ISSUES FACING CHP

Key Barriers and Issues for CHP

Interconnection policy - There are no consistent standards for interconnecting CHP units; each jurisdiction and in some cases each utility has its own. Often they are used as a barrier to entry. Interconnection approval is slow and expensive, often requiring the same processes and studies applying to 500 Megawatt power plants for a 5 MW CHP unit. Interconnection should be fast and streamlined, especially for smaller units, allowing mass-production of distributed generators that can operate in any state.

Credit for environmental benefits - Although CHP is widely recognized as the only means by which to increase fossil-fired generation to support economic growth while decreasing overall emissions, CHP units have trouble obtaining emissions permits. They run into hidebound standards which fail to credit CHP on the basis of its greater efficiency, or do not allow credits for displacing emissions from grid generated power. One of USCHPA's key policy objectives is to persuade environmental policy makers that air regulation should provide credit to CHP for its exceptionally low emissions per unit of useful energy output. Find out more>

Equitable treatment in utility rates - CHP and other distributed generators are often abused by unfair rates if they seek to remain connected to the utility grid, including unreasonable stand-by connection charges and back-up power rates designed to cost as much as if they generated none of their own power. Some are threatened with exit charges if they leave the grid.

Competition in the retail sale of electricity should create more opportunities for combined heat and power, but only if energy restructuring rules create a level playing field for all potential energy producers. Energy produced on-site may be used not only at the site, but may be sold to energy marketers, utilities or transmission and distribution companies. However, customers who stop purchasing electricity from their traditional suppliers may be faced with stiff exit fees. This, and the often artificially high costs of back-up power, constrain full deployment of combined heat and power technology. By opening a national dialogue on these issues, the Department of Energy and EPA hope to highlight and break down these barriers and others.

Equitable tax treatment- CHP machines are often subject to slower depreciation than the same machine used in other purposes because the tax code sees them as "utility" equipment. Their energy and environmental merits should instead entitle them to tax benefits.