A rising demand for natural gas puts pressure on supply, and greater deployment of high-efficiency combined heat and power energy (CHP) systems could mitigate recent and projected natural gas price increases and consequent economic impacts, according to the U.S. Combined Heat and Power Association (USCHPA). However, the organization also said that CHP faces policy barriers.

CHP systems generate electricity and thermal energy simultaneously from a single fuel combustion process. In contrast to typical large conventional gas-burning electric power plants that average 33 percent generation efficiency, CHP systems are 60 percent to 80 percent efficient. USCHPA says this is more efficient than most modern gas-fitted power plants, which produce electricity alone, and avoid the transmission line losses that can cost the centralized electric system an additional 9 percent of generated power.

Federal Reserve Chairman Alan Greenspan warned on June 10 that high gas prices could hinder the nascent economic recovery. USCHPA believes that CHP systems would reduce the economic impact of high gas costs on industrial production by reducing the quantity of gas needed to run critical economic infrastructures.

USCHPA has identified actions that could be taken to overcome policy barriers and create more widespread use of CHP. These policies include creating uniform standards for interconnecting CHP systems to electric utility networks, revising utility tariffs to eliminate unfair provisions intended to make CHP uneconomic, modifying tax treatment of CHP to provide a tax credit, and enhancing environmental regulatory process to recognize and reward the environmental benefits of high-efficiency energy generation.

— by J.J. Siegel

Publication date: 07/14/2003