Combined Heat & Power for Hospitals

March 5, 2015

With the need for continual, stable power, hospitals are tied to traditional energy sources that may not be cost effective or energy efficient. When up to two-thirds of traditional energy created is being released as waste heat into the atmosphere, it’s time to look for a new solution.

Combined heat and power generating systems (CHP) are growing in popularity across a number of different markets, but the market segment that may stand to gain the most is healthcare. CHP has misconceptions about its application, and more importantly, its potential benefits. A basic understanding of this power system is necessary to comprehend its function in any market, including healthcare. Simply stated, a CHP system generates electricity and heat for a building, utilizing a single, energy input or fuel source. Natural gas is typically the most common fuel source. CHP is often referred to as cogeneration because of its ability to generate both the building’s electricity and heat needs through one process.

Commonly, a hospital’s electricity and heat needs come from two separate power systems. CHP combines the two together to create a more efficient, cost-effective facility. CHP, unlike traditional power systems, makes use of heat that is produced as a part of the electricity generating process. Just like traditional power systems, CHP systems begin producing electricity by burning a fuel source. Then, CHP systems capture the waste heat to create useful heat in the form of steam, hot water, or hot air through heat exchangers, with no additional fuel input. Conventional power systems dispose that waste heat into the air or local waterways, expending up to 67% of their input energy. CHP, on the other hand, converts what would have been wasted into heat for the host facility.

Infographic depicting how combined heat and power systems work

CHP Misconceptions

Through the recent decades of low electricity prices and volatile natural gas prices, utilization of CHP has been fairly limited in many regions.  Additionally, a number of myths and misconceptions about its technology, initial investments, and costs for small facilities have inhibited growth in CHP applications. These preconceived notions remain prevalent, even in our current market of high electricity costs and low, stable natural gas costs. Many hospitals have the perception that an “expensive” and “technologically advanced” investment in a CHP system would be unaffordable and too risky in a smaller application. The truth is that a small hospital CHP system uses core technologies that have been proven for decades with recent advances that enable cost-effective application at almost any scale, with the most efficient system size running about 2 megawatts of power.

In addition, a number of financing options, grant opportunities, and incentive programs may provide additional support to reduce CHP costs and increase energy savings over the life of the project. In addition to the economic benefits, these systems create more efficient, green buildings, operating at a higher efficiency on clean natural gas. The lack of awareness of these financial solutions has been a barrier for CHP for years, but in reality, they contribute to a favorable payback period for the facility.

Reaping the Benefits


Hospitals and healthcare facilities have different needs than other commercial or residential buildings. They can benefit from cogeneration in a specific, constructive way. In healthcare, reliability is a central goal of the facility’s energy system. Because hospitals have a high required availability, they must be operational 24/7, 365 days a year. With this need for consistent and inexpensive energy, CHP provides ongoing power capacity that ultimately saves on utility bills by continually meeting the base load energy need, leaving the utility to provide energy only during peak usage times.


The CHP system also provides a supplement to the emergency backup generation in a power outage, which may extend their capability to power non-critical items like chillers, air handlers, and lighting.


Another benefit of CHP is its main fuel source—national gas—that allows you to now lock into a 5-10 year, long-term agreement with cheaper fuel prices.  A fuel agreement will help ensure the energy savings that the facility was expecting with CHP, as well as the internal rate of return needed to make the project successful. Due to the massive amounts of natural gas found in shale gas discoveries, natural gas is forecast to be a cost-effective, readily available fuel source. The U.S. Department of Energy’s Energy Information Administration predicts steady natural gas prices for the next 15 to 20 years, while at the same time, predicting electricity process will continue increasing through 2040. 

Given this information, CHP is now a viable financial solution with low energy costs and efficient energy production. As the spark spread, or price difference between electricity and natural gas, continues to grow, CHP offers a long-term solution to leverage low gas prices. Coupled with high prices for electricity, hospitals that employ natural gas-powered CHP will see favorable payback periods and drastic improvements to their bottom line. 


In addition to the economic benefits of CHP, hospitals should not overlook the advantages CHP offers in energy efficiency. When a hospital goes from a traditional power delivery system to a facility powered by CHP, they can increase the building’s efficiency, while reducing greenhouse gas emissions and air pollution. CHP can make its host a green, environmentally friendly facility with a substantially reduced carbon footprint. Having efficient systems in place may not be a deciding factor for a hospital patient, but energy efficiency and improvement of the hospital environment does promote overall patient and community health.

With reliability, operational costs, and patient health at the forefront of the minds of healthcare leaders, CHP can provide a host of benefits and help a healthcare facility continue to cost-effectively meet its goals.

About the Authors

Jim Christie

Jim Christie brings 22 years of healthcare experience to Performance Services. Previously with GE Healthcare, Jim held various positions of increasing responsibility including Diagnostic Imaging Sales Representative, Six Sigma Sales Black Belt, Region Sales Manager, and Strategic Account Executive/Customer Champion.

Jim Christie

Business development manager


Kevin Baum

With 16 years of experience creating and managing unique solutions for building systems, Kevin has focused on the assessment and design of HVAC, heat recovery and industrial systems for a variety of markets including K-12 schools, universities, healthcare, manufacturing, industrial, commercial  and government buildings.

Kevin Baum

lead engineer

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