Combined Heat & Power, 2013: Are We There Yet?

Combined Heat & Power (CHP) or cogeneration, while widely familiar, and in use in a significant number of industrial facilities, remains largely under-appreciated and under-utilized as a means of meeting U.S. energy and economic goals. CHP provides maximum fuel efficiency for delivering steam and power via fossil fuels, thus minimizing emissions while supporting U.S. industrial competitiveness. CHP is fuel flexible and utilizes proven technologies, offers much lower capital costs than renewable technologies, is safe, and highly reliable. With all of these attributes, why does CHP remain a minor player on the U.S. energy scene? Is this situation changing, and what can be done to accelerate implementation? As the U.S. emerges from the economic downturn, increased demand for energy in industry will provide opportunities for costeffective solutions. In August 2012, the White House issued an Executive Order on Accelerating Investment in Industrial Energy Efficiency calling for a national goal of deploying 40 gigawatts of new, cost effective industrial CHP in the U.S. by the end of 2020. In addition there are new EPA Maximum Achievable Control Technology (MACT) regulations on industrial boilers that require industrials nationwide to substantially reduce emissions from coal and oil boilers emissions. This paper explores the current policy, technology, financial environment, and barriers to using CHP as well as key players’ roles in making CHP investments. An investment analysis that lays out the business case from the point of view of a plant manager, corporate energy manager and chief financial officer is provided to better understand the decision process and prospects for utilizing CHP.