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Case Study: Combined Heat & Power Systems for Hotels


A Detailed Engineering Study for Combined Heat & Power (CHP) was recently completed by Efficiency Engineering at a world class hotel located in Niagara Falls, Ontario. The purpose of the study, funded by the Ontario Government under the Process and Systems Program, was to determine the feasibility of implementing a CHP system in order to lower the electricity consumption and demand of the building.

Principles of CHP

CHP systems work to simultaneously produce electricity and heat from a single source, i28.e. natural gas. The systems use heat discarded from the production of electricity in other thermal loads throughout the building. In the proposed system for this building, natural gas is used to operate the CHP system to generate electricity, while residual heat is captured and used to preheat other various thermal loads, i.e. space heating, DHW heating, pools and spas. This is very beneficial to building owners as it offsets thermal load and electrical loads, while taking advantage of the low cost of natural gas in Ontario.

Economic benefits of CHP include:

  • Offset of electricity use.
  • Offset of natural gas use by existing natural gas-fired heating systems.
  • Reduced maintenance costs on existing HVAC systems.

Building Overview

The study was done on an 18 storey, 350,000ft² hotel building which features an assortment of different amenities including 3 full size restaurants, a coffee shop and a heated indoor pool area with two spas. The hotel operates 24/7 year round, accommodating guests from all around the world.

In a typical year, the hotel has an average monthly electrical demand of approximately 900 kW and an average electrical consumption of 5,500,000 kWh, which is primarily due to the fact that both heating and cooling in the suites is electric. Natural gas consumption in a typical year is approximately 680,000m3.

The hotel’s heating & cooling is primarily served locally in suites, using packaged terminal AC units with electric heating coils. Additional conditioning is provided by packaged rooftop and rooftop make up air units. The units provide year round conditioning into the corridors, lobbies and common areas of the building. Domestic hot water throughout the building is served by three separate heating plants consisting of six boilers totaling 5000MBH and separate storage tanks totalling 1300 gallons. Each DHW plant serves a different area of the building and maintains constant water temperatures to ensure sufficient water is readily available at all times. Other gas loads within the building consist of 4 gas-fired dryers which are used approximately 12 hours a day for laundry done on-site, and two gas-fired (118MBH) boilers to serve the pool and spas which operate from 6am to 11pm.

Analysis & Design Strategies

The first step in determining if the facility is a good candidate for CHP is to analyse previous utility consumption and evaluate existing systems. Utility analysis provides good insight into the buildings electrical and natural gas consumption. Electrical demand indicates how big  a CHP system can be installed in the building before going on site, and the system is then accurately sized based on the number of thermal loads heat can be rejected to. Because of the size and complexity of this hotel, it was evident that the electrical demand was high for this building and CHP would likely be feasible; however, CHP systems need sizable heat loads in order to operate at their best. The challenge often associated with CHP installations is where the heat generated will be used within the building. Installation of the CHP system will provide a significant amount of thermal heating demand to the existing systems. Heating demands drive the efficiency of a CHP system, and, therefore, influence the way the CHP can operate and perform within the building. Typically, the higher the thermal demands of a building, the easier it becomes to use the waste heat from a CHP generator. After an analysis of existing systems and system consumption breakouts, specific gas loads are selected to reject heat to in order to run the system efficiently and optimize system performance.


After careful and thorough analysis, the CHP system recommended for the hotel was 2 of Capstone’s 65kW units. This system will lower the buildings electrical demand by 130kW and generate 627,587kWh, resulting in a savings of 11%. The system can reject heat to major pieces of gas-fired equipment, including 3 of the makeup air units and the DHW plants. These systems were chosen for heat utilization as they lie within fairly close proximity to where the units are situated. The thermal loads selected provide the majority of the baseload gas consumption of the building, meaning they are loads that consume natural gas year round. Though there are many gas options available, heat cannot be rejected to all of them, as they are either too small a thermal load or are situated in and are with difficult or no access. Running piping and connecting to these smaller or non-accessible loads often comes at a high cost, thereby making the project less feasible.

The following table provides a financial Analysis of installing a CHP system at the hotel:


The Capital Payback internalizes all projected costs including maintenance, inflation, capital expenditures, incentives, and fuel cost escalations. The “Net Present Value” (NPV) for this project was calculated based on a 20 year lifecycle. The recommended system size will be 130 kW and will operate behind the meter, meaning all electricity produced from the CHP is consumed within the building. The recommended CHP system will produce 11% of the building’s annual electricity, while offsetting 20% of its annual natural gas consumption .The building will have higher natural gas costs, but will have a larger reduction in electricity costs resulting in total savings of over $60,000 per year.

Cogeneration systems have been known to be high cost investments, but understanding the achievable savings and the available government funding by performing an engineering study will ultimately motivate building owners to implement this technology. As the cost of natural gas in Ontario remains low relative to electricity, CHP systems will continue to emerge in new and existing buildings as a way of conserving energy in Ontario.

Lessons Learned & Conclusions

Every building is different and each one has its challenges when looking to incorporate new technologies such as CHP. Things to take away from the following Study:

  • Acquire accurate utility data (Preferably 2 years)
  • Understand energy consumption & uses throughout the building on a day to day basis
  • Recognize that hotel gas consumption can be difficult to breakout. Challenges occur when multiple gas appliances share one common meter.
  • Understand which thermal loads to reject heat to and which ones will present a challenge
  • Consider CHP system location, how it will be incorporated into existing systems, where venting may go and the effect it will have on the building’s electrical systems

Combined heat and power (CHP) is an excellent technology to incorporate into not only hotels, but any building. This technology has helped customers around the world reduce heating, lighting and cooling costs by extracting multiple forms of usable energy from a single fuel source. Incentive programs available today, along with the low cost of natural gas in Ontario, make the systems very feasible at this time.