CHP Installations
No specific study has been completed
by the Midwest CHP Application Center (MAC) to ascertain the number
of CHP installations in the Midwest Region. Any installations
known to the MAC are identified in our searchable
database and also in
the section for information on each state where
the installations are located. The database provides information
on the names of the plant owners or operators, plant locations
and power generation capacity of each installation. If you are
aware of other CHP installation sites within the Midwest, please
submit the information to the MAC by clicking here.
CHP Market Potential
No specific study has been completed
by the Midwest CHP Application Center (MAC) to ascertain the market
potential of CHP installations in the Midwest Region. The MAC
has identified one
study that assesses
the potential commercial and institutional market on a state-by-state
basis. It was completed by ONSITE Energy Corporation in January
2000 for the Energy Information Administration. It is entitled
"The Market and Technical Potential for Combined Heat and
Power in the Commercial/Institutional Sector." For the eight
states in the Midwest Region (Illinois, Indiana, Michigan, Ohio,
Iowa, Minnesota, Wisconsin, and Missouri) ONSITE estimated a total
commercial/industrial market potential for CHP between 12,420
and 31,840 MW which correlates to 26–68% of the long-term
goal of 47 gigawatts of installed CHP capacity that was developed
as part of the CHP
Roadmap Workshop.
Energy Pricing
Energy pricing for both fuel and
electricity has significant impact on the financial viability
of CHP. Further discussion of energy pricing in the Midwest can
be viewed by clicking here.
Check with you local energy provider for specific pricing in your
area.
CHP Partners
Architectural
and engineering, property management,
equipment and manufacturing,
energy suppliers, and energy
service companies, as well as associations
and organizations are important to the successful deployment
of CHP. Click on any one of the links above to see more information
about the importance and existence of any of these companies and
organizations that support deployment of CHP in the Midwest.
No specific study has been completed
by the Midwest CHP Application Center (MAC) to ascertain the number
of companies in the Midwest Region that are engaged in CHP system
applications or have CHP system capabilities. Any companies that
the MAC is aware of are identified in our Contact
database, including contact information.
Financial Incentives
for CHP Systems
No specific study has been completed
by the Midwest CHP Application Center (MAC) to ascertain if there
are any financial incentives provided in the Midwest Region. The Database of State Incentives
for Renewable Energy (DSIRE) is a comprehensive source of information on state, local,
utility, and selected federal incentives that promote renewable energy. To access information
go the DSIRE Website.
Utility Contacts
No specific study has been completed
by the Midwest CHP Application Center (MAC) to ascertain the participation
of utilities within the Midwest Region that are engaged in CHP
system applications. Any utilities that the MAC is aware of are
identified in our Contact
database.
Summary and Status of
CHP Policy Issues
No specific study has been completed
by the Midwest CHP Application Center (MAC) to ascertain the status
of regulations and permits within the Midwest Region that pertain
to CHP system applications. Lack of standards for exit, interconnection
or stand-by fees, and the lack of supportive regulatory or legislative
policy regarding distributed energy are among the biggest obstacles
to the success of CHP in many states. In many states it is left
up to each individual electric utility to define the guidelines,
procedures, and rate structures that affect CHP installations
within that electric utility's service territory.
Another circumstance that impacts
the economic viability of CHP in the Midwest is the potential
for re-negotiated rates. This occurs when the utility is allowed
by the state to provide lower rates than in the approved rate
structures to industrial or large commercial customers. This is
because of the belief that ratepayers benefit from the utility's
retention of these customers since revenues received under the
discounted rates help minimize potential deficiencies in revenue
requirements.
The Energy Information Administration
(EIA) website
provides the current status on a monthly basis of the status of
electricity restructuring in each state.
The Market Capacity Potential
of BCHP in the Midwest
Commercial/Institutional Market
ONSITE Energy Corporation in January
2000 prepared a study for the Energy Information Administration
titled "The Market and Technical Potential for Combined Heat
and Power in the Commercial/Institutional Sector." (Click
here
to see complete report.) This study identified potential CHP application
sites using the iMarket, Inc. MarketPlace Database to select commercial/industrial
building types based on SIC codes. Actual potential may be higher
than this because their study focused on applications where thermal
energy load was in the form of steam or hot water, and did not
take into consideration the use of thermal technologies, such
as absorption chillers or desiccant dehumidification, as part
of the potential for thermal load.
