Energy waste the size of Japan

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By Elisa Wood

July 22, 2010

Here is a startling fact: US power plants waste more energy than many countries use, including advanced economies like that of Japan. The wasted energy is in the form of heat thrown off when power plants produce electricity.

This is one of the points being brought to light by the International District Energy Association (IDEA), as it promotes new federal incentives for heat efficiency.

While the US is focusing on cleaning up its electricity supply, it tends to ignore heat energy, even though it represents 31% of the energy we use, particularly to heat and cool buildings, warm water, and manufacture products.

IDEA is a group that promotes district energy and cogeneration (also called combined heat and power). These systems recycle heat waste for productive purposes. For example, a cogeneration plant might provide electricity to the grid and then recycle the wasted heat from the system into steam for use by a nearby factory. District energy systems often incorporate cogeneration. They supply water or steam to multiple buildings for space heating, domestic hot water, air conditioning and industrial processes.

IDEA, along with several environmental and efficiency groups, want Congress to approve a bill that will make available to heat the kind of incentives now given to clean forms of electricity. To that end, they are backing the Thermal Renewable Energy and Efficiency Act (S.3636), a bipartisan effort introduced by Sen. Al Franken (D-Minn.) and Sen. Kit Bond (R-Mo.)

The bill would create federal production tax incentives for heat energy, much like those that have spurred the wind and solar industries in the US. It also would expand tax-exempt bonds for the systems and reauthorize and broaden certain grants.

“The economic and environmental costs of the BP Gulf disaster are yet to be tallied, and the hurdles to comprehensive climate legislation are daunting. That’s why we must act now to implement policies that reduce fossil fuel consumption using proven clean technologies like district energy and combined heat and power,” said Rob Thornton, IDEA president, in a July 22 letter to US Senate leaders.

With today’s introduction of a smart grid, we are seeing many new systems and gadgets that promise energy savings. Industry insiders understandably eye them with skepticism; many of these technologies are untried. However, cogeneration and district energy are old ideas, decades old, and proven many times over. The US already has about 2,900 district energy systems and about 3,500 cogeneration plants. Still cogeneration represents only 8% to 9% of US electric capacity.

Cogeneration and district energy face the same problem as other capital intensive projects today. High upfront costs and reticent lenders make it hard to develop new projects.

Incentives do help spur these technologies. When the state of Connecticut began offering grants for cogeneration a few years ago, businesses and institutions jumped at the opportunity and quickly added installations totaling several hundred megawatts.

IDEA wants the Senate to incorporate heat energy incentives into any energy legislation that might pass this year. But it appears increasingly unlikely that a major energy bill will make it through Congress. The US may continue to throw away several countries worth of energy for some time.

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About Elisa Wood

Elisa Wood is the chief editor of She has been writing about energy for more than three decades for top industry publications. Her work also has been picked up by CNN, the New York Times, Reuters, the Wall Street Journal Online and the Washington Post.