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Installing a micro-CHP system yielded surprising results for one Connecticut homeowner. His electric bill dropped from more than $16,000 to just $1.25 for an entire year.

The billing department hadn’t made a mistake. Combined heat and power (CHP) systems use a propane or natural gas generator to create electricity that powers the home. Simultaneously, the heat from the engine is captured and used to warm the home or create hot water, further reducing energy costs. (To learn much more about how CHP systems work, as well as their environmental and economic benefits, take our free online course, Impact of Combined Heat and Power Systems in Residential and Commercial Buildings.)

The Connecticut homeowner’s Yanmar CP10WN-SN micro-CHP system produces 10 kilowatts of electricity and provides heat for an in-ground swimming pool and hot tub, a water-to-air heat exchanger and domestic hot water. Due to Connecticut’s net metering rules, the homeowner is able to bank kilowatts with the utility during the winter, when his electric usage varies between about 4 kilowatts at night and 9.5 kilowatts during the day.

During the summer, when his electricity usage increases, the homeowner is able to use the kilowatts he banked throughout the winter. In all, the system saves him $14,000 annually, for a payback of three years.

The Connecticut home is a prototypical use for a 10-kilowatt CHP system. At 13,000 square feet, it’s large enough to utilize the 10 kilowatts of electricity production, and its pool and hot tub provide a summertime load for the hot water generated by the unit. Because CHP systems are used for their thermal energy, they are most cost-effective in applications where there is a strong and steady need for heating energy.

Connecticut’s expensive electricity rates and net metering rules are also a good fit, says Chris Dockery, project technician in the Energy Systems department for Yanmar America. “The return on investment makes the most sense when you can produce power cheaper with our unit than you can when purchasing it from the utility.”

Expanding Market

A new 5-kilowatt CHP unit launched by Yanmar in October is set to dramatically expand interest in the technology. While the smaller units are still most cost-effective in homes with summertime heating loads such as pools, their power and heat output make them appropriate for smaller commercial settings and residential homes ranging from 2,500 to 8,000 square feet. Operating at 84 percent efficiency, the CP5WN compares favorably with the 33 percent efficiency attained using power from a traditional utility plant.

John Burrell, president and owner of Hall Heating and Cooling in Pelham, N.Y., is one contractor who is excited to work with the smaller units. “I think it’s going to be a good fit for light commercial or smaller residential areas,” he says. “There are a lot more houses between 3,000 and 5,000 square feet than there are in the 10,000 to 12,000 range.”

Because CHP units are new to many builders – Yanmar’s product has only been on the market since 2010 – Burrell is typically involved in presenting and selling the technology to homeowners. He says that return on investment, which can range from three to six years depending on usage, is his biggest selling point. “People want to be green, but at the end of the day everyone wants to save money.”

Another advantage is that CHP systems can be used for backup power. They run in tandem with the power grid when the utility power is on, but in the case of a blackout, they turn into a backup generator while still producing heat for the home. The Connecticut home, in fact, became a popular place for neighbors to shower and eat when the neighborhood lost power during 2011’s Hurricane Irene.

Burrell isn’t the only pro excited about the new units, Dockery says. “In our first shipment of 5-kilowatt propane units, every last one of them have sold out and we’re already selling into our second shipment of units coming into the U.S.,” he says. “There’s a large, large level of interest.”

The Propane Education & Research Council’s Propane Exceptional Product program promotes the adoption of new propane-fueled technologies, including CHP systems, in residential and commercial applications. The program provides financial incentives of up to $10,000 toward the purchase and use of eligible products. In exchange, program participants agree to share product usage information with program partners. The goals of the program are to encourage the adoption of new propane products for homes and businesses and to gather real-world performance data and user feedback.