Energy has been recognized as on of the most significant, if not the most significant, driving force of our economy. The availability and pricing of energy has been in the news regularly over the last several years; from lack of availability of electricity in California to large area blackouts caused by inadequacies in the transmission system, from high natural gas prices to conflicting opinions about drilling for natural gas in nature preservations, and even from America's energy "gluttony" to our current heavily debated presence in the Middle East: energy is in the forefront of many of our current issues.

One of the most outstanding elements of the current National Energy Plan is the need to more wisely use the existing resource that we have. In order to do that we must improve the way we use and convert energy. Back in the 70's and 80's energy conservation was on nearly every American's mind; we were driven to purchase high efficiency appliances, turn off our lights, and turn down our thermostats. Today many of them have been addressed because appliances are designed and built to be more efficient; we have timers that turn our lights on and off and our heating and cooling system up and down.

One of the most outstanding items that we have not done is improve how we produce electrical power. Today, as in the 1960's, the average efficiency of central electric power generation within the U.S. is around 33%. This means that two-thirds of all the fuel used to make electricity in the U.S. is generally wasted; in fact the unused thermal energy is usually discharged into water streams or vented to the atmosphere.

All buildings need electric power for lighting and operating equipment and appliances. One of the major consumers of energy in buildings is the equipment for space conditioning. Most commercial and institutional buildings for businesses, education, and healthcare require space conditioning for cooling, heating, and/or humidity control. When we look at the overall efficiency of providing electricity and space conditioning, even with high efficiency furnaces and air conditioners, the average overall efficiency is around 50%. It is time to change the way we use energy for producing electricity and meeting our needs for heating, cooling and controlling humidity.

As discussed in the section on CHP Basics & Benefits, combined systems that simultaneously supply electricity and space conditioning, which are located at or near a facility, can reach efficiencies up to 85%; saving more than 30% over conventional means. As shown in the diagram in the section on Basics & Benefits, CHP systems consume 65% less fuel than conventional systems to provide the same electric power and thermal energy to a facility.

Information for the media covers the following subjects:

• DOE Plans
• Success Stories *
• Database *
• Fact Sheets *
• Program Partners
• Policies & Regulations *
• Energy Pricing
• Emissions
• Contacts *

* This information is found in other sections of this site. Use the back button to return to this page.

U. S. Department of Energy Plans

The Administration's National Energy Plan encourages research and development efforts on next-generation energy technology. Energy Secretary Spencer Abraham has described the Administration's goal as making CHP technology the "preferred system for commercial buildings by 2020." Many of these technologies and systems are in use and commercially available today.

The CHP Industry Roadmap has itself created "Roadmap" to attain a goal of doubling the amount of installed capacity CHP in the United States by the year 2015. Utilizing 1999 as the base year this translates to 47,000 MW of new CHP capacity that is to be installed by 2015.

The Department of Energy, through Oak Ridge National Laboratory (ORNL), established the first Cooling, Heating, and Power (CHP) for Buildings Regional Application Center in April of 2001.

Besides providing information and resources through the RACs, DOE is working to advance CHP through development of packaged integrated energy systems. In June 2001, Secretary Abraham announced the "First Generation" Packaged Cooling, Heating and Power Systems for Buildings awards. Contracts of $18.5 million were negotiated with seven industry teams for research, development and testing of new, first generation packaged CHP systems for commercial and institutional buildings. Modular or packaged CHP systems for buildings will be a breakthrough in CHP. For better interoperability and marketability, CHP component manufacturers are creating CHP systems that physically fit the generation and heating / cooling / dehumidification components together, match power and thermal loads within the system, and communicate effectively between internal components and with external energy control devices. These modular systems will be pre-designed; this will save on engineering design costs as well as installation cost.

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Program Partners

The development of new "on-site" and "near-site" distributed power generation technologies, such as advanced combustion turbines and reciprocating engines, microturbines, and fuel cells, are opening up new opportunities not only for improving power reliability for buildings but also reducing energy costs. Equipment for distributed generation is commercially available from many U.S. companies, including, but not limited to, the following:

Combustion (Oil and Gas) Turbines

• General Electric
• Seimens Westinghouse Electric
• Solar Turbine

Micro- and Mini-Turbines

• Capstone Turbines
• DTE Energy Technologies
• Ingersoll Rand

Reciprocating Engines

• Caterpillar
• Kohler
• Waukesha

Opportunities for reducing energy costs for buildings come from integrating buildings cooling, heating and electrical energy needs with distributed generation. The CHP systems also improve the economics of operating humidity management system for controlling indoor air quality. Thermally-activated equipment (e.g. absorption chillers and desiccant systems) for cooling, heating, and humidity control are also commercially available from many U.S. companies, including the following:

