Traditional power plants only utilize about 30 percent of the primary energy that they consume, and the rest of the energy is usually wasted in the process of generating or transmitting electricity. On-site and near-site power generation has been considered by business, labor, and environmental groups to improve the efficiency and the reliability of power generation. Combined heat and power (CHP) systems are a promising alternative to traditional power plants because of the high efficiency and low CO2 emission achieved by recovering waste thermal energy produced during power generation. A CHP operational algorithm designed to optimize operational costs must be relatively simple to implement in practice such as to minimize the computational requirements from the hardware to be installed. This dissertation focuses on the following aspects pertaining the design of a practical CHP operational algorithm designed to minimize the operational costs: (a) real-time CHP operational strategy using a hierarchical optimization algorithm; (b) analytic solutions for cost-optimal power generation unit operation in CHP Systems; (c) modeling of reciprocating internal combustion engines for power generation and heat recovery; (d) an easy to implement, effective, and reliable hourly building load prediction algorithm.

This thesis presents performance evaluation and a field validation study of a time and temperature indexed autoregressive with exogenous (4-3-5 ARX) building thermal load prediction model with an aim to integrate the model with actual predictive control systems. The 4-3-5 ARX model is very simple and computationally efficient with relatively high prediction accuracy compared to the existing sophisticated prediction models, such as artificial neural network prediction models. However, performance evaluation and field validation of the model are essential steps before implementing the model in actual practice. The performance of the model was evaluated under different climate conditions as well as under modeling uncertainty. A field validation study was carried out for three buildings at Mississippi State University. The results demonstrate that the 4-3-5 ARX model can predict building thermal loads in an accurate manner most of the times, indicating that the model can be readily implemented in predictive control systems.