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Spark spread - A screening parameter for combined heating and power systems

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  • Smith, Amanda D.
  • Fumo, Nelson
  • Mago, Pedro J.

Abstract

Combined heating and power (CHP) systems may be considered for installation if they produce savings over conventional systems with separate heating and power. For a CHP system with a natural gas engine as the prime mover, the difference between the price of natural gas and the price of purchased electricity, called spark spread, is an indicator as to whether a CHP system might be considered or not. The objective of this paper is to develop a detailed model, based on the spark spread, that compares the electrical energy and heat energy produced by a CHP system against the same amounts of energy produced by a traditional, or separate heating and power (SHP) system that purchases electricity from the grid. An expression for the spark spread based on the cost of the fuel and some of the CHP system efficiencies is presented in this paper as well as an expression for the payback period for a given capital cost and spark spread. The developed expressions allow determining the required spark spread for a CHP system to produce a net operational savings over the SHP in terms of the performance of system components. Results indicate that the spark spread which might indicate favorable payback varies based on the efficiencies of the CHP system components and the desired payback period. In addition, a new expression for calculating the payback period for a CHP system based on the CHP system capital cost per unit of power output and fuel cost is proposed.

Suggested Citation

  • Smith, Amanda D. & Fumo, Nelson & Mago, Pedro J., 2011. "Spark spread - A screening parameter for combined heating and power systems," Applied Energy, Elsevier, vol. 88(5), pages 1494-1499, May.
    • Handle: RePEc:eee:appene:v:88:y:2011:i:5:p:1494-1499
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    References listed on IDEAS

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    1. Fumo, Nelson & Mago, Pedro J. & Chamra, Louay M., 2009. "Emission operational strategy for combined cooling, heating, and power systems," Applied Energy, Elsevier, vol. 86(11), pages 2344-2350, November.
    2. Fumo, Nelson & Mago, Pedro J. & Chamra, Louay M., 2009. "Analysis of cooling, heating, and power systems based on site energy consumption," Applied Energy, Elsevier, vol. 86(6), pages 928-932, June.
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    2. Tataraki, Kalliopi G. & Kavvadias, Konstantinos C. & Maroulis, Zacharias B., 2018. "A systematic approach to evaluate the economic viability of Combined Cooling Heating and Power systems over conventional technologies," Energy, Elsevier, vol. 148(C), pages 283-295.
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    5. Knizley, Alta A. & Mago, Pedro J. & Smith, Amanda D., 2014. "Evaluation of the performance of combined cooling, heating, and power systems with dual power generation units," Energy Policy, Elsevier, vol. 66(C), pages 654-665.
    6. Tilocca, Giuseppe & Sánchez, David & Torres-García, Miguel, 2023. "Application of the theory of constraints to unveil the root causes of the limited market penetration of micro gas turbine systems," Energy, Elsevier, vol. 278(C).
    7. Aikaterini Papadimitriou & Vassilios Vassiliou & Kalliopi Tataraki & Eugenia Giannini & Zacharias Maroulis, 2020. "Economic Assessment of Cogeneration Systems in Operation," Energies, MDPI, vol. 13(9), pages 1-15, May.
    8. Onishi, Viviani C. & Antunes, Carlos H. & Fraga, Eric S. & Cabezas, Heriberto, 2019. "Stochastic optimization of trigeneration systems for decision-making under long-term uncertainty in energy demands and prices," Energy, Elsevier, vol. 175(C), pages 781-797.
    9. Smith, Amanda D. & Mago, Pedro J. & Fumo, Nelson, 2011. "Emissions spark spread and primary energy spark spread – Environmental and energy screening parameters for combined heating and power systems," Applied Energy, Elsevier, vol. 88(11), pages 3891-3897.
    10. Elias, R.S. & Wahab, M.I.M. & Fang, L., 2016. "The spark spread and clean spark spread option based valuation of a power plant with multiple turbines," Energy Economics, Elsevier, vol. 59(C), pages 314-327.
    11. Kavvadias, K.C., 2016. "Energy price spread as a driving force for combined generation investments: A view on Europe," Energy, Elsevier, vol. 115(P3), pages 1632-1639.
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