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Cogeneration Payback Calculator
CHP / cogeneration produces electricity + thermal at 70–85% combined efficiency.
Simple payback (yrs)
1.96
Annual margin
$1,125,000
Total capex
$2,200,000
How the math works
kWh = kW × hours. Margin = kWh × (electric + thermal − fuel/maint). Payback = capex / margin.
1,000 × 7,500 = 7.5M kWh × ($0.18 + $0.05 − $0.08) = $1.125M. $2.2M / $1.125M = 1.96 yr.
How to Use
- Enter system kW size.
- Enter installed $/kW.
- Enter annual run hours.
- Enter avoided electric $/kWh.
- Enter recovered thermal $/kWh equivalent.
- Enter fuel + maintenance $/kWh.
- Read simple payback.
Frequently Asked Questions
CHP applications?
Best fit: continuous thermal load (hot water, steam, space heating). Hospitals, hotels, multifamily, district energy: ideal. Office, retail: poor fit (thermal load too intermittent). System size: 50 kW micro-CHP up to 50 MW industrial. Sweet spot for buildings: 250 kW - 5 MW. Co-located with absorption chiller: extends viability.
Economics?
Installed cost $1,500-3,500/kW. Operating cost (fuel + maint): $0.06-0.10/kWh produced. Avoided electric retail: $0.10-0.25/kWh. Net spread: $0.04-0.15/kWh × 6,000-8,000 hours = $240-1,200/kW/yr operating margin. Simple payback: 4-9 years typical. Better with thermal recovery + state incentives.
Incentives?
Federal ITC: 30%+ via IRA. NY-Sun: $1-2/W in NY. CA SGIP: $0.50-2.00/W. NJ CHP grant: $1-3M typical. C-PACE financing: most states. Utility CHP rebates: $0.05-0.50/kWh produced for first 1-3 years. State + utility stacking can offset 30-70% of capex.
Operating challenges?
24/7 staffing or remote monitoring required. Permitting (air emissions, electrical interconnection, gas pressure) takes 12-24 months. Long-term gas contracts critical for fuel cost stability. Maintenance contracts ($30-80/kW/yr) standard. Heat recovery system commissioning: complex. Best results: dedicated O&M provider + utility partnership.
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