Commercial and Industrial Facilities Can Increase Resilience with CHP-backed Microgrids


By Carol Denning

August 1, 2023

With energy capacity shortages and escalating power outages more likely due to severe weather, the commercial and industrial sectors are pursuing cost-effective strategies to ensure uninterrupted power supplies. One solution is to establish microgrids supported by combined heat and power (CHP) technologies that generate electricity and thermal energy for diverse applications requiring heating, cooling and industrial processes.

CHP microgrids are basically locally controlled, small-scale networks of interconnected loads and on-site energy generation sources. They are ideal for single facilities, like hospitals and manufacturing and industrial sites, and for groups of buildings like university campuses and military bases. During normal operations, CHP microgrids save money by being highly efficient while reducing load demand. During outages, they can isolate from the grid to power critical and essential services.

CHP technologies include gas turbines, reciprocating engines, microturbines and CHP fuel cells. By recovering and using the heat from on-site electricity production, CHP achieves total system efficiencies of 80% and more, far greater than the typical 50-55% efficiencies of facilities with separate boilers and grid power. Although current CHP technologies are powered primarily by natural gas, they still deliver significant emissions reductions due to their efficiency.

Among the benefits of CHP-backed microgrids:


Benefit #1: Resilience

When outages occur, the most common way to keep the lights on is with diesel backup generators. These generators degrade local air quality not just when they are used to provide backup power but also during their weekly or monthly tests. They also tie up significant capital in rarely used assets and depend on fuel supplies that may be unavailable during emergencies. 

CHP microgrids can be configured to “island” from the grid and operate despite grid interruptions, providing continuous power to individual buildings, groups of buildings, neighborhoods or urban cores. Because CHP systems typically run constantly throughout the year, they are more dependable in an emergency than backup generators that only run when needed. Plus, CHP systems can help the greater grid recover from outages faster through ancillary services that support the grid during power restoration.


Benefit #2: Reliability

As coal, natural gas and nuclear plants retire, and as Western drought threatens hydrogeneration, the risk of energy capacity shortfalls grows. At the same time, electricity demand will be increasing as the nation electrifies more transportation and home appliances.

Major transmission and distribution projects can take years to develop. Project approval, procurement, permitting and construction are years off.  

CHP microgrids can help address capacity shortfalls, bridging the gap to ensure a dependable energy supply by delivering both electricity and thermal capacity tailored to meet end-user requirements.


Benefit #3: Flexibility

Duration – CHP can provide reliable energy for an extended period. When millions of Texans lost power during weeklong record-low temperatures in February 2021, Thermal Energy Corporation provided uninterrupted power, steam and chilled-water service with its CHP units to the Texas Medical Center in Houston, the largest medical center in the world. Patients remained safe, and health care continued during the storm.

Fuel – CHP's fuel flexibility is unmatched, utilizing natural gas, renewable fuels, low-carbon waste fuels and hydrogen. Its efficiency maximizes the supply of renewable, low carbon and hydrogen fuels.

Grid – CHP microgrids can provide dispatchable power generation. They can also act as a reliable backbone for the grid, seamlessly integrating higher levels of renewable energy and efficiently managing load intermittency. CHP and CHP-backed microgrids can also provide services to stabilize the grid on an ongoing basis by reducing transmission congestion and improving power quality as well as frequency response, voltage control and ramping capabilities.


Benefit #4: Decarbonization

The Biden Administration’s Industrial Decarbonization Roadmap calls out CHP as the most efficient way to generate power and thermal energy and reduce CO2 emissions today. The carbon reduction potential is further enhanced when CHP is powered by renewable natural gas, biofuels or hydrogen. This makes CHP a crucial component in decarbonizing the U.S. commercial and industrial sectors, especially for applications that are not easily electrifiable or require long-duration resilience for critical infrastructure.

Benefit #5: Affordability

CHP microgrid systems have a track record of lowering costs, especially in regions with high electricity rates. By leveraging the recovery of waste heat, facilities can stabilize energy costs and hedge against future electricity price hikes.

Further, CHP microgrids can generate revenue by participating in ancillary grid services like voltage support, frequency reserve, demand response and resource adequacy programs. These attributes make CHP microgrids a compelling solution for cost-conscious energy users.


Benefit #6: Security

CHP microgrids can enhance energy security and support the grid through islanding during congestion or outages and by offering ancillary services. They reduce vulnerability to cyberattacks and natural disasters and are more secure due to their flexibility to use diverse resources and fuel sources, which helps strengthen overall grid stability, security and resiliency.

CSE is program administrator for the U.S. Department of Energy Western Combined Heat and Power Technical Assistance Partnership (CHP-TAP) covering Arizona, California, Hawaii and Nevada. A version of this article was originally published in the Western CHP-TAP newsletter.

Carol Denning


Carol Denning has over two decades’ experience in advanced energy services, designing, developing and managing alternative energy technology applications for companies across the nation. At CSE, she serves as director of the U.S. DOE Western CHP Technical Assistance Partnership and as the center’s…

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