Is CHP Poised for Growth in the Philadelphia Region?

12Apr2016
BY Burns Mechanical IN Energy

DK Formal Color

Dan Kerr, President, Burns Mechanical

If the Philadelphia Energy Action Team (GPEAT) fulfills its vision of connecting the Marcellus and Utica shale gas reserves to a Philadelphia Energy Hub, the region’s healthcare, university, hospitality and industrial sectors would stand to benefit through large scale deployment of CHP clean energy plants.

Combined Heat and Power (CHP) or Cogeneration is becoming the application of choice for clients seeking to reduce energy costs and greenhouse gas emissions, while providing redundancy for their electricity and heating needs. As defined by ACEEE, CHP is not a technology, but an approach to applying technologies. Heat that is normally wasted in conventional power generation is recovered as useful energy, which avoids the losses that would otherwise be incurred from separate generation of heat and power. As reported several months ago, we have a hospital client presently reaping a 15.3% Internal Rate of Return from their on-site CHP investment, while simultaneously cutting their greenhouse gas emissions in half.

GPEAT distributed their report, “A Pipeline for Growth,” at a Greater Philadelphia Chamber of Commerce event on March 30. In their document, the team paints a vision of energy-related economic prosperity, while also explaining the various barriers to pipeline development. One barrier is “the need to have additional (natural gas) demand in the downstream market.” They state that the region’s goal should be to double the amount of natural gas consumption.

Distributed CHP plants could play a vital role in achieving this vision. Properly conceived CHP plants increase the regional use of natural gas, while displacing less efficient utility purchase power, which is still heavily reliant on coal and nuclear resources. CHP plants are more efficient than purchasing electricity and natural gas separately. Electricity from the grid is only about 30% efficient by the time it reaches a facility’s utility meter. By comparison, our client benefits from CHP net efficiencies of greater than 70%. Hence the dramatic reduction in greenhouse gas emissions.

The Pennsylvania Public Utility Commission (PUC) also aims to promote greater adoption of CHP strategies – both through PA Act 129 utility (PECO) rebates and through the eventual adoption of a formal CHP policy statement. A new Act 129 rebate program is scheduled to begin this spring and will carry into May 2020. The policy statement might set the stage for establishing attractive utility rates for customers implementing CHP strategies.

Will the confluence of an immense energy supply, private sector development, and government policy be enough to nudge CHP strategies past the tipping point? It might take all three to ensure widespread adoption. CHP is one of the few natural gas strategies that truly enhance the “triple bottom line” of desirable financial, social, and environmental outcomes.