A Low-carbon future is here: combined heat and power (CHP) systems vs. onsite generation

It’s no secret that every institution plays a critical role in the fight against climate change. And while integrating renewable energy sources such as wind, solar, and hydro have become go-to options for many institutions, there is another, often overlooked solution: combined heat and power (CHP).

CHP, also referred to as cogeneration, has been quietly providing highly efficient electricity and process heat to vital industries, employers, urban centers, and campuses for decades, as noted by the U.S. Office of Energy Efficiency and Renewable Energy. Cogeneration is a proven, cost-effective tool for reducing emissions and furthering sustainability goals.

So, what does CHP entail, and how does it compare to onsite methods of heating and powering buildings?

CHP is an efficient process that combines the production of thermal energy (used for both heating and cooling) and electricity into one process. CHP systems can be configured differently, but they usually consist of a few key components: a heat engine, generator, heat recovery, and electrical interconnection, which are configured into an integrated whole.

Key facts about CHP systems:

  • CHP systems can be located at an individual facility, building, or campus. They can also be combined with district energy or utility resource.
  • CHP is typically employed where there is a need for electricity and thermal energy.
  • All CHP systems involve recovering otherwise-wasted thermal energy to produce useful thermal energy or electricity.
  • As a result, CHP systems require less fuel to produce the same energy output as conventional systems, emitting fewer greenhouse gases and air pollutants.

Although CHP is used in over 4,400 facilities across the U.S., many operations are still powered with conventional separate heat and power (SHP) systems. Unlike CHP, SHP systems are not integrated, meaning they obtain fuel from several sources, such as central fossil-fueled power plants and onsite natural gas heating systems.

To get the complete picture of how CHP compares to SHP, let’s dive into the facts across a few key areas of focus.

Energy efficiency

  • According to the United States Environmental Protection Agency, the average efficiency of fossil-fueled power plants in the United States is 36%. This means that 64% of the energy used to produce electricity at most power plants in the United States is wasted in the form of heat discharged into the atmosphere. 
  • Overall, SHP is 50–55% fuel-efficient. Alternatively, CHP systems typically achieve total system efficiencies of 65-80%, by recovering and using the otherwise-wasted heat from on-site electricity production.
Diagram showing CHP as 45% more efficient than onsite generation.
How CHP systems compare to SHP systems

Cost savings

  • According to the U.S. Department of Energy and the EPA, installing 40 GW of new CHP capacity would save U.S. businesses and industries $10 billion each year in energy costs. These agencies estimate that such an investment would cost about $40 to $80 billion and could pay for itself within four to eight years.
  • CHP systems also reduce energy bills because of their high efficiency. Recurring costs are further reduced because the CHP output reduces the need for electricity purchases.


  • In their CHP Guide, the EPA explains that because CHP systems require less fuel to produce the same energy output as SHP systems, CHP can reduce emissions of greenhouse gases and air pollutants such as nitrogen oxides (NOx) and sulfur dioxide (SO2).
  • A CHP system can operate on various fuel types, such as natural gas, biogas, biomass, and more sustainable alternatives as they become widely available.
  • Currently, the emissions prevented by a single 5 MW CHP system are equivalent to the annual emissions of more than 5,400 passenger vehicles.
Graphic showing C02 emissions comparison of conventional generation vs. combined heat and power
This diagram from the EPA illustrates the CO2 emissions output from electricity and practical thermal energy generation for two systems: (1) a fossil-fuel-fired power plant and a natural gas-fired boiler and (2) a 1 MW reciprocating engine CHP system powered by natural gas.

Growth potential

  • There is enormous growth potential for the CHP market: Global Market Insights forecasts revenue generation within the market to increase from $20 billion in 2016 to over $45 billion by the end of 2024.
  • Investing in CHP systems can also help stimulate local, state, and regional economies through job creation and market development. Demand for raw materials and construction, installation, and maintenance services can create green jobs and develop markets for future sustainable technologies.
  • The potential capacity for CHP also cannot be understated: a U.S. Department of Energy study identified nearly 14 GW of additional technical potential for CHP across more than 5,000 U.S. colleges and universities alone.
Chart showing CHP capacity additions over time
Forecast of potential CHP capacity additions through 2026

Reliability and resiliency

  • CHP systems are more efficient and more resilient, and reliable than conventional methods, especially when configured as part of an advanced microgrid. These systems can be designed to operate independently from the electric grid to enhance facility reliability.
  • Through the onsite generation and improved reliability, facilities can continue operating in the event of a disaster or an interruption of grid-supplied electricity.

