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Maximizing Benefits of CHP Systems: Factors, Incentives, and Applications

Learn why promoting Combined Heat and Power (CHP) systems is beneficial, including energy and environmental advantages, as well as potential reliability benefits. Discover factors to consider, possible incentives, and how CHP can be incentivized through educational programs, technical assistance, project financing, and tax credits.

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Maximizing Benefits of CHP Systems: Factors, Incentives, and Applications

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  1. Why Promote CHP? • Focus on cogenerating electricity and thermal energy on-site • CHP uses thermal energy from heat normally wasted in electricity generation • Result: energy and environmental benefits • Also, potential reliability benefits • But: cost and maintenance issues must be addressed

  2. Factors to Consider • Utility rates • Interconnection standards, fees, processes • Environmental regulations • Applicable taxes • Price forecasts for alternative fuels • Familiarity of facility managers with existing & emerging CHP technology • Incentives to reduce capital cost

  3. Possible Incentives • Education & capacity building • Technical assistance re scoping studies • Project financing • Project incentives • Tax credits

  4. CHP & Utility Rates • Gas utility promotional rates for gas • must apply for off-tariff rate, with justification • Electric utility favorable backup/standby power rates • as discussed

  5. Regional CHP Initiative • Northeast CHP Application Center was established Oct 2003 for US DOE at UMass Amherst and Pace Univ. • Partnership between UMass, Pace, NYSERDA, MA Division of Energy Resources and the Maine State Energy Office • To provide application assistance, technology information, and educational support in the six New England states and New York.

  6. CHP Incentives, continued • Source of Incentives • Gas utility ratepayers • Electric utility ratepayers • Taxpayers • OTHER? • Delivery of Incentives • State agency • Gas utility • Electric utility • OTHER?

  7. Example Program -- MA • Massachusetts gas utilities • Technical assistance • eg Bay State Gas, 50% of cost for engineer for scoping study, up to $7500 • Plus existing DSM incentives only • eg incentive for more efficient boiler • Above are permitted within gas DSM despite load-building effect

  8. Example Program -- NJ • Office of Clean Energy CHP incentives • CHP system must be at least 60% efficient • Add-on generation capability -- $0.50/W, up to 30% of project cost • New microturbine/ICE/gas turbine based -- $1/W, up to 30% of project cost • W. space cooling, up to 40% of project cost • Fuel cell based -- $2.50/W, up to 40% of cost

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