The Importance of Energy Efficiency and CHP Growth Patterns

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Move Over Solar, Time to Welcome Industrial Energy Efficiency: Pew Report

Energy Efficiency Markets, October 27, 2015. Image credit: Zara

That’s why industrial energy efficiency is on a growth trajectory in the U.S. — not as fast as some would hope, but expanding nonetheless. Characterized largely by combined heat and power (CHP), it is set to increase 22 percent by 2030, or even more if Congress extends clean energy tax credits.

That’s the word from a report issued today by the Pew Charitable Trusts that looks at the tremendous upheaval created by distributed energy on the electric grid, and what’s to come for heat-related energy tech, such as CHP and waste-heat-to-power (WHP). The technologies use heat — otherwise wasted in production processes — to create useful energy. This leads to fuel savings and emissions reductions.

The industry is asking to be placed on equal footing with solar when it comes to federal tax incentives. Solar installations receive a 30 percent tax credit, while CHP receives only 10 percent — and that’s only on the first 15 MW of a project no larger than 50 MW. WHP isn’t eligible for the tax credit at all.

The CHP and WHP industries are pushing for Congressional approval of the Power Act of 2015 (S. 1516, H.R. 2657), which would end the inequity.  CHP and WHP would receive a 30 percent tax credit through 2018, which would apply to the first 25 MW of a project with no cap on project size.

The report finds that the improved tax incentive would lead to more CHP/WHP development. The Clean Power Plan also is boosting CHP/WHP.  The federal rule requires that states come up with plans to reduce carbon dioxide emissions from electric power 32 percent by 2030.

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