The Role of Distributed Generation and Combined Heat and Power CHP Systems in Data Centers

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3 Benefits of Distributed Generation and Combined Heat
and Power for Data Centers
DG and CHP applied in data centers can provide cost savings to the facility operator in the form
of:
• Reduced energy-related costs and enhanced economic competitiveness─from reduced
fuel and electricity purchases, resulting in lower operating costs.
• Increased reliability and decreased risk from outages─due to reliable onsite power
supply.
• Increased ability to meet facility expansion timelines─by avoiding the need for utility
infrastructure upgrades.
In addition to these cost savings, DG/CHP provides the following benefits to the energy supply
chain:
• Increased economic development value─through energy cost savings, businesses can be
more economically competitive in a global market, maintaining local employment and
economic health.
• Increased energy efficiency from generating electricity and useable thermal energy from
a single fuel source.
• Reduced emissions of greenhouse gases─reduced fuel use results in lower levels of fossil
fuel combustion and reduced emissions of carbon dioxide (CO2).
• Reduced emissions of criteria air pollutants─reduced fuel use and cleaner technology
results in lower air emissions of carbon monoxide (CO), nitrogen oxides (NOX), and
sulfur dioxide (SO2).
• Increased reliability and resource adequacy for the grid─customer-sited generation can
provide support and stability to the distribution grid and reduce or defer the need for
regional power plant and transmission construction.
3.1 Reduced Energy Costs
Due to their very high electricity consumption, data centers have high power costs. Installing
CHP systems with absorption cooling can often reduce energy costs by producing power more
cheaply on site than can be purchased from the utility supplier. In addition, waste heat from the
power generation can drive absorption chillers that displace electric air conditioning load.
Table 1 shows simple annual savings and paybacks for four actual CHP systems installed in
California and the Northeast. Capital costs for the first three DG systems were based on average
capital costs for completed installations under the California Self Generation Incentive Program
(SGIP), plus an assumed capital increase for absorption cooling of $1,200/ton based on the
cooling capacity required for each system. Capital costs for the gas turbine were estimated based
on an estimated price for a complex installation with a double effect absorption chiller
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