It’s no news that coal-fired electricity generation is in decline in the United States. Falling natural gas prices and increasing pollution regulations are combining to put aging plants in many states out of business. While natural gas-fired generation likely will pick up much of the slack, energy-efficiency advocates say more efficient and distributed generation should play a role, as well. Combined heat and power (CHP) systems offer a promising option that could boost efficiency and reliability of local electricity supplies.

Coal is fading fast. In May, the Energy Information Administration announced that coal’s share of the electricity-generation market had dropped to 36 percent from 44 percent in just one year—an almost 20 percent decline. The share of natural gas jumped to 28.7 percent from 20.7 percent during the same period, underscoring that fuel’s growing presence in energy markets.

But instead of just building new natural gas plants to replace shuttered coal operations, maybe we would be better off rethinking our electricity demand in the context of our total energy needs. At least, that’s the position of CHP advocates. Also called cogeneration, or cogen, CHP plants have had a long-time presence as part of U.S. industrial operations, capturing the heat exhausted by on-site generators and putting it to use in process heating and cooling operations. The generators involved are often gas-fired, so they don’t represent a new fuel source; however, these installations help plant operators get more bang from their energy buck.

To understand the effect more widespread CHP use could have on our total energy needs, consider that the most modern combined-cycle gas electric-utility turbines operating today top out at just under 60 percent efficiency, with many current plants performing significantly worse. In fact, central-plant electricity production averages efficiencies well below 40 percent. CHP plants, however, can hit 80 percent efficiency, meaning they are making use of 80 percent of the energy potential carried in a given amount of natural gas.

“There’s so much Btu value that gets wasted in the U.S.,” said Rob Thornton, president and CEO of the International District Energy Association.

District energy refers to the use of centralized heating and cooling plants to service multibuilding campuses—or even multiblock areas in a city—through networks of steam and/or chilled-water piping. CHP generators are often the foundation for district energy installations.

The American Council for an Energy-Efficient Economy (ACEEE) released a study in September arguing that, through district energy and other strategies, CHP plants could help offset coal capacity either lost or anticipated to be lost between 2011 and 2020 in 12 states. For example, CHP could offset 100 percent of lost coal capacity in South Carolina and more than 50 percent in North Carolina and Alabama, the report’s authors found.

As an added benefit, CHP electricity is generated at its point of use, so transmission and distribution losses are eliminated.

“Anywhere from 7 to 10 percent of energy is lost in the transmission and distribution of energy,” said Anna Chittum, a senior policy analyst with ACEEE and a co-author of the report. “If you’re generating it on-site, you immediately negate that.”
State-level energy planners are beginning to see CHP’s potential to improve both the efficiency and environmental performance of our energy-generation efforts through the renewable portfolio standards mandating alternative sources for a set percentage of the electricity sold by a state’s utilities.

“CHP does qualify in a number of states, but it doesn’t always have the same status as renewables,” Thornton said.

However, extensive outages caused by Hurricane Irene and other storms last year have prompted some Mid-Atlantic and New England states to also consider the reliability benefits of localized electricity generation when setting portfolio targets. In Connecticut, for example, legislators now are looking at ways to promote microgrids and other distributed--generation options in which CHP technology could play a role.

CHP plants are most economical when sized to serve a steady thermal demand, such as an industrial steam boiler or a college campus’ central chiller plant. This approach keeps the related electricity production consistent and predictable, and it limits the start/stop operation that can kill generator efficiency. Proponents—including federal energy officials—are confident CHP could help U.S. manufacturers cut their energy bills, along with related emissions. In August, President Obama signed an executive order announcing a national goal to deploy an additional 40 gigawatts of CHP capacity (above the existing 82 gigawatts, according to the U.S. Clean Heat & Power Association) by 2020.

Such an effort could go a long way to addressing what some CHP promoters see as a dearth in efforts directed toward improving U.S. industrial energy efficiency.

“The industrial sector is one that very few utilities have figured out how to engage, and there are a lot of savings to achieve,” Chittum said, noting that “low-hanging” improvements in the residential and institutional markets already have been achieved. Over the next 10 years, she said, “we’ll see more programs targeted to the industrial sector.”


ROSS is a freelance writer located in Brewster, Mass. He can be reached at chuck@chuck-ross.com.