Recognizing CHP, rewarding
Susan Freedman, Senior Policy Analyst, San Diego Regional Energy Office
Combined heat and power (CHP)
allows for the productive use of much of
the waste heat from electricity generation,
which accounts for about two-thirds of
the energy used to produce the electricity.
Unfortunately, such innovative technologies can face environmental barriers as
the brunt of regulation targets the newest,
most efficient systems. And in the case of
CHP, regulations do not necessarily recognize total system efficiency.
In the United States, for the most
part, power-sector emissions are regulated on an input basis: They are measured
in pounds of pollutants per British thermal unit (Btu) of fuel. This input-based
approach pays no attention, however, to
how much electricity or heat is provided,
and it fails to reward efficient production. Put another way, input-based regulations provide no correlation between
the amount of fuel used and the amount
of electricity generated by that fuel. In
contrast, an ‘output-based’ approach –
measured in pounds of pollutants per
megawatt hour – would reward those
generators producing the same amount
or more energy while emitting fewer pollutants for that energy product (fig. 1).
Instituting output-based emissions policy
in the United States would help advance
an array of innovative power technologies like CHP with enormous potential to
improve efficiency and the environment.
If output-based policy can encourage the installation of newer and clean-er-generating systems, the question is,
Why is it not used more widely in the
United States? The answer lies in part
with simple inertia. For more than 50
years, America has employed a ‘central
power paradigm’ in which utility monopolies built large central power plants
many miles away from urban centers.
That paradigm made sense for several
years as larger power plants were more
efficient; but by the late 1950s, the U.S.
electricity industry was operating at only
a 33 percent efficiency level, meaning
that for every three units of burned fuel,
only one unit of useful energy was
obtained. Although the utility industry
has delivered relatively reliable power
and, therefore, gained an image of being
as effective as possible, this efficiency
record has not improved.
With a growing demand for electricity
Figure 1. Output-Based Regulations Recognize Efficiency and Lower Emission.