A Power Plant for the Home

Basement furnaces generate electricity, too

4 min read

When you flip on a light switch in an average American home, the light bulb probably uses electricity generated in a far-away power plant. But that is not the most efficient way to use fuels--twoâ''thirds of their energy is lost as waste heat at the plant and while traveling over power lines.

What if the power plant were sitting in your home’s basement instead? Combined heat and power (CHP) systems can utilize up to 90 percent of a fossil fuel’s energy by simultaneously generating heat and electricity on-site, reducing energy consumption and slashing utility bills. Such systems already power hospitals, university campuses, and large petrochemical factories, and they are widely used for district heating in Denmark, the Netherlands, and other northern European countries. But only in the last few years has the technology evolved to the point that it can power and heat individual homes. Recently gaining popularity in Europe and Japan, micro-CHP, as it’s called, has now broken into the lucrative U.S. market.

Climate Energy, a company in Medfield, Mass., is testing a 1.2â''kilowatt system in 25 U.S. homes and hopes to sell several hundred units this year. The company, a joint venture of ECR International, in Utica, N.Y., and Yankee Scientific, also in Medfield, is marketing a system developed by Honda Motor, Tokyo [see photo, "Basement Installation"]. Honda has sold 50 000 1â''kW units for single-family homes in Japan. SenerTec, a firm in Schweinfurt, Germany, markets a 5-kW system for apartment buildings in Europe.

Micro-CHP systems typically consist of an internal combustion engine and a furnace. The engine drives a generator to produce electricity, and the heat created in the process goes to the furnace via a heat exchanger module. Micro-CHP equipment can run on a range of fuels, including coal and oil. The most popular systems, including Climate Energy’s, run on natural gas.

Unlike solar panels, wind turbines, and fuel cells, CHP is, as Climate Energy CEO Eric Guyer says, ”an approach that’s much more like the hybrid gasoline-electric automobile than an exotic automobile such as one running on fuel cells. It’s a good application of available technology--nothing extraordinarily new, no new science, no new way of converting energy.”

The micro-CHP setup costs a few thousand dollars more than a traditional gas furnace. Whether it is worth the extra money depends on where you live. This is because it is driven by heat demand: in the winter the generator runs as much as possible without turning off, providing heat and about half of a typical home’s electricity. When you do not need heat, the power plant switches off and you buy all your electricity from the grid. And if you generate more electricity than you need--say, at night--you could sell it to the utility company.

The Climate Energy system makes the most sense if you live in one of those states where it gets very cold in the winter and you pay a lot for electricity. In that case, it can pay for itself in two years and save you US $500 a year thereafter. Otherwise, the payback period could be up to 10 years.

More than 35 U.S. states now require utilities to provide net metering, a simple way for customers to sell power to a utility using standard meters. But states decide what type of residual energy customers can pump into the grid, and so far, just 11 states allow net metering for CHP.

The main market for micro-CHP in the United States would be homes that require more than 4000 heating hours per year, according to Peter Banwell of the U.S. Environmental Protection Agency, who is investigating residential CHP. Banwell says roughly 30 million U.S. homes are in that bracket. Guyer notes that Climate Energy’s system is especially attractive in states such as Massachusetts and Connecticut, where electricity can cost as much as 20 cents per kilowatthour and where local utilities are offering financial incentives for micro-CHP buyers.

According to John Jimison, a former executive director of the U.S. Combined Heat and Power Association, in Bethesda, Md., micro-CHP growth might be slower in North America than in Europe and Japan because many of the same homes that require a lot of heating in winter also run electricity-hungry air conditioners in the summer. The drawback of trying to use CHP in such homes is that it makes no contribution to a consumer’s electricity bill during the summer, when usage is highest.

On the other hand, Jimison argues, the U.S. market has much more potential than Europe or Japan in the long term because of the country’s copious power consumption, recent high fuel prices, and growing environmental awareness.

Strong incentives from major utilities and the government would help spur residential CHP in the United States, Jimison says, but traditional utilities still see home power generation as a threat. Europe and Japan offer good examples of how financial incentives can boost micro-CHP sales. In Germany, micro-CHP users do not have to pay an eco-tax that is attached to the use of natural gas, and they are paid more than the wholesale price of electricity for what they deliver to the grid. Micro-CHP users in the United Kingdom get a big discount on the natural gas tax, paying just 5 percent rather than 17.5 percent. In Japan, where consumers cannot sell electricity back to utilities, the government gives subsidies toward micro-CHP, and gas utilities also give a discounted rate to encourage people to use it. Jon Slowe, a director in Glasgow of Delta Energy and Environment, a distributed energy research and consulting firm based in the UK and Belgium, says the Japanese subsidy is ”in recognition of the carbon dioxide savings” obtainable from using CHP.

”My expectation is that when it’s time to replace [the furnace], they’ll be putting in a micro-CHP unit”
--John Jimison

Government support for micro-CHP in the United States has been scant. The U.S. Department of Energy funded preliminary system-design research in 2004, including R&D done by one of Climate Energy’s parent companies, ECR International. But there have not been enough funds to support the research in subsequent years, says Douglas F. Gyorke, a program manager at the DOE’s National Energy Technology Laboratory. ”It’s a novel technology that I wish we could’ve played around with a little more,” Gyorke says.

Climate Energy’s Guyer says the hesitancy of the government and utilities to embrace micro-CHP is natural. ”This is the case of the microcomputer versus the mainframe,” he says. ”There were people in the mainframe business who thought that there was no role for personal computing.”

Guyer and Jimison say they expect things to be different in a few years. A typical gas furnace has a life of 15 to 20 years, Jimison notes, adding, ”My expectation is that for people who are putting in a new gas furnace now, when it’s time to replace that, they’ll be putting in a micro-CHP unit.”

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