A new report by the American Council for an Energy Efficient Economy says that combined heat and power can more cheaply replace coal plants, which are being retired at an accelerated rate across the US.
According to the report Coal Retirements and the CHP Investment Opportunity, the ACEEE estimates coal retirements in 12 energy-intensive manufacturing states.
Coal-dependent states like West Virginia, which expects to see up to 11 per cent of its total electric-generating capacity retire, could replace about one-third of that lost generation with utility-owned CHP. Alabama and North Carolina could replace over half of their retiring coal plants with CHP.
ACEEE's report analyzes the potential for new CHP at energy-intensive industrial and commercial facilities, and finds that by encouraging utilities to invest in CHP on customer sites, states could more easily meet future demand and offset some or all of the need to invest in new expensive power plants.
The figures are supportive of CHP as a valid replacement for coal in the North American energy matrix.
A typical new natural gas-powered CHP system can generate electricity at a cost of 6 cents/kWh, while the cost of new natural gas-powered traditional generation or nuclear-powered generation can range from 6.9 to 11.3 cents/kWh.
As well as being cheaper, CHP it is also cleaner and more efficient, squeezing more useful energy out of every unit of fuel. It can generate electricity and thermal energy at efficiencies of up to 85 per cent, while the average electric generation efficiency of U.S. power plants is about 33 per cent.
Coal-powered generation is becoming increasingly uneconomic due to the increased cost of coal; the decreased cost of alternatives like natural gas; an aging and inefficient coal fleet; and the impact of new air quality regulations, which aim to reduce toxic pollutants and other substances harmful to human health and the environment.
"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," said 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."
"Unfortunately, most of the states that are facing substantial coal retirements currently lack the policies that would encourage utilities to invest in CHP," said Neal Elliott, Associate Director for Research at ACEEE. "Policymakers and regulators could help states meet their identified CHP potential by implementing policies that allow utilities to earn a rate of return on CHP like they do other capital investments.”
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