tion. Power plants would be subject to an
emissions cap of increasing stringency, and
industrial facilities might be exempt from
the cap for several years. At a minimum,
we would want the new rules to more fully
reflect the fuel efficiency of district energy/
CHP and not perversely threaten these
assets with higher compliance costs than
grid incumbents. We would like the downhill portion based on a minimum 62 percent
CHP efficiency standard and the aerial
freestyle scoring to recognize that emissions reductions occur when surplus heat
is recovered and recycled for incremental
use, displacing other fossil combustion and
lowering regional emissions.
Part of our challenge is to educate
more people involved in rule making of
the positive solution that district energy
and CHP can play near term in the United
States. Immediacy must be considered
in scoring, as neither nuclear nor carbon
sequestration will be able to compete with
CHP on ‘speed to market.’
The Voice of the Competition
We need to recognize that, just as in
the Olympics, there is spirited competition
in this arena. The legislative committee of
the American Public Power Association,
an association of publicly owned electric
utilities, approved a resolution recently on
the contentious issue of how allowances
should be allocated in a future cap-and-trade system. APPA’s resolution stated
that “all, or substantially all” allowances
should be distributed among utilities on
the basis of past GHG emissions.
We should not be surprised by the
chorus of voices suggesting self-serving
policy treatments, but we should likewise
offer our own comments. Ultimately,
one would hope that energy efficiency
and environmental efficacy would trump
political preferences and that competition
between energy solutions would reasonably consider factors like true costs of capital, scarcity or availability of indigenous
resources, fuel flexibility and other aspects
of integrated resource planning. But all is
not fair in love and politics.
Certainly, our university systems
deserve credit for the regional emissions
reductions achieved by their campus CHP
to be properly scored against allowance
requirements. The scorecard should not
be rigged for utility incumbents where
free allowance allocations are given to
dirtier utility operations on the margin
just because of political clout or ’repu-
tation.’ Likewise, a district energy/CHP
operator should not be disadvantaged by
having to purchase emissions allowances
to produce its own heat and power based
on fuel consumption when the regional
competitor, the incumbent electric utility,
is granted dispensation with free allow-
ances. That would be like asking district
energy to ski the moguls without poles –
a disastrous scenario.
Electricity production should
not be a prerequisite to qualify
for renewable or advanced
energy portfolio standards or
production tax credits.
U.S. district energy systems have
largely flourished without external policy
drivers or market incentives. Since 1990,
nearly half a billion square feet of building owners have selected district energy
service over installing on-site equipment
based on competitive life-cycle costs and
other advantages like simpler operations,
reduced capital and operating risks, and
the value of space recovered for more
profitable uses.
On a community level, district energy
systems have the advantage of economies
of scale in tapping renewable resources
and enhanced fuel flexibility, diminishing reliance on fossil fuels and improving
the economic multiplier of indigenous
resources like biomass or wood waste.
Who Should Be on
Medal Stand
In the Olympics, fitness, performance
and skill level should ultimately determine
medal winners – not a referee’s ruling.
The ability of a district energy system to
aggregate dozens or hundreds of buildings for thermal scale should yield operating efficiencies through load factor,
industrial equipment efficiencies, allocation of fixed costs and pure operational
advantage due to professional performance by skilled operators.
The quality, professionalism and
training of operators, as evidenced by
The University of Texas at Austin’s 90
percent fuel-efficient CHP operations,
should translate into lower operating
costs and competitive advantages for
end-user buildings. When it comes to
evaluations of building performance, real-world performance metrics ideally would
be properly factored and not arbitrarily
impaired by assignment of LEEDTM points
or adjudged by source versus site emission disparities.
Policy drivers have clearly created
favorable market conditions for renewables. Working with the U.S. Department
of Energy’s Clean Energy Regional
Application Centers (DOE RAC), IDEA
will support regional efforts to increase
awareness of district energy and combined heat and power as a community
level solution for enhanced energy security, emissions reductions and adaptive utilization of surplus heat and waste energy
opportunities. The recent IDEA DOE RAC
workshop in Reno was a positive first
step, engaging more than 80 people in
a discussion of technologies, applications
and market strategies.
In addition, IDEA has established a
relationship with the American Planning
Association so that urban planners seeking more sustainable energy solutions
are able to develop deeper insight on
implementing district energy systems in
their communities. We plan to explore
community energy planning strategies
at the upcoming IDEA 101st Annual
Conference, June 13-16, 2010, in
Indianapolis.
Looking ahead, it is pretty clear
that competition for capital is becoming
increasingly important for many of our
District Energy / Second Quarter 2010 5