The potential buildings were: hotels/motels,
nursing homes, hospitals, schools, colleges, commercial laundries,
car washes, health clubs, golf clubs, museums, correctional facilities,
water treatment plants, extended service restaurants, supermarkets
and refrigerated warehouses. The buildings were divided into different
groups based on their electric demand. The electric demand was
estimated using data from Wharton Economic Forecasting. As a result
ONSITE selected 1,431,805 buildings in the United states as suitable
for CHP applications requiring a capacity of 77,281 MW.
The ONSITE results are summarized
on the following map:
Energy Pricing
Fuel Costs
Most of the CHP generation technologies
use natural gas as a primary fuel, such as reciprocating engines,
combustion turbines and microturbines. For these systems, fuel
constitutes the majority of the variable/operating cost. High
natural gas prices, such as those experienced in the year 2000,
could have negative affects on the CHP market development.
In an Energy Information Administration
report entitled "U.S.
Natural Gas Markets: Recent Trends and Prospects for the Future,"
the EIA identifies several reasons for the gas price movement
in 2000, including significant demand increase following a period
of low growth in gas consumption (from 1996 to 1999), and a relatively
cold winter in 2000. In its mid-term outlook, the EIA states,
"Because natural gas resources are expected to be adequate
to meet future demand through 2020 and technological progress
for exploration and development is expected to be sustained, natural
gas prices are projected to return to a lower price path around
2005 and gradually increase to about $3.05 per million BTU (MMBtu)
in 2020."
According to the EIA's "Short
Term Energy Outlook - January 2002," gas prices are expected
to fall through 2002 because of reduced consumption, in part due
to this warm winter and the slow economy, and increased supply,
in part created in response to shortages in the winter of 2000/01.
The EIA predicts that average natural gas wellhead price in 2002
will be around $2.00 per thousand cubic feet ($2.00/MMBtu), with
price increasing in 2003 to around $2.60 per thousand cubic feet
($2.60/MMBtu) because of predicted improvements in the economy.
The EIA in their long-term outlook, "Annual
Energy Outlook 2002 with Projections to 2020," predict
that natural gas wellhead prices will reach $3.26 per thousand
cubic feet ($3.26/MMBtu) by 2020. Taking into consideration the
transportation and distribution costs, the delivered price of
natural gas to end-use customers is significantly higher than
the wellhead price. For example, in 1999 when the average welhead
price of natual gas was $2.19/MMBtu, its average delivered price
was $5.30/MMBtu.
Reference: Annual Energy Outlook
2002 with Projections
to 2020, EIA, dated 12/21/01, Gas
Prices
Midwest gas prices move relatively
in sync with Henry Hub prices, which is one of the central gas
trading points in the US. The mid-term outlook for the Henry Hub
prices are that relatively low gas prices of around $3.00/MMBTU
are anticipated by 2005. Taking into account some lead time for
new CHP installations the winter 2000 gas spike should have little
affect on the economics of future CHP projects.
Electric Pricing
In the annual Energy Information
Administration report titled "Annual
Energy Outlook 2002 with Projections to 2020," the EIA
projects that the average electricity prices will decline from
6.9 cents per kilowatt-hour in 2000 to 6.5 cents per kilowatt-hour
in 2020. Electricity industry restructuring contributes to declining
projected prices through reductions in operating and maintenance
costs, administrative costs, and other costs. Electricity prices
are projected to decline to 6.3 cents per kilowatt-hour by 2006
then rise in the last 5 years of the forecast as natural gas prices
rise.
Reference: Annual Energy Outlook
2002 with Projections
to 2020, EIA, dated 12/21/01, Electric
Prices
CHP Partners
Architectural and Engineering
Firms
Architectural and Engineering firms
are important to promoting CHP technologies because the most economical
time to install a CHP system is during the construction of a new
building or during an extensive renovation, when the central heating
and cooling plant is being initially installed or completely replaced.
This is because the payback period associated with the cost to
install a CHP system need only be justified on the cost differential
between the CHP system and a conventional central cooling/heating
system which otherwise would have to be installed. Architectural
and engineering firms are generally engaged in the design and
installation of such facilities in commercial and light industrial
buildings.
Property Management Firms
Property management firms are important
to promoting CHP technologies because they are the operators of
most commercial buildings in which CHP technologies would be suitable
and therefore are interested in reducing energy costs. They often
are the decision makers as to what type of central service systems
are installed. In many of the buildings that they operate, they
are already required by newer building codes to provide some sort
of emergency electric power generation equipment. Since they are
already required to install generation equipment, the cost differential
to install CHP over a conventional central heating/cooling system
is less and easier to justify. In addition, it gives them the
ability to provide higher power reliability to tenants, which
is an important issue to many business operators.
