Co-generation Operation Cost vs. Fuel Cost
In an extension of previous posts, I've looked at the Ecopower operating costs versus fuel costs for propane and natural gas. The above figure shows the cost of power production for these two fuels. There are three different lines drawn. The blue lines show the cost of production assuming that no "waste" heat is used, and clearly the costs are rather high.
The red lines (and next lines down from the tops) show the generation cost in co-generation mode. The main assumption is that the extra fuel requirements are 30% over a traditional boiler or furnace.
The lower purple lines in both graphs in the figure is the equivalent market generation cost in the case of a $0.05/KWH delivery cost. Currently here in CT, the delivery cost is $0.0545/KWH. The purple lines show what the market competition is (coal!). What is notable is that with a propane price of less than $1.5/gal or a natural gas price of less than $15/mcf (retail price), it makes sense always to generate the power locally in co-generation mode if there is a net metering arrangement in place, because it costs more to deliver the power than it does to co-generate the power locally.
Current costs this year in CT is about $2/gal for propane and $20/mcf for natural gas. This is the retail price, and for natural gas it is rather high as wholesale natural gas for delivery next month is currently under $5/mcf. There is always a retail mark-up due to the extra delivery costs and, in the case of natural gas which is regulated, there is probably an additional cost from prior hedging with gas procured for delivery earlier in the year or last year when prices were significantly higher. The retail power cost including generation and delivery is in the range of $0.15/KWH to $0.18/KWH depending upon the retail provider (we have choices here in CT).
The conclusion is that co-generation wins hands down, and the primary reasons are (1) close to 70% of the fuel energy is lost as waste heat up the smoke stack and in transmission, and (2) there is a delivery cost for distributing the power, and these extra costs are larger than the extra retail fuel cost over wholesale fuel cost.
I would love someone to check these numbers. The methodology is described in prior posts on the co-generation costs.