A low-carbon future is here

Major U.S. cities like Boston, Cambridge, and Philadelphia are already reaping the benefits of CHP. CHP is integrated with local district energy networks in these communities, delivering low-carbon thermal energy to buildings and campuses across the cities’ urban core.

By leveraging existing district energy infrastructure and CHP, these cities are leading the way in America’s adoption of this powerful technology and forging ahead towards a zero-carbon future.

Reliable Green Steam from Vicinity Energy is Supporting Philadelphia’s Booming Life Sciences Scene

Green cogenerated steam will be supplied to support the 24/7 thermal energy needs of The Curtis building and its conversion of office space into laboratory research space

PHILADELPHIA, September 22, 2021 – Vicinity Energy, owner and operator of the nation’s largest portfolio of district energy systems, announces that it has signed a long-term agreement with Keystone Property Group to supply green steam to The Curtis, a historic 12-floor, 912,245-square-foot mixed-use building located at 601 Walnut Street in Philadelphia. The agreement will enable the transition of The Curtis’ office spaces into lab facilities to support the city’s booming life sciences industry and attract world-class talent.

In the midst of a thriving life sciences boom, Keystone sought to transition traditional office spaces on multiple floors of The Curtis building to support lab research. Currently being serviced by an onsite boiler, Keystone desired a more reliable and scalable thermal energy solution that could support the high volume, high quality and precise requirements needed for laboratory research and growing life science tenant demand.

As a current steam customer of Vicinity’s, Keystone recognized the value of district energy in its scalability and ability to deliver the uninterrupted, low-carbon thermal energy required for tenant lab spaces. With district energy, Keystone can increase its steam demand to support additional floors if needed, without any additional upfront capital investment. Initially, the building will receive 9,000 Mlbs of steam annually used for heating, reheating, sterilization and humidification to support lab research. The transition will be seamless, requiring no street alterations, with steam service expected to begin in October 2021.

Due to the sustainability of the district energy system’s cogenerated steam, The Curtis will also receive carbon reduction benefits. Touching over 100 million square feet of building space in Philadelphia, Vicinity’s district energy system is reducing greenhouse gas (GHG) emissions by nearly 300,000 tons annually — the equivalent of removing almost 65,000 cars from Philadelphia’s roads every year. With the integration of biogenic fuel into its energy mix, district energy customers like the tenants at The Curtis will benefit from continuous greening solutions that will further cut carbon emissions.

“Vicinity has been an active partner in furthering Philadelphia’s greening initiatives for many years, and we’re proud to support both the city’s sustainability goals and the expansion of vital life sciences research at The Curtis,” said Bill DiCroce, president and CEO of Vicinity Energy. “We’re committed to providing reliable and sustainable energy solutions that empower local businesses, support the city’s growing economy, and enable a greener, healthier climate future.”

“This is an exciting time for the life sciences industry in Philadelphia, and The Curtis’ conversion from office to lab space is at the forefront of the city’s life science sector,” said Keystone Property Group’s Senior Property Manager Sam Mattei. “Thanks to the reliability and flexibility of district energy, tenants can be confident that our labs will maintain consistent 24/7 heating, reheating, sterilization and humidification to meet the specific requirements needed to support their critical research.”

About Vicinity Energy

With 19 district energy systems in 12 major cities, Vicinity Energy is the leading provider of district energy solutions in the U.S. Vicinity produces and distributes steam, hot water, and chilled water directly through its vast underground network to individual buildings and campuses. District energy eliminates the need for boiler and chiller plants in individual buildings, improving overall efficiency, lowering carbon footprints, and increasing reliability. Vicinity’s over 450 skilled engineers, operators, and energy experts have a singular dedication to customer success and a relentless focus on delivering reliable and efficient energy products and services. With the recent launch of the company’s Clean Energy Future roadmap, Vicinity has committed to reaching net zero carbon emissions across all operations by 2050. For more information, check out www.vicinityenergy.us.