Equipment Manufacturers and
Suppliers
Manufacturers of power generation
equipment, absorption chillers, and desiccant dehumidification
equipment, and their sales representatives are important to promoting
CHP technologies for obvious reasons, to sell their equipment.
In most cases these manufactures have established a market presence
and have built relationships with those most likely to install
CHP technologies.
Energy Suppliers
Local energy suppliers are also
important to promoting CHP. Many have formed subsidiary companies
to promote distributed generation, especially the gas supply companies.
Howver, they are not necessarily considering CHP because they
often can justify the cost of distributed generation on the peak-shaving
savings of electrical generation. They are not particularly interested
in CHP because it provides heat in winter and reduces the gas
consumption for boilers/furnaces used for heating. In the case
of electrical supply companies, distributed generation may be
viewed as a threat to the parent company, which may have rate
structures that pose a disincentive to the installation of distributed
generation and therefore to CHP. In these cases, distributed generation
is viewed as more acceptable if it is on the electric suppliers
side of the meter, which makes CHP a difficult option to promote
since the electric generation source may be at some distance from
the customer, thus making the use of exhaust heat from the generation
source impractical.
Energy Services Companies
Energy Services Companies (ESCOs)
are just beginning to become interested in CHP technologies. With
the commercial sector’s growing interest in power reliability
and quality, and the onset of restructuring in the Midwest Region
and new guidelines on evaluating emissions from CHP installations,
the market may be opening up with opportunities for ESCOs to consider
CHP as a financially attractive energy saving option.
Associations and Organizations
Involved with CHP Deployment
Federal, state, and regional governmental
entities are becoming interested and concerned about distributed
energy within their areas. With that interest comes significant
potential for making CHP systems an important part of their distributed
generation philosophy. Governmental entities are increasing their
interest in CHP because of the energy savings and reduced emissions
it provides. Many are promoting its development. While the Federal
government, through the Department of Energy, Office of Power
Technologies, has provided substantial support, the most effective
deployment of CHP technology will come from regional and local
activities. This is true because most of the barriers are due
to local issues, such as site permitting (especially in areas
classified as non-attainment by the EPA), interconnection requirements
and studies, local utility pricing, and local building codes and
standards. These barriers can be overcome with support from regional
and local entities. The Midwest area is home to many non-profit
organizations and associations that have come forward to support
the deployment of CHP. In fact the Midwest appears to be leading
the way in promoting the deployment of CHP.
Besides the Midwest CHP Application
Center, there is also a Midwest
CHP Initiative. This initiative is an alliance of environmental,
industry, and government organizations. It has formed a task force
to promote the installation of clean, energy-efficient "combined
heat and power." The mission of the Initiative is to double
the amount of CHP in the Midwest by 2010. The Midwest CHP Initiative
will focus on the strong base of CHP already in use in the Midwest,
especially in the "industrial crescent" around the Lake
Michigan basin. To achieve its mission, the Midwest CHP Initiative
will work to remove marketplace and government barriers to CHP
development. The Initiative's game-plan includes streamlining
the permitting process, implementing interconnect and free access
guidelines for states, educating pertinent policy makers and industry
groups, and developing a pro-CHP policy platform for legislative
changes in Midwestern states.
The founding organizations of the
Midwest CHP Initiative include
the Delta Institute, the Gas Technology Institute, the Environmental
Law and Policy Center, NiSource, and the Energy Resource Center
of the University of Illinois at Chicago. Other participants include:
U.S. Department of Energy, Indiana Department of Commerce, Illinois
Department of Commerce and Community Affairs, Wisconsin Division
of Energy, Michigan Public Service Commission, U.S. Environmental
Protection Agency, Northeast-Midwest Institute, Building Owners
and Managers Association of Chicago, and Exergy Partners.
There is also the Midwest
Cogen Association (MCA) that
serves to promote a greater public understanding of cogeneration,
independent power production, and distributed generation. In addition,
MCA works to improve general business conditions of the industry.
The non-profit organization provides pertinent information for
its members to conduct research, publish reports, and hold various
seminars and workshops with the goal to advance the concept of
cogeneration throughout the Midwest. MCA was incorporated in 1984
and covers the states of Illinois, Indiana, Iowa, Michigan, Minnesota,
Missouri, Ohio and Wisconsin.
Members of MCA include leaders
from a variety of organizations in both the public and private
sectors. The membership includes: engineers, end users, equipment
vendors, equipment contractors, project financiers, architects,
project developers, government officials, educational personnel,
and utility representatives. |
