President Obama Executive Order Sets National Goal for Combined Heat & Power

Proponents of combined heat and power technology (CHP) are getting a big boost from President Obama. He issued  an Executive Order that calls for 40 gigawatts (GW) of new CHP capacity in the US industrial sector by 2020.

That’s a 50% increase from today’s levels. It’s part of Obama’s push to accelerate investments in industrial energy efficiency, which, the White House says, could save manufacturers at least $100 billion in energy costs over the next decade, while creating jobs.

Manufacturing plants and other industrial operations are still energy hogs, accounting for more than 30% of the energy consumed in the US. "For many manufacturers, energy costs affect overall competitiveness," says the Executive Order. 

"While our manufacturing facilities have made progress in becoming more energy efficient over the past several decades, there is an opportunity to accelerate and expand these efforts," says Obama’s Executive Order. "Instead of burning fuel in an on-site boiler to produce thermal energy and also purchasing electricity from the grid, a manufacturing facility can use a CHP system to provide both types of energy in one energy efficient step.

"Accelerating these investments in our nation’s factories can improve the competitiveness of United States manufacturing, lower energy costs, free up future capital for businesses to invest, reduce air pollution, and create jobs."

The US Clean Heat & Power Association estimates CHP currently supplies about 12% of US energy capacity at 82 GW. It could potentially reah 130 GW at existing sites, plus 10 GW more if waste heat is recovered. CHP systems can reach efficiencies above 80%.

Doubling industrial efficiency would create 1 million skilled jobs and bring in $234 billion of investment according to studies by the Department of Energy’s Oak Ridge National Lab. 

The White House calls for: 

  • Public workshops that help establish best practices for state policies that encourage investment in industrial energy efficiency and CHP;
  • State assistance to help businesses account for potential emission reduction benefits of CHP and other energy efficiency efforts;
  • Incentives for CHP and other clean energy investments that might help improve industrial energy efficiency, including set asides, grants and loans;
  • Compliance options in power and industrial sector regulations;
  • Expanding participation in existing programs for energy such as the Better Buildings, Better Plants program at the Department of Energy, which is working with companies to help them achieve a goal of reducing energy intensity by 25% over 10 years;
  • Providing general guidance, technical analysis and information, and financial analysis on the value of investment in industrial energy efficiency and CHP to States, utilities, and owners and operators of industrial facilities.

As you might expect, the CHP industry is pretty excited about this development.

"CHP technology can be deployed quickly, cost-effectively and with few geographic restrictions," says Jessica Bridges, executive director of US Clean Heat & Power Association. "Establishing this national goal toward greater CHP deployment will significantly advance cleaner energy generation in the U.S., benefit the environment, and help create much-needed manufacturing and industrial jobs."

"This energy efficiency strategy can save manufacturers as much as $100 billion in energy costs over the next decade, and offers a type of ‘renewable’ energy as the heat is already available, but too often vented to the atmosphere," says Jackie Roberts, director of sustainable technologies for the Environmental Defense Fund. "According to Oak Ridge National Labs, many industrial operations have an efficiency of 45% or less; waste heat recycling can increase the efficiency of these systems to 80% by capturing waste heat and putting it back to work."

Among the benefits the trade group sees as a result of this plan, aside from lower greenhouse gas emissions:

  • Improved US manufacturing competitiveness, since CHP could help manufacturers save at least $100 billion in energy costs over the next decade 
  • New jobs as a result of the upgrades, along with $40 billion to $80 billion in new equipment, much of it made in the US
  • A more cost-effective way for manufacturers to plan for new electricity generation capacity. Investments in industrial energy efficiency, including CHP, cost half of what is needed for traditional forms of delivered new baseload power

The federal initiative could be instrumental in inspiring states to recognize cogeneration resources under their Renewable Portfolio Standards. New Hampshire took steps toward this in June when it mandated that a portion of renewable energy must come from thermal sources, solar hot water, geothermal heating and cooling or wood pellet boilers.

"The United States is poised for a period of capital reinvestment in industrial infrastructure, and actions such as this executive order will spur industrial firms to modernize their domestic manufacturing capacity," says the American Council for an Energy-Efficient Economy.

Two examples of how CHP technology can be applied in agribusiness settings include the cogeneration system installed at a 125-acre California tomato greenhouse operation, which is also helping reduce it water usage and chemical fertilizers; and a vertical farm in Chicago.

Interest in CHP at the residential level also is growing, with Pike Research predicting that sales could increase by 50% this year and by about 49% over the next decade, reaching 13.5 million homes by 2022.

Obama has turned to Executive Orders because all efforts to pass energy and climate legislation have been blocked by Republicans. 

Executive order on industrial energy efficiency:

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