Report: Combined Heat and Power Market Growth Varies from State to State, Requiring More Than Supportive Policies for Greater Deployment

September 28, 2011

CHP Already Providing Over 12% of U.S Electricity, but More Efforts Are Needed to Overcome Market Barriers and Mitigate Uncertainty


Washington, D.C.—The combined heat and power (CHP) market is growing unevenly in different states, and will require more efforts than just supportive policies to achieve greater deployment, according to a new report released today by the American Council for an Energy-Efficient Economy (ACEEE). The report, Challenges Facing Combined Heat and Power Today: A State-by-State Assessment, profiles CHP markets in each state and identifies which elements of the market are encouraging or discouraging CHP developers today.

CHP, sometimes known as cogeneration, is an important energy resource that produces electricity and thermal energy at the same time from a single fuel input and provides highly efficient energy by maximizing the energy value of a variety of fuels. CHP can produce energy twice as efficiently as standard centralized energy generation. The Department of Energy reports that CHP has been cleanly and quietly providing nearly 13% of U.S. electricity generation. Since 2005, over 1700 MW of capacity has been added due to new CHP system deployment, but that deployment has been unevenly distributed around the country.

“CHP markets differ considerably among states,” said Anna Chittum, ACEEE Senior Policy Analyst and lead author. “This report shows that building a favorable CHP market requires more than just good policies, such as interconnection standards and tax incentives. The current economic recession and missing access to retail power markets continue to negatively impact CHP markets in many states, and prevent CHP from reaching its full potential around the country.”

Over 50 CHP developers and supporters were interviewed for the report to determine which states are attractive for CHP deployment and which ones are viewed as non-starters by those in the CHP community. Greater support from the electric utility sector and the removal of burdensome standby power rates were identified as several ways CHP markets could be improved. The report also finds that support from policymakers varies considerably from state to state, presenting CHP developers with a mixed policy landscape in which to attempt greater project deployment.

“CHP represents an important energy resource that could meet a significant portion of projected needs for new electricity generation investments over the coming decade,” said Dr. Neal Elliott, ACEEE Associate Director for Research and author of the recent white paper Avoiding a Train Wreck: Replacing Old Coal Plants with Energy Efficiency. “This report identifies areas that each state and the country as a whole must work on to better encourage CHP so that we can realize the full benefits of this resource.” 

To read the report click here.

The American Council for an Energy-Efficient Economy acts as a catalyst to advance energy efficiency policies, programs, technologies, investments, and behaviors.