Gas availability drives optimism on CHP in the US

Steve Hodgson

There’s a certain amount of optimism for the prospects for CHP and decentralized energy in North America in the air at the moment, with commentators talking-up prospects for the next couple of years and more. The point was neatly presented by Bruce Hedman from ICF International, speaking at the POWER-GEN International event in Las Vegas last December. Two powerful new drivers for CHP ” the availability of cheap natural gas again, thanks to new supplies of shale gas, and increased attention by energy users to the need to save money ” will combine to increase the rate of CHP capacity additions back to 2005 levels, he said. The last five or six years have seen particularly low levels of new capacity being built ” less than a gigawatt per year.

Hedman also suggested that, far from being a poor relation to renewable technologies, gas-fired CHP can achieve higher energy and carbon savings than wind and PV plants. Comparing a 10 MW gas turbine CHP plant ” with 68% overall efficiency and an annual capacity factor of 85% ” with 10 MW PV and wind installations, CHP wins on both fronts, largely due to its ability to run for long continuous periods of time. With capacity factors of 25% and 34% respectively, PV and wind cannot operate enough hours of the year to generate equivalent savings.

But the fortunes of CHP also remain tied to the local regulatory environment and quality of support programmes. In the US, a third driver for CHP is federal, but more importantly state, support. This is patchy, although 18 US states include CHP or waste heat recovery in their renewables portfolio standards, and six states have specific incentives for CHP ” progress here is largely good. However, the American Council for an Energy-Efficient Economy (ACEEE) has studied state support quite extensively and concluded in a report published last autumn that, in some states, a supportive regulatory environment doesn’t necessarily translate into growth. CHP still suffers from high capital costs, cheap grid-supplied electricity in some areas, and lack of prioritisation by regulators. Despite this, the ACEEE is also optimistic about CHP growth in the US ” and will argue the point in an article in the next issue of COSPP.

Over in Europe there is, perhaps, less optimism, as the various parts of the energy industry try to influence the design of the proposed Energy Efficiency Directive (EED), which will take the place of the largely ineffective 2004 CHP Directive. COGEN Europe points out that the considerable growth potential for CHP, identified after the old CHP Directive came into force, has not been realised. There has been little overall growth in recent years and, as COGEN Europe says, the new Directive needs to provide the trigger for the translation into projects of that growth potential. In particular, the proposed new Directive needs to take a strongly supportive stance on priority dispatching of CHP plants by grid operators.

Cogeneration’s unique place between energy suppliers and consumers, its provision of two types of useful energy, and its interaction with electricity networks mean that its prospects necessarily remain tied to local regulation and the quality of support programmes. However, particularly in the US where new gas supplies have come into play, optimism is the watchword.


Steve Hodgson Editor, COSPP PS. Please do visit the website at to see regular news updates on cogeneration and decentralized energy from around the world, together with the current issue of the magazine and a complete archive of articles from previous issues. You can use the same website address to subscribe to the magazine and to sign-up for our monthly COSPP e-newsletter.

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