Northeast Clean Energy Application Center

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For Policymakers

The Northeast CHP Technical Assistance Partnership supports and promotes state level policies that will facilitate the sensible integration of CHP solutions into the energy mix. CHP is becoming economically viable on its merits for many applications, but requires a level playing field to effectively compete in the marketplace. At the same time it is not yet a mature industry, and there are certain applications from which the public may benefit via targeted incentives for CHP deployment.

Energy Wasted in US Power Grid

 

The CHP Solution

Two-thirds of all the fuel used to make electricity in the U.S. is generally wasted by venting unused thermal energy from power generation equipment into the air or discharging it into waterways. While there have been impressive energy efficiency gains in other sectors of the economy since the oil price shocks of the 1970s, the average efficiency of electric power generation within the U.S. has remained around 33% since 1960. The average overall efficiency of generating electricity and heat by conventional systems is around 51%. CHP increases the average efficiency of electrical generation, and provides power at the points where it will be used without line losses or (potentially) the need for new transmission and distribution investment. Thus it provides many benefits to society at large, including many that are difficult to quantify.

 

McKinsey GHG Abatement Cost Curve

 

Regional CHP Benefits

Several factors prime the Northeast to capitalize on the potential benefits of CHP. Compared to other regions of the United States, the Northeast faces higher than average energy costs, significant pockets of congestion in its electrical transmission system, aging capital stock, high peak summer demand for electricity, and growing concerns about air quality. CHP addresses all of these issues, and likewise they are factors that make the Northeast a target market for developers of CHP systems.

Heating Oil Use by Region for United States.jpg

The Need for a Coherent CHP Policy

As a relatively new entrant into the larger energy industry, and as a collection of small and medium sized companies (as opposed to the industrial titans that have dominated the industry until now), CHP is highly sensitive to government policies. Currently, there is little coordination or even similarity among the various Northeastern states regarding the many policy issues that affect CHP deployment. In most states there are also significant differences among the state’s regulated utilities, which creates additional obstacles to marketing and economies of scale. In general, state policies should recognize the valuable economic, environmental, reliability and other benefits of CHP, and provide a level and consistent playing field for CHP to compete with other energy resources in the marketplace. The Policy section of the NERAC web site attempts to collect in one place and provide links to some of the information Northeastern policy makers may need when making decisions affecting this sector of the energy industry.

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