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CHP Dilemma

Electric Savings resulting in GHG emissions?

By: Jake Fuller

Combined Heat and Power (CHP) units are an increasingly popular behind-the-meter solution to reduce electric consumption by producing both thermal and electric energy but the emissions impacts of CHPs are not always obvious. These projects allow companies to reduce their power demand from distribution companies by generating a portion of their own power needs on site. In 2012, the President signed an Executive Order setting a goal to increase the country’s installed CHP capacity by 50% (40GW) by 2020. A Department of Energy (DOE) and Environmental Protection Agency (EPA) report estimated that this additional CHP capacity would result in energy savings reaching 1% of the country’s total energy consumption.[1] EcoMetric has begun to see a shift in energy efficiency evaluations to measure the economic and social costs on greenhouse gas (GHG) emissions. As energy efficiency programs are increasingly focused on mitigating GHGs and social impacts they cause, it is important to analyze the emissions impact of these CHP units.

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According to DOE statistics, 85% of the United States’ installed CHP capacity uses fossil fuels as a primary fuel source, highlighting the importance of understanding the emissions impacts of these units.

A recent EcoMetric evaluation of a major energy efficiency portfolio found that all CHP projects under evaluation succeeded in reducing GHG emissions through electric savings.  However, increased natural gas consumption by the CHPs resulted in high levels of emissions that greatly exceeded the avoided emissions from electric savings. In fact, only 3 of 8 CHP projects evaluated resulted in a net decrease in GHG emissions. The one CHP project that resulted in reduced GHG emissions from natural gas savings was an anomaly that would not qualify for assistance under the evaluated program if it was started today.

While CHP units reduce electric demand, the avoided GHG emissions for these utilities can be shifted to the CHP operators using fossil fuels. Other fuel sources such as biomass allow CHPs to generate electric power and avoid major GHG emissions.

DOE data shows that the number of biomass-fueled CHP units in the United States is on the rise. Since 2010, 21% of the CHP capacity added in United States uses biomass as its primary fuel source, compared to just 2% of the capacity in operation before 2010. While this represents a positive shift to reduce emissions, 68% of the United States’ installed CHP capacity since 2010 uses fossil fuels with natural gas and coal representing 59% and 8% of total primary fuel, respectively.

The Environmental and Energy Study Institute claims that 6,000 GWh of biomass such as wood pulp, livestock manure and sewage is disposed of annually, representing unfulfilled potential to develop cleaner-fueled CHP capacity.[2] CHP units do not represent a panacea to reduce electric demand when the impacts of GHG emissions are considered. As lawmakers, utilities and consumers continue to focus more deeply on the impacts of GHG emissions, it will become increasingly important to examine the potential to shift growing CHP capacity away from fossil fuels to biomass.

 

[1] US Department of Energy, “Benefits of Combined Heat and Power”. https://energy.gov/eere/amo/benefits-combined-heat-and-power

[2] Environmental and Energy Study Institute, “Fact Sheet: Combined Heat and Power”. http://www.eesi.org/papers/view/fact-sheet-combined-heat-and-power