By Jessica Lubetsky, The Pew Charitable Trusts
Each year, U.S. utilities and factories send enough energy in the form of heat up their chimneys to power all of Japan. That heat, when captured and processed through proven industrial efficiency technologies, can be put to work heating or cooling buildings and/or generating additional electricity. Making use of otherwise wasted heat makes U.S. industries more competitive, enhances energy security, and creates skilled jobs.
Combined heat and power (CHP) technologies, which produce heat and power from a single fuel source, double the efficiency of central power generation Waste heat to power (WHP), on the other hand, captures wasted heat from an industrial process and uses it to make electricity with no additional combustion. Because of their efficiency, CHP and WHP dramatically reduce costs and lower energy use.
These efficient technologies generate power where it is used, a practice known as distributed power that can protect businesses and institutions from unexpected outages. CHP systems with the ability to operate independently from the grid can maintain power when the grid is down, ensuring facility productivity during storms and other energy-security-related incidents.
To get an idea of the scale of what’s at stake, consider this: The United States has the capacity to generate 82 gigawatts of electricity through industrial efficiency technologies—about 12 percent of total U.S. production. Tennessee’s large industrial load makes the state well suited for adding as much as 8 gigawatts of CHP – one of the highest potentials in the country.
The good news is that in 2012, President Barack Obama signed an executive order setting a national generation goal of an additional 40 gigawatts of industrial energy efficiency through technologies such as CHP and WHP. Although this initiative is a step in the right direction, critical policy changes are needed to ensure that the U.S. meets and exceeds this target.
Currently, companies that invest in some CHP projects can benefit from an investment tax credit, but eligibility restrictions prevent larger industrial users from accessing this incentive. In addition, WHP projects do not qualify for the credit. With small modifications, such as removing size limitations and adding WHP as a certified technology, more companies could install these systems and increase the U.S. manufacturing sector’s efficiency and global competitiveness.
Jessica Lubetsky is an officer with The Pew Charitable Trusts’ clean energy initiative where she manages industrial energy efficiency policy and investment research reports.