Absorption Chillers

• American Yazaki
• Broad USA
• Carrier Corporation
• Dunham Bush
• Robur Corporation
• The Trane Corporation

Desiccant Systems

• Munters Corporation
• Stultz-ATS
• Semco
• Kathabar

At present the distributed generation equipment and the thermally-activated equipment must be customized at each building site . Work is now in progress, by at least seven teams of US companies, for developing “Ready to Go" integrated modular packaged systems to reduce total system cost, improve overall energy efficiency, and reduce operating and maintenance costs. Producing plug-and-play systems for CHP systems is critical to reducing the time and effort required to integrate system components. Click here for the latest information on the status of various packaged systems. Universal interconnection standards for connecting CHP systems to power grids would greatly simplify installation and maintenance-and encourage acceptance of the technology by the architectural and engineering community. Simplified, pre-engineered, skid-mounted CHP equipment would make building owners responsible only for connecting power, piping, or ducting. Controls may be connected to a local network, permitting onsite personnel to operate the equipment directly from a desktop PC.

A CHP Integration Test Center has been established at the University of Maryland, College Park, MD. The objective of the center is to create a new understanding of how to integrate CHP into buildings. You are welcome to take a virtual tour of the test center . Partners in this test center include the following:

• DOE's Office of Power Technologies
• DOE Office of Distributed Energy Resources (DER)
• DOE CHP Program
• University of Maryland 's Center for Environmental Energy Engineering
• Oak Ridge National Laboratory
• Pacific Northwest National Laboratory
• Brookhaven National Laboratory
• National Renewable Energy Laboratory
• Broad USA
• Goettl Corporation
• ATS
• Kathabar
• Several gas utilities

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Energy Pricing

The Energy Information Administration (EIA) predicts that demand for energy in the commercial sector is going to grow at an average annual rate of 1.7 percent, reaching 12.2 quadrillion Btu in 2025. Increasing square footage of commercial floor space, plus increased electrical consumption per square footage (due to increased use of computers, office equipment, and telecommunications equipment) is expected to raise the demand for electricity in the commercial sector at even a faster rate.

According to the EIA, in 2002 CHP plants produced 134 billion kWh for their own use in industrial and commercial processes, such as petroleum refining and paper manufacturing. CHP is expected to increase to 210 billion kWh by 2025, as demand for manufactured products increases.

Natural Gas Pricing and Availability

Most CHP generation technologies, such as reciprocating engines, combustion turbines and microturbines, use natural gas as a primary fuel. For CHP systems, fuel constitutes the majority of the variable/operating cost. High natural gas prices, such as those experienced in the year 2000, as well as the volatility currently being experienced, could have negative affects on the CHP market development.

According to the EIA's "Short Term Energy Outlook - January 2004", the recent volatility in natural gas spot prices from around $5.00 per million Btu spiking to almost $8.00, which then fell back to around $5.50 per million Btu as warmer than predicted winter weather eased the demand (in December 2003) that subsequently allowed storage to increase slightly. They predict that spot prices well above $5 per million Btu will remain likely over the next few months. In 2004, they expect natural gas prices to average just under $5 per million Btu. In 2005, natural gas spot prices they project them to fall again to average $4.83 per million Btu assuming that domestic and imported supply can continue to grow by about 1-1.5% per year.

The EIA in their long-term outlook, "Annual Energy Outlook 2004 with Projections to 2025", predicts that the delivered natural gas price to end-use customers should drop until 2012. Their predictions show prices for the commercial sector dropping to about $7 per thousand cubic feet (which includes distribution costs), and wellhead prices back to about $3.50 (EIA Fig. 86).

Reference: Annual Energy Outlook 2004 with Projections to 2025, EIA, dated January 2004

The EIA projects total domestic natural gas consumption will increase from 22.6 trillion cubic feet in 2002 to somewhere around 29.1 to 34.2 trillion cubic feet in 2025. Demand by electricity generators is expected to account for 29 percent of total end-use natural gas consumption in 2025, as compared with 27 percent in 2002.

