CHP: An overlooked efficiency powerhouse?

Combined heat and power systems (CHP) are one of the most promising, yet most overlooked, keys to increase energy efficiency and reduce carbon emissions, according to a report released in December 2008 by the Oak Ridge National Laboratory

The report cites CHP, also known as cogeneration or cogen, as a near-term solution that could ease grid congestion, increase energy security and spark investment and job creation while slashing emissions. While touting CHP’s promise, the report identifies significant hurdles—including regulatory and policy barriers—to widespread adoption.

CHP systems—also known as Cogeneration systems—can run on various sources including oil, natural gas, biogas and solar. They capture waste heat generated by electricity production and use it for space or process heating and cooling. CHP systems are already employed by many large industrial plants, but the report notes other potential applications, including hospitals, commercial buildings and universities.

Jay Zoellner, CEO of Costa Mesa, Calif.-based energy and carbon management company eps Corp., says his company has had success with CHP systems, calling them “the best return on investment” in terms of reducing energy use and cutting carbon emissions. The company has built cogeneration systems for clients, including biogas and solar plants, and also owns several natural gas-fueled systems with a cumulative capacity of about 10 megawatts. Three of the eps-owned plants in California and Massachusetts are used by Dallas-based Dean Foods (NYSE: DF) in dairy processing facilities.

Currently, cogeneration plants make the most sense in areas where electricity rates are high, Zoellner says. But he also says that policy and regulatory changes could bring increased adoption, adding that a consistent national policy and changes to utility rate practices would be important steps.

Investment and production tax credits may also drive CHP development, the report says. Also, states are increasingly pushing to have CHP included in their renewable portfolio standards, Zoellner says. Washington currently allows cogeneration to count towards portfolio standards, while California offers credit for CHP in its emissions output regulations.

Source: Sustainable Industries