Program (FEMP) was created to reduce the cost of government by advancing energy efficiency, water conservation, and the use of solar and other renewable energies. Executive Order 13123, Greening the Government Through Efficient Energy Management, specifies that Federal facilities shall use combined cooling, heat, and power systems when lifecycle costs indicate that energy reduction goals will be achieved.

FEMP CHP Government Study

How to Guide for Federal Facility Managers


Commerical/Institutional Buildings
The U.S. consumed over 94 quadrillion BTUs of energy in 2000. Of this total, commercial buildings accounted for over 16 quadrillion BTUs-equivalent to the amount of energy of gasoline consumed in the U.S. in one year. The growth of the economy, as well as the nation’s rising population, is leading to greater numbers of larger and more energy-intensive homes and commercial buildings, resulting in increased energy consumption in this sector (DOE, 2002).

Several reports indicate CHP potential and interest in the large commercial office buildings, hospital/healthcare, supermarket, hotel/motel, restaurant, and large retail markets. Some markets appear to have strong drivers to adopt CHP, e.g., grocery stores have significant dehumidification loads to keep water from condensing on freezer displays and hospitals and healthcare facilities have significant reliability needs.

Market Assessment of Integrated Energy Systems (IES) for Buildings, prepared by Resource Dynamics for DOE/ORNL (August 2002)

The Market and Technical Potential for CHP in the Commercial/Institutional Sector, prepared by Onsite SYCOM Energy for EIA (Jan 2000)

Mixed-use developments, including “power parks” are an emerging market for CHP, especially due to the clean, reliable onsite power they provide. This includes the commercial redevelopment of brownfield sites is becoming an appealing market for CHP, with projects underway in Chicago, Massachusetts and Iowa to name a few.


Aggregated loads, to achieve favorable scale for CHP, can be achieved in the multifamily market within this sector. The Dept. of Housing and Urban Development (HUD) and NYSERDA are engaged in activities with large multifamily residential projects and CHP.

CHP in Multi-family Housing (NY specific from cogeneration online)