While the EIA predicts that natural gas reserves will be maintained, increasing initially, their projections differ as to when they begin to taper off and where they are in 2025 as shown in the figure below.

Reference: Annual Energy Outlook 2004 with Projections to 2025, EIA, January 2004

Electric Pricing and Capacity

The EIA predicts that the average U.S. electricity prices (based on total US revenues from sale of electricity divided by total kWh sold) will decline by 8%, from 7.2¢ per kWh in 2002 to 6.6¢ in 2008, and to remain relatively stable until 2011. From 2011 they are projected to increase gradually, by 0.3% per year, to 6.9¢ per kWh in 2025, generally following the trend of the generation component of electricity price, which currently makes up 64% of electricity prices. Delivered electricity prices for residential, commercial, and industrial customers are projected to fall by 5, 10, and 9%, respectively, from 2002 to 2013 and then to regain about half of those losses by 2025.

Reference: Annual Energy Outlook 2004 with Projections to 2025, EIA, January 2004,
Electric Prices

As generators and CHP plant adjust to the evolving structure of the electricity market, they face slower growth in demand than in the past. Historically, demand for electricity has been related to economic growth; that positive relationship is expected to continue, but the ratio is uncertain.

The EIA expects the electric demand growth (from increased office equipment and personal computers, among other equipment) to be some what offset by slowing growth or reductions in demand for space heating and cooling, refrigeration, water heating, and lighting. They expect growth in electricity sales to be held to an average of 1.8% per year between 2002 and 2025 due to continued saturation of electric appliances, installation of more efficient equipment, and the promulgation of higher efficiency standards. Of the 356 GW of new generating capacity predicted to be needed by 2025, the EIA project nearly 62% to be natural-gas-fired combined-cycle, combustion turbine, or distributed generation technology.

The cost of producing electricity is a function of fuel costs, operating and maintenance costs, and the cost of capital. Fuel cost makes up most of the operating costs for fossil-fired units. According to the EIA, falling coal prices have reduced the fuel share of operating costs for coal-fired plants to about 74% in 2001, whereas volatile prices and rapidly increasing usage rates raised the fuel share for natural-gas-fired combined-cycle plants to 90%. Despite increasing fuel costs, the market share of total generation met by natural gas is projected to increase from 18% in 2002 to 23% in 2025 due to the greater efficiency of natural gas Units.

Reference: Annual Energy Outlook 2004 with Projections to 2025, EIA, January 2004,
Fuel Prices to Electricity Generators

NOTE: All of the above information was obtained from the Energy Information Administration website . Unless otherwise noted the information was obtained form the EIA's Annual Energy Outlook 2004 with Projections to 2025.

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Emissions

Emissions associated with electric power can be attributed to the source — power generation — or to the "end-users." CHP systems help reduce emissions by increasing efficiency in the overall generation of electric power and energy usage, and by reducing transmission energy losses by moving the source of generation closer to the end-user.

Saving energy by utilizing heat that other would be rejected increases energy efficiency by reducing the need for the generation of electricity by central station plants. By increasing energy efficiency CHP helps prevent "greenhouse" gas emissions (CO₂) and other forms of air pollution. Increasing energy efficiency is a smart practice that helps the economy, too, by saving consumers and businesses million of dollars in energy costs each year.

Carbon dioxide (CO₂) is the key gas responsible for global warming concerns. The overwhelming share of U.S. and world CO₂ emissions comes from burning fossil fuels, such as coal, oil, and natural gas. Burning fossil fuel also causes emissions of other greenhouse gases as well, such as methane (CH₄) and nitrous oxide (N₂O). The Department of Energy has several initiatives in collaboration with EPA that will help to increase efficiency by improving overall energy performance in commercial buildings, school systems, local governments, homes, transportation networks, electricity plants, and many other areas.

CHP systems offer great potential for improving the environment; it can lower CO₂ greenhouse gases emissions by 45% or more. In the September 1997 Scenarios of U.S. Carbon Reductions, five DOE laboratories examined more than 200 technologies, and found that the application of three power generation technologies for CHP applications — advanced turbines, fuel cells, and integrated combined cycle technologies — accounted for nearly 10% of the projected carbon savings. The next generation of turbines, fuel cells, and reciprocating engines offers increased efficiency at reduced size and versatility in the ratio of electric or mechanical energy to thermal energy. These can be combined with advanced thermal recovery technologies for the highest possible overall total energy efficiency and lowest carbon emissions.