CHP in the Era of Distributed Generation

Gita Subramony for Zondits, October 30, 2015. Image credit: Lars Plougmann

Just last week the ACEEE released its annual Energy Efficiency Scorecard. The rankings take into account factors such as utility spending on energy efficiency programs, transportation policies aimed at lowering greenhouse gas (GHG) emissions, adoption of building energy codes, combined heat and power policies, and state government initiatives. Based on these factors, the top states for energy efficiency include Massachusetts, California, Vermont, Rhode Island, and Oregon.

Good scores are achieved primarily through strong and well-funded utility energy efficiency programs as well as a combination of transportation policies and building energy codes. CHP and appliance standards remain a much smaller piece of the efficiency pie. However, CHP might become an increasingly important solution for states seeking to promote energy efficiency and reduce GHG emissions, especially as states begin to align utility profits with newer technologies, distributed generation, and energy efficiency goals.

The Pew Charitable Trust recently released a report on industrial energy efficiency gains and how CHP is a driving force behind efficiency in this sector. Industrial facilities are some of the most energy intensive buildings in the USA, and there is high potential for CHP not only to assist these facilities with receiving reliable power but also to establish distributed resources. Currently, more than 4000 facilities in the USA have CHP systems resulting in over 80 GW in installed capacity. The Pew report suggests that an additional 126 GW of CHP capacity could be installed across the commercial and industrial sector.

In addition, distributed generation technologies are becoming more mainstream solutions for areas seeking to increase energy efficiency while including utilities in the discussion. If New York’s REV proceedings are any indication of things to come, other states will be looking to realign utility goals with advanced technology to promote a cleaner grid. CHP, along with solar PV and battery storage, will play an increasing role in how states provide energy to customers in a more efficient way. Right now, solar PV is not only more visible to the average consumer, but also receives a 30% tax credit; CHP only receives a 10% tax credit. However, there is a movement in Congress to increase the CHP credit to match the one for solar PV.

CHP is poised to be an important element in the toolkit for clean and reliable energy. Not only is there potential for added capacity, but policy initiatives on the state and federal level will help push the technology forward.