About Keystone Property Group

Keystone is a vertically integrated commercial real estate development and investment company. Headquartered in Conshohocken, Pa., its portfolio of iconic projects attracting world-class companies includes 10 million square feet of office and mixed-use properties with 2 million square feet under development, and spans thriving locations along the East Coast.

For more information, please visit www.keystonepropertygroup.com.

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Sara DeMille
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How the energy industry is forging the path to net zero

In 2018, 33.1 gigatons of energy-related carbon dioxide (CO2) were emitted globally, underscoring the need for immediate action to reduce this staggering number. Put another way, that’s 33.1 billion metric tons, a collective mass equal to 66 times that of all humans on earth.

As greenhouse gas emissions have continued to increase, energy utilities have sought to reduce the amount of CO2 that is released into the atmosphere, as a result of burning traditional fossil fuels.

To combat the rising CO2 levels, many utilities have committed to reach net-zero carbon emissions by either 2030 or 2050. For some, switching to fuel alternatives with lower emissions, such as natural gas, is an interim step to get there, while others look to renewable energy sources, such as wind and solar. While there are many possible paths to reach net zero, one thing is clear: time is of the essence.

But what exactly does net zero carbon emissions mean, and which method of energy production will yield the greatest environmental benefits? Let’s take a closer look.

What is net zero?

The term “net” zero does not mean there are no carbon emissions emitted. At the moment, all fuel-burning energy generation methods emit some carbon. However, after these emissions have been reduced as much as possible, companies can offset the remaining emissions by investing in assets that absorb carbon, such as forests, carbon capture, or other emerging technologies. Those assets effectively cancel out the carbon emissions being produced, resulting in net zero carbon.

Harnessing the power of renewables

Recognizing this need for change, energy utilities have sought alternatives to traditional generation sources to enable continued provision of their essential services. Unlike fossil fuels, such as coal and oil, renewable energy resources are neither extractive, nor reliant on a single resource that depletes over time. Wind, solar, and biofuels are all renewable resources that utilities are investing in to reduce their carbon footprint.

One method for reducing CO2 emissions that can already be utilized is combined heat and power (CHP). Unlike traditional power plants that take excess heat produced during power generation and discard it, CHP efficiently harnesses that excess heat as thermal energy that can be used to keep buildings warm or cool, humidify the air or sterilize equipment. By taking advantage of this resource, utilities can conserve fuel, rather than burn more to produce heat, effectively cutting CO2 production dramatically.

Perhaps what is most exciting about this energy source is that CHP generators can also burn biofuels, such as waste vegetable oil from restaurants or organic matter. By fueling CHP with biofuels, the total amount of carbon emissions produced during energy generation can be additionally decreased.

No matter the method, utilities that choose to utilize the energy potential of renewable resources will see a reduction in carbon emissions. When renewables are combined with generation methods such as CHP systems integrated with biofuels, even greater benefits can be achieved.

The road to net zero

A broad swath of energy generators are shifting to renewables to replace natural gas, especially utilities. Challenges remain, however, especially when it comes to transforming the entire grid to be more environmentally beneficial.

While wind and solar are good renewable resources, they are reliant on ideal weather conditions to produce at maximum efficiency. When there is no wind or sunlight, utilities must turn to other energy sources, such as natural gas, to continue supplying power to the facilities they serve. Although a cleaner resource than burning coal, natural gas does emit CO2 and still contributes to greenhouse gas buildup. Regardless of weather conditions, customers must continue to receive services, and falling back on traditional fuel sources that will produce emissions while providing necessary services is a challenge to decarbonization efforts.

Another obstacle that utilities face is upgrading existing infrastructure. For many utilities, their incumbent grid technology is outdated and ill equipped to accommodate alternative fuel sources that previously were not used or available during the original infrastructure’s development. Because of this, utilities are tasked with not only transitioning to renewables, but also updating systems that have known no other fuel source and were designed for a one-way distribution path. Utilities also have to take into consideration that the majority of U.S. communities leverage onsite boilers for residences and buildings, which means every end user will need to have their infrastructure updated to convert to greener fuels and generation methods as well. The hurdle is a high one – accompanied by a price tag that utilities will have to take into account.

