An upcoming conference will discuss new power market dynamics, new technologies and new policies that are changing the game for the many cogeneration systems that experts agree are on the horizon, writes Paul Cauduro
The market for CHP is changing and many now have a better understanding about power generation. Aiding this understanding is the constant drumbeat of news suggesting that abundant natural gas supplies are expected to keep the price of the fuel at multi-year lows for the foreseeable future. As a result, the economics supporting CHP development are becoming increasingly attractive, thereby driving more adopters to seek CHP for both its economic value proposition and for power reliability.
This is evident in America’s chemical processing and refining industry. These operations need heat, lots of heat, and where these or other concentrations of manufacturing facilities are located are typically the same locations where CHP facilities can best provide heat and power. Last year the American Chemical Council gathered a list of 148 proposed chemical plant investments between now and 2023, and found that chemical companies are planning to spend $100.2 billion in the US. The vast majority of new projects are in the Gulf Coast area and will involve the expansion of existing CHP systems or new systems altogether as part of their investment.
But more deployment of CHP won’t stop there. CHP and waste heat-to-power (WHP) technologies can and will play an increasing role in the nation’s manufacturing renaissance beyond just chemical processing and refining. Industrial demand for electricity is growing in every region and all industries are sure to examine, and ultimately implement, CHP as an economic, efficient and reliable on-site energy option. This also holds true for many other CHP end-user candidates such as hotels, hospitals, data centres, residential towers and even single-family homes.
Additionally, policymakers concerned about grid inadequacies are beginning to better understand the emission benefits. Plus, many now know that more distributed energy using CHP saves vast quantities of water, making water shortages in many regions an important driver for additional CHP. Just last year the Texas legislature changed the state’s utility code to allow CHP facilities to sell electricity to multiple customers in microgrid-type arrangements.
Before the change, CHP facilities could only sell electricity to one customer, and this restriction may have kept otherwise good energy projects from moving forward. This change was deemed important in the ongoing discussion about how Texas will power its industrial expansion and vibrant population growth while, at the same time, reduce the amount of water used by traditional power generation.
Policy initiatives like these in many states, combined with equipment and technology advances, innovative project financing mechanisms and power price dynamics are all driving decisions to install new CHP and WHP systems. Currently, 82 GW of installed CHP capacity (9% of US energy-generation capacity) are in use at more than 4100 sites across every state. But at least 50 GW, and up to almost 200 GW, of additional potential remains. The potential for WHP projects is equally impressive, with more than 11,000 MW available at industrial sites as well as gas compressor stations, landfills and locations where gas flaring is occurring.
In April, the World Alliance for Decentralized Energy (WADE) will bring together business and energy leaders, engineering consultants, project developers, policy specialists and end users to Houston, Texas for the DistribuGen Conference and Trade Show for Cogeneration/CHP 2015. There attendees will explore new market drivers, discuss emerging technologies, examine policy changes and survey the growing demand for the energy security and resiliency offered by CHP and WHP systems for the industrial, commercial and institutional sectors.
This is the fifth year that this important energy conference has been held, and more about the event can be found at www.distribugen.org.
Paul Cauduro is Director of WADE’s Cogeneration Industries Council