The U.S. Environmental Protection Agency’s (EPA’s) plan to regulate carbon emissions is just the latest challenge facing the U.S. electric power system. Technological innovation is disrupting old ways of doing business and accelerating grid modernization. Earlier this year, AEE released Advanced Energy Technologies for Greenhouse Gas Reduction, a report detailing the use, application, and benefits of 40 specific advanced energy technologies and services. This post is one in a series drawn from the technology profiles within that report.
Industrial Combined Heat and Power (CHP, also called cogeneration) uses a single fuel, often natural gas, to co-produce electricity and heat for use in industrial operations, usually on site. Industrial CHP accounts for more than 75 GW out of the approximately 82 GW of installed CHP in the United States, or 7% of the country’s total generation capacity. CHP can be applied widely within the industrial sector, but is particularly well suited for industries with significant, steady thermal loads such as refining, chemicals, pharmaceuticals, and forest products.
CHP is a well-developed, mature technology with a long history. The first commercial power plant in the world, Thomas Edison’s Pearl Street Station in Manhattan, was a CHP plant. CHP is currently thriving in areas with industrial power needs, including Texas. Despite the state’s low electricity rates, Texas is home to 21% of the nation’s CHP capacity.
The efficiency of CHP can make it an attractive option for industrial users that have both heat and power demands. In some cases, meeting the thermal loads of a facility can result in excess electricity generation, which can be sold to the grid for additional revenue. Most CHP uses natural gas, resulting in lower emissions than some grid power. Other industries that use CHP include the forest products industry, which uses a large amount of wood waste (e.g., sawdust, bark, spent pulping liquors) which is available at zero cost. Industrial CHP also improves reliability by insulating industries from power supply disruptions. Outages can have especially significant economic impacts on process industries that operate 24/7, where restarting industrial processes is a complex undertaking.