Other facilities have turned to natural gas as a bridge fuel as they shift away from fossil fuels to greener solutions. Though as previously mentioned, natural gas is not carbon-free, although it has a lower carbon footprint than coal or fuel oil. Additionally, those who employ natural gas as a main energy resource may consider transitioning completely away from it to be a daunting challenge. Similar to electric utilities, these organizations will need to seek alternative fuel sources, while also upgrading existing infrastructure, in order to reach net zero. 

In contrast, district energy companies can more quickly transition to renewable fuels and technologies through upgrades at their central plants. Unlike other conventional utilities, upgrades to the distribution system are not required. The improvements made at these central plants, whether this is integrating renewable fuels or converting boilers to renewable electricity, will then benefit all the buildings connected to the district system, dramatically reducing carbon emissions. By nature, district energy is typically found in urban environments, which eliminates the need to transport energy over long distances to customers. It is highly reliable, cost-effective and cuts the amount of fuel that is required by individual buildings using onsite generation. Utilizing renewable resources, energy efficient equipment and green technology at the central plant means that all connected buildings connected to the district become greener. In effect, a district energy system can dramatically reduce the carbon footprints of entire cities relatively quickly and easily.

A greener path

Time is often an overlooked resource, as it is easily spent, but it can never be recouped. As we look to the mid-century, it is crucial that energy utilities explore and implement renewable strategies to reach net zero carbon goals. It is already estimated that global carbon emissions are expected to increase by 0.6% per year until 2050, underscoring the battle against time itself. That equates to more than half a billion additional metric tons per year above 2018 levels.

By harnessing the power of renewable resources, energy providers can dramatically cut carbon emissions and diminish the climate impact of their operations, ushering in a healthier, greener world for generations to come.

The many benefits of CHP for a low-carbon future

When people think about green energy, they often think of renewables like solar or wind power. While harnessing the earth’s natural elements to generate energy is an excellent strategy, these sources are intermittent and not always available. Also, space constraints in urban cores often make these technologies challenging to implement. Integration of wind and solar will certainly be a component of a greener future, but there are many other ways we can reduce emissions, save on fuel, and keep energy affordable by tackling the huge amount of energy wasted under current production conditions.

The United States squanders an incredible amount of energy through wasted heat. This heat, which is a byproduct of traditional energy generation processes, is vented to the atmosphere or released into bodies of water. Traditional generation and the electric grid itself are responsible for the majority of the thermal energy wasted. In fact, the United States loses more energy in wasted heat each year than is consumed by the entire nation of Japan.

One of the best ways to combat this issue is with CHP. By capturing heat that would have otherwise been wasted, CHP systems result in the most efficient use of fuel to produce clean, low carbon steam over traditional generation sources. Let’s take a look at what CHP is, how it works, and how it can help turn waste heat into usable energy to help reduce carbon emissions.

Understanding the CHP process

CHP stands for combined heat and power and is also referred to as cogeneration. CHP is an efficient process that combines the production of thermal energy (used for both heating and cooling) and electricity into one process. Unlike a traditional power plant that discards excess heat produced from its power generation process as carbon emissions, CHP harnesses this waste heat and puts this energy to good use. There are two common CHP processes that are used most often:

  • In the first, fuel is combusted in a prime mover, like a gas turbine or engine. Then, a generator connected to the prime mover produces electricity. The energy normally lost in this process as heat exhaust is recaptured in a heat recovery boiler to generate thermal energy.
  • In the second, a boiler burns fuel and produces high pressure steam, which feeds a steam turbine and thereby creates electricity. Upon exiting the turbine at a lower pressure, the steam is captured and used for thermal energy.

Benefits of CHP

There are many considerable advantages to CHP, both to individual buildings, campuses and society at large. CHP systems have an average efficiency of about 75%, but can exceed 80% efficiency when using steam turbines. This is versus the 50% efficiency yielded by traditional systems via separate boilers and generators. Greater efficiency means better fuel utilization. Better fuel utilization both reduces emissions and reduces costs.

