Analysis on conditions for directing customer selection of networked CHP system toward optimum for social cost and CO2 reduction

Abstract

A combined heat and power (CHP), sometimes called cogeneration, is one of the effective technologies for reducing CO2 emission. In the previous research, the authors proposed a concept of “Networked CHP system”, which allows surplus electricity of CHP to be reversed to the power grid and to consume it effectively in the network. Result of the analysis clarified significant CO2 reduction with minimum social cost compared to the non-networked system. The social cost is the amount supplying energy to the area, and it is different from the benefit of individual customer. Customers select the capacity and operation of CHP to have the minimum cost for them, and it is mostly different from the social optimum. This paper analyzes the conditions of energy prices to direct customer selection to the social optimum for cost and CO2 reduction. The results of the analysis show that the electricity/gas price ratio normalized by CO2 emission factor should be unity, and the sell/buy ratio of electricity between the grid for the customer should be larger than 0.6. As an example of measures to keep the profit of electric company for increasing CHP, FIT price of about 1% is enough to be added on the electricity and gas prices. To make customers to select the optimum capacity of the CHP, clear guideline of the optimum kW for unit floor area should be indicated and the CHP price should be in the acceptable range for customers; this is due to the fact that effective subsidy for CHP selection is hardly determined, as the minimum cost for customers does not vary much for the capacity of the CHP.

Keywords

• cogeneration
• chp
• network
• customer selection
• social cost
• co2 emission