Lessons Learned from Successful SWOT Analysis at the NE Chapter Annual Conference

Oct 16, 2023


By Ryan McDonald, Pace Land Use Law Center for Sustainability

During the September Northeast Chapter of the CHP Alliance Annual Conference, attendees assessed the state of the CHP market via a collaborative Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis exercise. The exercise brought together industry experts, manufacturers, end-users, and other key stakeholders for an engaging, thought-provoking examination of the state of the CHP industry.

During an initial morning conversation, attendees were broken up into four groups, with each tackling one of the four areas of analysis. The conversations, among those most intimately familiar with the CHP industry, yielded many important insights.  

During a follow-up afternoon session with all attendees, facilitators from each SWOT group highlighted three to four key takeaways from their discussions.

Strengths are the core competencies of any group or organization, allowing them to grow and thrive. During their discussion, the Strengths group identified resiliency, immediate carbon reductions, and cost savings as major strengths of CHP.

Resiliency a key benefit that CHP provides and should be leveraged in discussions about the technology. CHP can help infrastructure, both critical and otherwise, remain operational during grid outages, which have increased exponentially in frequency due to climate change and extreme weather events.

Immediate carbon reductions are another important strength of CHP technology. The theory of the “time value of carbon” — a reduction in carbon emissions today is worth more than the same reduction in carbon emissions at a future date — is something that sets CHP apart from other technologies, as it substantial emissions savings in the near term.

A third strength noted by the group is one that anyone involved in business can appreciate: cost savings. CHP technology offers a wide range of cost savings, including reduced energy bills due to its high efficiency, avoided capital costs, and less exposure to electricity rate increases, which is perhaps one of the most important overall strengths of the technology.

Identifying Weaknesses is often more important than identifying strengths. During the conference, the Weaknesses group identified branding issues, the “Innovation Wall,” and carbon fuel requirements of CHP, specifically noting natural gas as the most problematic carbon fuel required.

CHP’s branding issues are a clear and present issue. Lack of overall public understanding and lack of knowledge of potential end-users contributes to these branding issues. The industry can overcome this challenge with proper effort on both the educational and outreach fronts.

The “Innovation Wall” presents another area of weakness for CHP. All technological sectors are constantly seeking to innovate. When that innovation hits a proverbial wall, problems arise. It is important to note that such a wall can be overcome, so while this is a present weakness for CHP technologies, it need not be a permanent one.

Carbon fuel requirements were noted as another area of weakness for CHP technologies, most notably surrounding natural gas fuels. Several states across the U.S. are in the process of phasing out natural gas assets, which subsequently could lead directly to phasing out CHP systems. This comes back to CHP’s branding issue and the need to separate the fuel input from the technology — and emphasize ongoing efforts to transition CHP systems to use clean fuels like green hydrogen.

Opportunities abound with CHP technologies. The working group identified the Inflation Reduction Act (IRA) and its investment tax credits (ITC); hydrogen and future fuels; and sustainability and carbon dioxide marginal grid emissions as potential opportunities for CHP technologies.

The IRA’s ITC provides up to a 30% tax credit, with bonus credits available if certain additional requirements are met, for energy projects up until December 31, 2024, which offers a marked incentive for businesses to invest in CHP technologies now.

In addition, the group noted that hydrogen and future fuels offer opportunities for CHP technology, most notably in the realm of arbitrage. The Alliance published a Clean Hydrogen and CHP Roadmap outlining that existing and newly installed CHP systems can use a substantial blend of clean hydrogen — ranging from 20-100%, according to equipment manufacturers. Within the decade, and in many cases much sooner, new CHP systems will be capable of burning 100% clean hydrogen. Lastly, the group noted that sustainability and carbon dioxide marginal grid emissions provide additional opportunities for the CHP industry to explore.

Threats to the industry were a key discussion point throughout the conference. The Threats working group identified governmental issues and bad publicity surrounding natural gas, fiscal issues, and fuel issues as key threats to the CHP industry.

Public utility commissions and state legislatures were identified as the largest governmental threats to CHP, as uncertainty continues to plague the regulatory and legislative environment. On the fiscal front, participants identified issues with capital, financing, and dwindling incentives as the chief threats to CHP. Projects are undoubtedly affected by the macroeconomic climate. As lending rates continue to rise, access to inexpensive capital becomes more difficult to find, which is a significant threat to the larger CHP landscape and must be carefully monitored. Fuel issues were identified as a third threat, notably fuel availability, both in the short- and long-term, and the potential for stranded assets because of fuel source changes.

The Northeast Chapter plans to use all the lessons learned from the Annual Conference to shape its policy and educational priorities for 2024 and beyond. We look forward to future in person events and webinars, and welcome advocates across the CHP supply chain with interest in Northeast activities to reach out to learn how to get involved with our growing organization.

Reach out to Diane Molokotos, President of the NE Chapter, and William Sherman, Manager of the CHP Alliance, to join our Northeast CHP network!