Financial viability of switching propane heat to Combined Heat and Power (CHP) in rural northern communities

Community energy production will serve as an avenue for self-sufficiency and energy independence from utilization of biomass in local forests. The most opportune way of achieving this is to maximize the full utilization of the forest resource. As in the rural northern communities, the forests are available for Combined Heat and Power (CHP) projects. The CHP technology is well established in Europe, and it would be beneficial for Canada to become business partners with the CHP manufacturers to ensure the knowledge and expertise is established in British Columbia (BC). Based on this project, the CHP system is most appropriate when the unit is producing enough heat and power for the facility rather than to establish a large CHP for selling the surplus power to BC Hydro. The BC Hydro bioenergy rates are not high enough for building a strong business case for CHP at a smaller scale. The rates for BC Hydro are a driver for CHP, if the project is built based on present energy prices the renewable energy based projects are more costly than fossil fuel burning energy systems. As shown in the capital budgeting calculations, the smaller BG25 has a greater chance of success due to the lower costs for the initial investment and the lower operating costs. When the purchase price of renewable energy increases and given priority with premium prices then CHP will be financially viable. --P. 2.