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BCSE In Action

June 11, 2013

New ICF Report: Issues That Impact the Economics of CHP

Combined heat and power (CHP) has the potential to increase energy efficiency by meeting both the thermal and electric needs of a facility through a single process resulting in large reduction in energy losses that occur when power is generated in central station electric plants.

The report “The Effect of Departing Load Charges on the Costs and Benefits of Combined Heat and Power ” presents an analysis of one of the barriers to CHP deployment, Departing Load Charges (DLCs) as identified by the Energy Commission during a 2012 IEPR workshop and the lost benefits to the state of California due to the resulting reduced market penetration.

The report states that DLC’s need to be removed from CHP customer rates in order for the full potential of CHP to be reached. CHP is recognized as an energy efficiency measure by the Department of Energy, Environmental Protection Agency, California Air Resources Board (ARB) and the California Energy Commission.

However, reductions in electricity consumption due to investment in energy efficiency are not subject to DLCs, thus, the report argues, CHP, as an energy efficiency measure, should receive the same treatment.