About 9% of the U.S. electricity generating capacity comes in the form of cogeneration, or combined heat-power (CHP) in various onsite commercial/industrial applications, but a recent General Electric (GE) study estimates that fully up to 20% of the nation’s capacity could come from CHP if energy programs were expanded.

In early 2011 GE acquired Dresser Inc, and with it Dresser’s Waukesha engine manufacturing unit. Dresser-Waukesha subsequently completed the CHP study, including recommendations to the U.S. Department of Energy (DOE) that might help unleash the power of cogeneration in the overall national energy scene, not just in a few states.

The report looked at both the U.S. and European markets for CHP, seeking lessons learned as part of a commercialization plan for applying the Waukesha engine in the 1-5 MW cogeneration market centered on industrial commercial onsite operations. In making recommendations to DOE, the report acknowledges that a key implementation level is state government where rates, incentives and policies can either encourage or discourage more CHP.

Using the top five states for encouraging CHP as identified by the American Council for a Energy Efficient Economy (ACEEE) — California, New York, Pennsylvania, Texas and Ohio — each state is estimated to have more than 8,000 MW of CHP potential, according to the ACEEE. Combined, the five states have less than 800 MW of CHP currently.

According to U.S. government projections, the top 10 states for CHP during the past 15 years (1995-2010) produced more than 56,000 MW over the period with Texas and California first and second with 16,600 MW and 8,500 MW, respectively. The remaining top 10 states were Louisiana (6,700 MW), New York (5,800 MW), Florida (3,400 MW), Pennsylvania (3,300 MW), Alabama (3,100 MW), Michigan (3,100 MW), New Jersey (2,900 MW) and Oregon (2,500 MW).

Among four major drivers/barriers to CHP are fuel availability and price, and that means natural gas in most cases, the report said. The other three driver/barriers are: grid interconnections, capital costs of the cogeneration/CHP facilities, and permitting regulations that vary greatly by state.

The report quotes Energy Information Administration projections for Lower 48 state completed gas wells to increase an average of 2.3% annually during the next 25 years, and as a result gas prices will increase an average of 2.1% annually. Even so, the Henry Hub and U.S.prices would not average more than $5/MMBtu until after 2020 and 2024, respectively.

“This supply can and will likely fundamentally change the long-term gas supply outlook for the United States,” said the report, which calculated that domestic dry gas reserves have grown by 42% in the past five years.

Earlier in December California cleared away long-standing legal hurdles to its newly devised self-generation incentive program, which includes waste heat capture (cogeneration), pressure-reduction turbines, advanced energy storage, CHP gas turbines, micro-turbines and internal combustion engines. The last of a long line of lawsuits dating back years got settled, clearing the way for natural gas-driven cogeneration applications in California that should boost a program the major utilities have agreed to help expand (see Daily GPI, Dec. 5, 2011).

Clearing the litigation allowed the state’s major utilities and industrial operators to begin implementing a new state law (SB 412), under which state regulators revised the incentive program for on-site power generation, allowing up to 25% of the awards to go to nonrenewable CHP self generation, which includes natural gas-fired cogeneration (see Daily GPI, Sept. 12, 2011).

California is implementing some of the incentives and permitting streamlining that the GE report noted have been used effectively in Europe to stimulate more CHP, and waste heat recovery programs.

“The U.S. DOE sought an analysis regarding the success of Europe in promoting CHP adoption and recommendations about how the DOE may adapt or consider those ‘lessons learned.'” The report outlined what its authors called “a myriad of policies” in both Europe and the United States. Ultimately Dresser-Waukesha made recommendations for DOE to go beyond its current CHP programs covering grants, incentives, tax credits and an array of educational efforts supported by its Energy Efficiency and Renewable Energy unit’s industrial technologies program and federal Clean Energy Application Centers.

In short, the recommendations add up to ways the DOE might “leverage CHP” more to make it more of a driving force in national energy efficiency and carbon reduction programs, the report said.

During the summer, GE introduced a new tool to grow the biogas-fueled on-site generation market that takes advantage of fuels from landfills, wastewater treatment plants and agricultural waste centered on an advanced version of a Waukesha Gas Engine (APG 1000) in response to demand for more biogas engine choices in the lower-output range (see Daily GPI, Aug. 24, 2011).

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