While I agree there should be a cogeneration standard, there also needs to be a minimum efficiency of 60-65% for these cogen plants otherwise the net efficiency gains are negligible versus standard efficiencies. Found on Forbes.com written by William Pentland.
As the consumer of about one-third of the nation’s energy, the industrial sector presents a significant opportunity to save energy, according to a new report by the U.S. Department of Energy’s Oak Ridge National Laboratory and Georgia Institute of Technology.
The report, “Making Industry Part of the Climate Solution,” reviewed seven federal policy options for promoting energy efficiency in the industrial sector. Chemical manufacturing, petroleum refining, pulp and paper and iron and steel manufacturing dominate industrial energy use. Large firms with more than 250 employees are responsible for about two-thirds of industry’s energy consumption.
While the report found all seven of the options to be feasible, mandating procurement of combined heat and power (CHP), sometimes referred to as “cogeneration,” is probably the most politically palatable of the possibilities. CHP produces heat and electricity in a single process. In conventional electricity generation, roughly one third or so of the energy potential contained in the fuel is converted into electricity. The remaining two-third of the energy contained in the fuel is lost as waste heat. By capturing a large share of this wasted heat for end users, CHP can achieve an efficiency of as much as 90%. The bottom line is that CHP uses about 40% less energy than conventional production of heat and electricity.
The report contemplated creation of a federal “Energy Portfolio Standard” (EPS) that mandates electric distributors to procure a certain amount of CHP. The EPS strategy would also expand the current investment tax credit to 30% of the total CHP system cost.
The result: industrial CHP capacity would more than triple from 28 GW in 2010 to 90 GW in 2035. The total electricity generation from CHP facilities would grow nearly twice as rapidly over the next two decades. These findings are generally consistent with an analysis by ICF International, which evaluated the impact of a 30% ITC for CHP projects with overall efficiencies of 70% lower heating value or greater.
CHP in the chemicals and pulp and paper industries generate approximately 50 billion kWh of electricity today. Under a CHP standard, the chemicals industry would generate nearly 200 billion kWh by 2035, compared with a more modest expansion for pulp and paper, which grows to about 75 billion kWh. The food industry starts at only about 5 billion kWh today, but grows to more than 50 billion kWh in 2035, nearly matching the pulp and paper industry.