CHP in the State Scorecard: On the books and on the ground

Blog | November 14, 2014 - 5:41 pm
By David Ribeiro, Senior Researcher

ACEEE’s State Energy Efficiency Scorecard was released last month. You may have seen the rankings, but did you know that combined heat and power (CHP) has its own chapter? We’ve been publishing the Scorecard since 2007. Each year, we’ve seen the policy landscape change, and we’ve refined the metrics to quantify state progress in each policy area to make sure they keep pace with current trends. The CHP chapter is no exception. In 2012, we gave the CHP scoring metrics a significant facelift (see this white paper for more details), but even with the flood of input from states and regional organizations, assessing state friendliness to CHP is an inexact science. Many informed experts have different thoughts on the appropriate methodology. This is made clear to us every year from the volume and thoroughness of CHP-related comments we receive for the Scorecard.

There are two general comments that are particularly important: Are the policies we score states on successfully moving the needle in CHP deployment? Are we weighing the specific policy metrics in a way that truly reflects their importance?

These are fair questions that are difficult to answer. Many factors impact CHP development. For example, favorable CHP policies and programs can encourage CHP deployment, but fluctuating electricity and natural gas prices can dramatically impact the business case for CHP. (If you’d like to take a deeper dive on state-by-state CHP opportunities, take a look at our Change is in the Air report).

To help answer these questions, we sought to correlate state CHP scores in the 2014 Scorecard with actual CHP installations data from 2012 and 2013, compiled from ICF’s CHP database. We may not be able to draw causal relationships between policy and deployment, but we can examine whether there is a relationship. The stronger that relationship is, the more confident we can be that these metrics are at least representing some of the realities facing CHP developers today.

We ran a simple correlation analysis between the number of new CHP installations and 2014 CHP scores and also graphed them side by side to get a more detailed view. Because we’re only using one year’s worth of Scorecard scores and two years’ worth of installation data, our results are limited and may be impacted by year-to-year variability. Overall, we found only a moderate correlation between scores and CHP installations – an improvement over the poor correlation we found between installations and CHP scores in previous scoring methodologies (see our Challenges Facing CHP Today report for more details).

CHP scores and new state installations

[click for a larger version]

Unfortunately, we can’t infer much from this analysis, but there are some noteworthy trends and observations. Many of the states with high levels of CHP deployment do indeed correspond with high marks in the Scorecard. California is most noticeable, with over 90 installations over the last two years, but Connecticut and Massachusetts also have high levels of deployment relative to other states. California has a whole suite of incentives and utility goals for CHP, and has been incentivizing smaller CHP systems in particular, which may all have coalesced to yield high installation numbers. Also noticeably, many states, including those with strong manufacturing bases like Indiana and Michigan, received low scores due to poor policies and have few new installations over the past few years. However, strong potential remains, and it’s possible that in places like that, good policies would really make a positive impact and stimulate dormant demand for CHP services. And although we don’t yet account for it in the Scorecard, states with resiliency-focused programs and goals, such as New Jersey, Connecticut, and New York, have seen growth in CHP deployment since Superstorm Sandy, and likely will continue to see that in the future as well.

The increased efficiency of CHP provides substantial energy, economic, and environmental advantages over separate heat and power, including reduced overall energy costs, improved system reliability, and cost-effective emissions reductions. As states work toward compliance with new air quality regulations, such as EPA’s Clean Power Plan, CHP is a readily available resource that can help states meet their goals for energy savings and greenhouse gas emissions reductions.

To see more details on CHP scoring, check out the 2014 State Energy Efficiency Scorecard and the State & Local Policy Database.