How Combined Heat and Power Saves Money, Reduces Emissions and Improves Energy Security

Wednesday, May 22, 2013—The Environmental and Energy Study Institute (EESI) held a briefing on how combined heat and power (CHP) technology can provide critical facilities (e.g. hospitals, wastewater treatment), businesses, institutions, and communities with more resilient and reliable heat and power, while at the same time reducing energy costs and harmful emissions over time. This briefing introduced participants to CHP technology and presented a number of recent case studies in which CHP systems helped communities pull through extreme weather events when the grid went down. Speakers discussed both some of the opportunities and the barriers to deploying more CHP systems.

• Anne Hampson, a Senior Associate at ICF International, provided an introductory overview of CHP. A recent study from ICF International details numerous case studies on the critical role CHP played keeping the lights, heat and air conditioning on during recent extreme weather events across the country.
• Hampson began by noting that two-thirds of the heat generated in the electric power sector is wasted up the smokestack.
• CHP systems produce electric power while also using much more of the thermal energy for industrial processes and other heating and cooling applications. This results in significant gains in overall efficiency.
• CHP systems can reduce energy costs, reduce emissions, improve reliability and resilience, and strengthen power grid capacity in highly congested areas.
• Most of the 82 gigawatts (GW) of installed CHP capacity in the United States today is used for industrial purposes (e.g., refining, chemical, pulp and paper industries).
• Supportive federal policies (PURPA) and low natural gas prices led to a significant expansion of CHP from 1985 to 2005, but the expiration of these policies and the spike in natural gas prices reduced the rate of expansion dramatically after 2005.
• The market is beginning to pick up again with low natural gas prices.
• In 2012, the President issued Executive Order 13624, directing federal agencies to promote the expansion of CHP by an additional 40 GW by 2020.
• ICF International recently released a report documenting the important role CHP systems played providing resilient, continuous electric and thermal energy to critical facilities in the aftermath of Hurricane Sandy.
• Susan Wickwire, Chief of the Energy Supply and Industry Branch, Climate Protection Partnerships Division, at the Environmental Protection Agency (EPA), spoke about EPA and other interagency initiatives to advance CHP and to help overcome some key challenges for developers.
• EPA’s CHP Partnership (CHPP) is a voluntary program that works closely with DOE and with EPA’s Energy Star Industrial Program. Through 2012, CHPP has provided technical assistance for more than 770 CHP projects representing 5.7 GW of new CHP capacity.
• EPA is working with developers and state air quality regulators to deal with the complexities of emissions accounting and permitting for CHP at the local and regional levels.
• EPA is working to help developers overcome the higher upfront costs of installing CHP systems and work more effectively with utilities.
• EPA is educating owners of critical infrastructure (such as hospitals) about the resilience of CHP systems in the wake of environmental disasters when the grid is down, and identifying state policies that support CHP installations.
• EPA recently released a report on state level best practices to support CHP expansion.
• Tom Bourgeois, Deputy Director of the Pace Energy and Climate Center, Pace University, described recent developments in the Northeast, the resilient performance of CHP facilities in the wake of recent extreme weather, and the future potential of CHP development.
• In case after case, facilities that have installed CHP systems report significant energy cost savings, reduced emissions and carbon footprints, and increased reliability and resilience.
• The future growth of CHP in the Northeast is likely to be more commercial and institutional, more in district energy and micro-grids settings rather than industrial ones.
• Back-up electric power generators often fall short of meeting needs in a disaster. They may not start up; they run out of fuel; and they do not supply thermal energy.
• The states of New York, Connecticut, and Massachusetts have developed comprehensive policies that encourage the development of CHP.
• A key challenge is to educate potential developers about the benefits of CHP and to think about the conventional energy services they use differently.
• Robert Araujo, Manager for Sustainable Development and Environment, Health and Safety for Sikorsky Helicopter, described Sikorsky’s experience developing a CHP system for their facility in Connecticut and the way it performed in the aftermath of recent extreme weather events.
• Key to the CHP project’s success was Sikorsky’s strong companywide commitment to sustainability - as well as its positive impact on the bottom line.
• Reduced energy costs paid back the $29 million investment in less than three years – well ahead of schedule – and will result in continued substantial savings in the years ahead.
• Sikorsky’s carbon footprint was reduced dramatically, as well.
• Following Hurricane Sandy and subsequent blizzards, Sikorsky was able to keep the lights on and the plant operating, continuing production while serving the needs of its 9,000 employees, plus thousands more in the surrounding community.
• Dale Louda, Executive Director of the CHP Association, summed up the multiple benefits of CHP for business, industry, critical infrastructure, and the nation as a whole.