part 1: overview of cogeneration and its status in asia - Fire

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Policy framework for promoting cogeneration 45 to be used in cogeneration systems should avail duty-free or low duty benefits. Several countries in Asia have already adopted a number of these measures in their efforts to encourage efficient energy generation and utilization. For example, the government of India has listed a number of energy generating devices which are eligible to apply for reduced import taxes and duties, accelerated depreciation, income tax holiday, capital and interest subsidy, etc. (for more details, please see Part II, Chapter 1). In Europe, apart from the national incentives given to private companies, there are several European Union energy programmes that provide grants to encourage investment in energy efficiency (e.g. JOULE, THERMIE). The concept of third party financing is strongly supported by the European Commission in order to help companies finance investment without affecting their balance sheets. Projects suitable for third party financing can get assistance from the SAVE programme and the Technology Performance Financing (TPF) system developed under the SPRING programme of the European Commission. 4.3.5 Role of electric utilities A factor of prime importance appears to be an adequate definition of the structure and activity of the electric utility. There is a trend across the globe for liberalization, restructuring and gradual disintegration of the traditional vertical energy supply monopolies. Some Asian developing countries are already envisaging to separate the production and distribution operation of the vertically integrated utilities. The emphasis should be clearly to bring forth progressive changes in the utilities so that they gradually become suppliers of energy services. The public and monopolistic natures of electric utilities in many developing countries lead to subsidized price of electricity and improper tariff structures that hinder the promotion of cogeneration systems. The electric tariff should be acceptable to all parties concerned and not protect the interest of any specific entity. For projects with long term commitments, the tariff structures should reflect the long-run marginal cost of electricity generated. There should be rules and regulations for the sale and buy-back rates for electric utilities and cogenerators; the latter should get benefits for their installed capacities and exported electricity based on the avoided costs of electric utilities. The active and supportive role of electric utilities in different forms, such as promotional activities on behalf of cogenerator, investment in schemes, establishment of joint ventures and setting up conducive tariff structures, can be crucial to the development of cogeneration. For example, utility owned cogeneration is quite common in Denmark and Germany that have a long record of adopting district-heating networks. In countries like the Netherlands, Spain and the United Kingdom of Great Britain and Northern Ireland (United Kingdom), joint ventures have been established between utility and cogenerator. Similar initiatives have also been taken in Japan, Republic of Korea and Thailand. A contentious issue related to private participation in power generation is the decision on fixing the new capacity that should be added. Capacity planning should not only have representation from government and electricity producers and distributors, the interests of those willing to contribute to decentralized power generation and cogeneration, should also be protected. The procedure applied should be fair and transparent, taking into account factors such as cost-effectiveness, location of the plant, environmental benefits, etc. If a cogeneration facility shows the same economic promise as a conventional power plant, it is obvious that the former should be given a priority. The idea of the power utilities implementing a competitive bid process seems the right approach to determine the realizable potential for cogeneration. This helps to avoid situations of the supply of power greatly exceeding the demand.
46 Part I: Overview of cogeneration and its status in Asia 4.3.6 Internalization of environmental costs Fossil fuel and electricity prices are forecasted to remain low for the short and medium terms. As a result, there is likely to be a lack of market forces to support energy efficiency projects, including cogeneration using fossil fuels. In the absence of other specific incentives for cogeneration development, there is a need to develop a mechanism to internalize external environmental costs. Though Denmark and Sweden have succeeded in introducing such measures for energy conservation, the European Union proposal for an energy/carbon tax has met with significant resistance. The tax revenues on fossil fuel and electricity, similar to the one introduced in Thailand (a small tax imposed on oil products to sustain the Energy Conservation Promotion Fund), could be used to promote all activities leading to energy conservation, including cogeneration. 4.3.7 Setting targets for cogeneration development It is important to set ambitious but realistic targets for cogeneration development as it demonstrates a clear political commitment. If insufficient action is being taken, pressure may be applied by the organizations that are in-charge of promoting cogeneration. In the European Union, specific targets have been set by a number of countries including the Netherlands, France, Spain and the United Kingdom. This obliges the concerned authorities to monitor the evolution of cogeneration on a regular basis, and intervene, if necessary, in a proactive manner by taking timely policy and implementation decisions in consultation with all the beneficiaries.
Page 1: PART 1: OVERVIEW OF COGENERATION AN
Page 4 and 5: 4 Part I: Overview of cogeneration
Page 12 and 13: State of art review of cogeneration
Page 36 and 37: Policy framework for promoting coge
Page 46 and 47: Cogeneration in Asia today 49 1.1 I
Page 48 and 49: Cogeneration in Asia today 51 4,000
Page 50 and 51: Cogeneration in Asia today 53 1.3 T
Page 52 and 53: Cogeneration in Asia today 55 1.3.3
Page 58 and 59: Cogeneration in Asia today 61 1.7 R
Page 60 and 61: Cogeneration in Asia today 63 Every
Page 62 and 63: Cogeneration in Asia today 65 Cogen
Page 64 and 65: 68 Part II: Cogeneration experience
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part 1: overview of cogeneration and its status in asia - Fire

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