On World Cogen Day, These Are the Top Issues We’re Watching

Sep 4, 2023


We’re celebrating World Cogeneration Day! On September 4, 1882, the first cogen plant at Pearl Street Station in New York City began operating. It generated enough electricity to power 400 lamps for 82 customers. Today, there are nearly 5,000 cogeneration plants across the country which collectively produce more than 80,000 megawatts of energy.

The cogen, or combined heat and power, industry has undergone quite a lot of change since 1882, but CHP systems are still highly efficient, reliable, and cost-effective. By using a single unit of fuel to produce both electricity and heat, they waste far less energy and have lower emissions profiles than traditional power plants.   

Now, as the entire world confronts the climate crisis, we at the CHP Alliance have been heavily focused on how this technology can adapt and grow to play a pivotal role in curbing dangerous planet-warming emissions.

In honor of World Cogen Day, here’s a look at the top issues we’re watching on the federal and state level right now.

1. Inflation Reduction Act tax credits create massive potential.

The IRA is the most consequential piece of climate legislation ever passed, and it’s just getting started. But there are major implementation decisions looming that will impact the future of billions in clean energy tax credits.

Soon, we expect the Department of Treasury to determine whether CHP projects that yield zero emissions can qualify for technology-neutral tax incentives that take effect in 2025. The CHP Alliance strongly believes they should: We need to ensure renewable fuels, like hydrogen, are used in the most effective way possible, and that means we should encourage ongoing use of high-efficient, reliable CHP systems.

The tech-neutral credits, along with other IRA investments in clean hydrogen, will play a pivotal role in expanding the use of CHP systems fired by renewable fuels. Green hydrogen is rapidly gaining steam as a climate solution, and with the right policies in place it can help the U.S. reach its clean energy targets. For CHP, adapting to use renewable fuels is essential. Today, existing CHP systems can already handle fuel blends that include some hydrogen, but within the decade — and in many cases sooner — new CHP plants will be capable of burning 100% clean hydrogen. For end-users, this means knowing the CHP systems they install today can seamlessly convert to clean hydrogen over time and help them achieve the emissions reduction our climate crisis demands.

2. Distributed energy, like CHP, will help power a resilient future.

Record-breaking heat and dangerous severe storms continue to test the U.S. electric grid, making the ability to generate onsite backup power more valuable than ever. CHP systems that can function in “island mode,” completely independent of the grid, have widespread potential to support critical industries.

Hospitals and universities have long recognized the reliability benefits of CHP, but we’ve also seen growing interest from new sectors like commercial buildings and data centers which can use CHP to provide onsite electricity generation and cooling.

Data centers, in particular, are expanding at a rapid pace, requiring huge amounts of fuel to support their operations. And yet, 60% of facility operators say they’ve experienced an outage in the past three years. In a changing climate, CHP can keep power flowing and limit the serious consequences of service disruption.

3. State-level CHP policies can accelerate carbon reductions.

Climate and energy policy varies widely across the country, but state-level policies will be central not just in shaping the future of the CHP industry, but in determining whether or not the U.S. achieves its climate objectives. 

The CHPA is always engaging with governors’ offices, legislatures, utility commissions, and others to advocate for CHP. In the past few months alone, we’ve commended the New Jersey Board of Public Utilities for supporting CHP and microgrid funding; we’ve voiced support for building efficiency legislation in North Carolina that specifically notes the value of CHP as a tool; and we’ve encouraged the New York Public Service Commission to recognize the role that CHP can play in closing the gap between the capabilities of existing renewable technologies and future system reliability needs. Our Northeast Chapter’s upcoming conference will also delve deeper into New York City’s building efficiency law, LL97, and what it means for large energy customers across the city who may want to consider CHP.

Join us in celebrating 141 years of cogeneration! If you haven’t already, be sure to join our mailing list to stay up to date on all the work we do: https://chpalliance.org/join/