When it was looking for ways to cut the energy bill at its syrup plant in Atlanta, Georgia, Coca-Cola found a sweet deal: a project that could deliver not only cheaper electricity, but also steam, which the company uses to run a chiller for humidity and temperature control.

Now nearly two years into production, the 6.5-megawatt combined-heat-and-power plant is performing well and lowering the beverage giant’s energy expenses, said Richard Crowther, sustainability manager for Coca-Cola’s North American operation.

“We were looking for cost savings, and we also have a carbon reduction target,” Crowther said. “It just so happened that the project was a nice match.”

CHP is an old concept that is getting a new outlook. Long used at college campuses, hospitals and industrial operations, CHP fell out of favor in the last decade, when fuel pricing was high and the economy low.

The rise of domestic shale gas production, though, makes CHP worth a second look, said Katrina Pielli, senior policy advisor for the US Department of Energy’s Office of Energy Efficiencies. Hurricane Sandy, which devastated the East Coast electric grid in 2012, also renewed corporate interest in securing reliable backup power during blackouts.

In 2012, nearly 1 gigawatt of CHP projects came online in the US, representing the largest amount since 2005. That number might be poised to rise further amid growing government support for CHP research and construction.

Last October, the energy department announced $11m in funding for seven regional centers that will help their local businesses develop CHP projects. President Obama set a goal of adding 40 gigawatts of new CHP production by 2020.

Businesses that have turned to CHP for energy in recent years include the Clarion Hotel, Lockheed Martin, Pfizer, Paramount Pictures, eBay and Toyota.

In total, nationwide, 82.4 gigawatts of CHP systems had been installed at commercial and industrial sites as of July 2013. Chemical companies made up the largest set of users, accounting for 29% of installations, followed by fuel refining companies at 18%.

Environmental benefits

CHP systems burn fuel, usually natural gas, to produce electricity. The process also produces heat, which is then recovered to make steam or hot water. Producing electricity and heat together, instead of separately, makes the systems more energy efficient: CHP systems achieve average efficiencies of 65% to 75%. In comparison, using a conventional power plant and a boiler will collectively get you an average efficiency of about 40%.

Because of CHP’s higher efficiency – and because natural gas yields lower emissions than, say, coal – the technology can help a company reduce its carbon footprint. The environmental benefit typically isn’t the most important factor for companies, though.

“What we found is that the driver for large companies is not to go green, unlike when they think about investing in solar. It’s from a bottom line and reliability standpoint,” Pielli said.

A CHP poster child

A 10.7-megawatt project at a Connecticut factory for Sikorsky Aircraft, maker of the Black Hawk helicopter, has become a poster child for CHP technology advocates. Not only has the system saved Sikorsky a bundle of money, but it also enabled the company to operate through Hurricane Sandy and help the disaster relief efforts by flying food, water, flashlights and other items to the Staten Island University Hospital in New York.

“With a lot more fuel supply, we are seeing folks who considered CHP five years ago taking a look at the same projects that might have penciled out then,” said Anne Hampson, project manager at ICF International, a consulting firm in Virginia that maintains a CHP database for the energy department.

When CHP makes sense – and when it doesn’t

Using a CHP system doesn’t automatically guarantee savings, though. The technology makes more financial sense in regions with high electricity prices, such as California, New York, Texas and New England. It also will not deliver significant savings, if any, if a business doesn’t need both electricity and thermal energy consistently, Crowther said.

“It doesn’t work well when a facility needs intermittent energy – it needs a lot during the day and little at night,” he said.

In Coca-Cola’s case, the ability to secure low-cost landfill gas from several miles away made the project feasible even though electricity prices are fairly low in Atlanta compared with the national average, Crowther said.

It also helped that the company didn’t have to fork over the full cost of developing and building the CHP project upfront. Instead, Coca-Cola signed an energy purchase agreement from Mas Energy, which owns the project.

Pricing and payback

Pricing and performance of CHP systems vary widely. Adding more sophisticated emission-capturing technology will raise the cost, for example. A system with an adjustable power-to-heat production ratio or the option to run both on and off the grid also could be more expensive.

But generally, a CHP system costs about $1,500 per kilowatt, Hampson said.

When considering building their own power generation, manufacturers and industrial operators usually seek a payback period of two to three years; any more and they’d rather spend the money on growing their core businesses, she said. However, a hospital or university is more likely to accept a longer payback period of five to 10 years.