CHP Can Replace Coal, Cheaply

As the coal industry gears up for a round of TV ads to promote its agenda, a study shows that combined heat & power (CHP) could replace up to 100% of the coal used in the most coal-dependent states.

The American Coalition for Clean Coal Electricity’s ad campaign will tell voters to stand up to the EPA’s "anti-coal agenda." 

"Voters will have a choice this November to elect candidates who stand up for coal and low cost electricity," says Mike Duncan, CEO of the group. "We have an EPA that wants to shutter more than 200 coal-fired power units across 25 states, destroying jobs and making electricity more expensive for businesses and families."

But even without EPA regulations that protect peoples’ health and the environment that the industry is trying hard to prevent, coal is losing favor to natural gas and other more efficient alternatives. Energy efficiency and CHP, in particular, represents significant near-term opportunities to make highly cost-effective investments in new energy resources that can more cleanly and efficiently meet the nation’s demand for electricity.

Demand for coal is down so much this year that some mines are exporting most of their supply.

This is one of three ads – this one touts the industry’s investment in "clean coal." Most of the demonstration projects have been canceled and the process remains largely untested.

The Power of CHP

In August, President Obama issued an Executive Order calling for 40 gigawatts (GW) of new CHP capacity in the US industrial sector by 2020, a 50% increase from today’s levels.

Increasing  industrial energy efficiency could save manufacturers at least $100 billion in energy costs over the next decade, while creating jobs, the White House said.

And utilities can use CHP to replace much of their coal-generated electricity from plants that will soon retire, while  providing energy more cheaply, according to the American Council for an Energy-Efficient Economy (ACEEE).

Looking at some of the most coal-dependent states in the US where coal plants are close to retiring, CHP could replace all that energy in Kansas and South Carolina, a third in West Virginia and more than half in Alabama and North Carolina. 

Their report, Coal Retirements and the CHP Investment Opportunity, points out that if utilities invest in CHP on industrial customer sites, instead of relying on centralized plants, states could more easily meet future demand and offset some or all of the need to invest in new expensive power plants. 

CHP systems produce both electricity and thermal energy. Heat is a byproduct of most electricity generation – but while traditional power plants waste that heat by releasing it into the air or nearby water, CHP systems capture it and put it to productive use, such as generating steam that is then used in manufacturing processes.

CHP can generate electricity and thermal energy at efficiencies of up to 85% compared to the average efficiency of US power plants at 33%.

A typical new natural gas-powered CHP system can generate electricity at 6 cents per kilowatt hour (kWh) compared to 6.9 to 11.3 cents/kWh for new natural gas or nuclear plants.

Coal-powered generation is becoming increasingly uneconomic due to several factors: the increased cost of coal; the decreased cost of alternatives like natural gas; an aging and inefficient coal fleet; and the impact of new and forthcoming air quality regulations, which aim to reduce toxic pollutants and other substances harmful to human health and the environment. An estimated 2-5% of U.S. electric-generating capacity will retire due to the above impacts, most of it in the form of older and smaller coal plants that were built over two generations ago.

"Our report suggests that instead of investing in new centralized power plants, utilities should invest in new CHP plants to keep costs down for their customers and generate much cleaner electricity," says Anna Chittum, the report’s lead author. "Utilities around the country have expressed concern about the amount of coal-fired capacity they believe they will need to retire in the near future. Many are asking for substantial increases in customer rates to pay for new investments in traditional power plants when they could be investing in CHP instead."

An estimated $70 to $180 billion will be invested in new power plants or pollution controls for existing ones in the coming years. Rather than spend that money on expensive, inefficient, and dirty energy resources, utilities could spend it on new CHP systems at customer sites, says ACEEE.

Here’s the report:

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