Most people grade President Barack Obama based on Syria, health care and the federal budget. But at EnergyEfficiencyMarkets.com, we’re watching his progress on combined heat and power (cogeneration).
Obama set a goal last year to increase CHP installations 50 percent by 2020.Getting presidential attention was a huge deal for the CHP industry. Energy insiders know the technology to be highly efficient, but most of the world knows it not at all.
So one year later (and a couple of months), how is CHP doing?
Has the presidential attention paid off?
Is more CHP being developed?
Does your neighbor have any idea yet what you’re talking about when you say you work in CHP?
Okay, so that’s asking a lot. No one expected the Obama executive order to move mountains. The CHP industry has been in the doldrums for about six years, so change is likely to be incremental. But a few hills may have shifted.
“We are seeing an uptick in CHP development activity, although it’s still a little too soon to see much effect on the installed capacity,” said Anne Hampson, a project manager at ICF International, which maintains a US CHP database.
It will probably be about two years – the amount of time it typically takes to design and construct a CHP plant – before the US shows real growth, she said.
The US has about 82.4 GW of CHP, and Obama wants to see the nation add another 40 GW. ICF has identified 4,400 MW, or 4.4 GW, under development or construction. That means CHP has to make a lot of progress in seven years to meet Obama’s 2020 target. But the picture may be a bit better than it seems. ICF says its 4.4 GW count may be conservative because of limits to its database. Projects are underway that remain under wraps.
What’s attracting the new CHP development? A key driver is low natural gas prices, which are bringing chemical factories and other manufacturers back to the US, according to Hampson. These plants are a good fit for the highly efficient delivery of energy that CHP offers. So it’s no surprise that about 87 percent of CHP capacity serves industrial plants.
Federal money didn’t accompany the Obama goal. Instead, the DOE and EPA lent technical assistance to state energy officials. At first, the program didn’t inspire a great deal of interest because of uncertainty about Obama’s re-election, but that changed after Obama won, according to Neal Elliott, associate director for research at the American Council for an Energy-Efficient Economy.
“The place it has probably had the most effect is in the Midwest,” Elliott said “The Midwestern Governors Association really took on CHP as a major focus. They have embraced what they see as their share of the executive order’s challenge.”
As a result, state utility regulators in the region are looking at various ways to incorporate CHP. For example, Ohio is working on rules for SB 315, passed in 2012, which would include CHP requirements in the state energy efficiency resource standard. Work is also underway to expand CHP in Minnesota, Illinois, Indiana, Michigan and Iowa, according to Elliott.
Superstorm Sandy brought new attention to CHP too, particularly in Connecticut, New Jersey and New York as a way to keep the lights on when the grid goes down. The movement toward microgrid in these states benefits CHP as well, since CHP plants are often installed as part of a microgrid. The coastal push for better ‘storm resiliency’ means more CHP for hospitals and universities, as well as for office buildings – a market that ICF notes offers large untapped potential.
ICF sees California, the Northeast and Texas as states that offer the best prospects for CHP. But in reality, growth potential exists nationwide, Hampson said.
For a state-by-state look at CHP policy, watch for ACEEE’s State Energy Efficiency Scorecard, due out in late October. The scorecard includes a ranking of how well state governments perform when it comes to CHP policy. Last year’s top score went to Massachusetts, with Ohio second and Connecticut and New Jersey tied for third. The bottom three states were Mississippi, Nebraska and Oklahoma.
Meanwhile, click back here in 12 months. Let’s check up on Obama again, and see how he’s doing in Year 2 of the 40 GW CHP goal.