Additionally, unlike many new technologies, CHP systems can be deployed quickly, and have few geographic limitations, making it easier for buildings within a district or campus to take advantage of the benefits of CHP and quickly lower their environmental impact. At the same time, CHP offers more resilient energy, especially when configured as part of an advanced microgrid. This was clearly evidenced in 2012 when Super Storm Sandy plunged New York City into darkness with its destruction of the local electric grid. But one campus stayed lit and heated – New York University’s Washington Square campus, which is powered by a 13.4-megawatt CHP plant.

Furthermore, CHP supports local economic growth by cutting energy costs and freeing up funds for other investments. According to the U.S. Department of Energy and the Environmental Protection Agency, Installing 40 GW of new CHP capacity would save U.S. businesses and industries $10 billion each year in energy costs and shave one percent off of the overall national energy demand. Such an investment would cost about $40 to $80 billion and could pay for itself within four to eight years, these agencies estimate.

A low-carbon future

So, CHP is more efficient, more affordable, and spurs economic growth. What about the environment? For starters, CHP often uses domestic natural gas, which is cleaner than coal and superior to oil from an energy independence perspective. What’s more, opportunity fuels like biofuels and wood waste are also options for CHP systems, offering an even greener approach to CHP. CHP overall, and its ability to integrate green fuels, provides cities with a tremendous opportunity to reduce carbon emissions on a massive scale. By pairing CHP with district energy networks, low carbon thermal energy can be delivered to a broad swath of buildings and generate significant carbon reduction benefits.

CHP’s emissions are inherently lower than alternative technologies, and can meet even the most stringent U.S. emissions regulations. This is partly due to its aforementioned greater fuel efficiency, which reduces greenhouse gas emissions, including carbon dioxide (CO2) and air pollutants such as nitrogen oxides (NOx) and sulfur dioxide (SO2), according to the EPA.

How much of an impact can CHP have on emissions? Let’s put it in perspective. The Department of Energy estimates that the U.S.’s current CHP deployment saves about 1.8 quads of energy annually, and reduces U.S. carbon dioxide emissions by 240 million metric tons. That’s the equivalent of taking 40 million cars off of the road. The DOE goes on to suggest that deploying an additional 40 GW of CHP could decrease CO2 emissions by an additional 150 million tons each year, which is like removing 25 million more cars from the road. In other words, CHP can have a massive positive impact on our environment and pay for itself.

CHP in action

With so many benefits and comparatively little cost to implement, it’s not surprising that in their recent Market Data: Combined Heat and Power in Microgrids report, Guidehouse Insights reported that they expect 11.3 GW of new CHP capacity to be added in microgrids globally over the next ten years.

Unfortunately, most of that implementation continues to be outside of the U.S. As with many progressive energy moves, Scandinavia leads the way. CHP accounts for 50% of Denmark’s power production and more than 30% in Finland and the Netherlands.

However, CHP only represents about 8% of the U.S.’s total generation capacity. That means that there’s enormous potential for growth. Some major U.S. cities are already reaping the benefits of CHP, including Boston, Cambridge and Philadelphia. In these communities, CHP is integrated with local district energy networks, delivering low carbon thermal energy to buildings and campuses across these cities’ urban core. In fact, CHP driven district energy has been so successful at reducing carbon emissions, its specifically tied to these cities’ climate action plans. By leveraging existing district energy infrastructure and CHP, these cities are leading the way in America’s adoption of this powerful technology and forging ahead towards a zero-carbon future.

Vicinity Energy celebrates Earth Day in Philadelphia

In celebration of Earth Day, Vicinity’s Philadelphia team joined with ACV Enviro for the Schuylkill River Bank clean up. The team spent the day removing a cubic yard of aerosol cans for safe disposal and filled an entire dumpster with trash! The Schuylkill River is used for recreation and is a source of drinking water in Philadelphia, in addition to being an important habitat for wildlife. As a local environmental company in Philadelphia, Vicinity organized this clean-up event because we feel strongly that it is our collective responsibility to keep our cities green.