Statutes and Market Signals Align to Foster Growth of CHP in U.S. Manufacturing

Above Photo: 40MW CHP installation at ArcelorMittal Indiana Harbor in East Chicago, Indiana including a blast furnace gas recovery boiler and a condensing steam turbine.

Recent developments in U.S. Environmental Protection Agency (EPA) rulemaking, in combination with decade-low natural gas prices have prompted a heightened interest in combined heat and power (CHP) technology from U.S. manufacturers.  

Owner-operators of the nation’s largest emitting boilers – which constitute nearly 14% of United States’ more than 1.5 million boilers – are facing new air quality regulations imposed by the impending Boiler MACT rule, a mandatory emission reduction standard established under Section 112 of the Clean Air Act. While the majority of these affected units may comply through routine workplace practices and annual tune ups, the top 12% of “major source” units will be subject to new emissions limits on mercury, particulate matter and carbon monoxide.

MACT Compliance Pathways

For industrial-scale boiler operators – including both manufacturers and utility power generators – that collectively operate the vast majority of all major source boilers impacted by Boiler MACT, there are three primary approaches to achieving compliance under the pending rule:

• Fuel switching from coal or distillates to natural gas or refinery gas;
• Retrofitting major source boilers; or
• Replacing major coal- and distillate-fired source boilers with natural gas-based CHP systems.

The EPA’s inclusion of a CHP compliance pathway is an important development for energy efficiency because it explicitly acknowledges the capability of energy efficiency to reduce overall emissions. This output-based approach will evaluate boiler emissions against the total useful output of the system, as compared to conventional fuel-based EPA emissions standards where emissions are strictly linked to the amount of fuel input. Output-based standards strongly favor maximizing the useful energy output, both electric and thermal, of the system – in other words, energy efficiency.

The Role of CHP under MACT

CHP is a proven technology that joins the production of electric power and thermal energy into a single process, productively utilizing otherwise wasted heat. By combining these two common processes, CHP systems can elevate the aggregate efficiency of the two separate processes from approximately 45% efficiency into a single process that can top 80% efficiency.

Today, CHP systems account for over 85 Gigawatts (GW) of installed capacity across a diversity of sectors – municipalities, manufacturing plants, commercial buildings, institutional campuses, hospitals and data centers, among others – but experts estimate there exists another 50 GW of cost-effective CHP potential. For industrial processes with heavy thermal and electric demands, CHP is a particularly attractive opportunity to bring power production “inside the fence” and enhance energy efficiency, while also reducing emissions intensity. 

DOE Efforts to Advance CHP through Boiler MACT Technical Assistance Program, SEE Action

To assist manufacturers with the evaluation of CHP under the new Boiler MACT rule, the U.S. Department of Energy (DOE) is offering technical assistance under its Boiler MACT Technical Assistance Program. This program administers one-on-one guidance on project feasibility, strategy and financing through its network of Clean Energy Application Centers. Most recently, this initiative co-sponsored a workshop with Ohio’s Public Utilities Commission to discuss CHP as a viable option to comply with Boiler MACT within the state.

DOE also has been a driving force in the State and Local Energy Efficiency Action Network’s Industrial Energy Efficiency and CHP Working Group, known as “SEE Action.” This working group has assembled a cross-section of energy professionals to identify barriers to the deployment of industrial energy efficiency, including CHP, and chart an explicit path forward to overcome those.

Finally, DOE and the U.S. Council for Energy-Efficient Manufacturing (CEEM) have jointly configured the forthcoming Superior Energy Performance (SEP) program so that plants seeking certification may benefit by deployment of CHP. Companies participating in the Better Plants/Better Buildings challenge can also make progress toward their 25-in-10 goal (25% energy intensity reduction over 10 years) through efficient use CHP in their facilities.

More on the Clean Air Act and Industrial Energy Efficiency

• Intro to the Clean Air Act & EPA 101 Seminar – summary and PowerPoint presentations from February 2011
• EPA Rules Include Energy Efficiency to Reduce Boiler Emissions – news article from February 2011