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

Cogeneration experiences around the world 85
industrial company of an investor-owned utility plans to construct a cogeneration facility or if a
government-owned utility plans to construct such a facility and sell more than 25 per cent of
its output under a long-term contract to a private user, the facility will generally not be eligible
for tax-exempt financing.
According to the most recent data available, at the end of 1996, wind turbines, solar and
geothermal units together accounted for 4.9 per cent of all installed non-utility generation
capacity. Biomass comprised another 15.1 per cent. On the other hand, natural gas, coal and
oil make up for over two-thirds, or 68.8 per cent, of the installed non-utility generating capacity.
3.2.1 Renewed interest in cogeneration
Cogeneration is now used extensively by several energy-intensive industries, including pulp
and paper, chemicals, and petroleum refining. Following are the developments that have
renewed interests of both government and industry in expanding cogeneration applications to
other industries as well as other sectors of the economy:
- Recent advances in technologies such as combustion engines, steam turbines,
reciprocating engines, fuel cells, and heat-recovery equipment have decreased the cost
and improved the performance of cogeneration systems;
- A significant fraction of the country’s boilers will be replaced in the next decade, which will
provide opportunity to upgrade them with clean and efficient cogeneration systems;
- Environmental policies related to abatement of greenhouse gas emissions have created
pressures to find cleaner and more efficient means of energy use;
- The restructuring of the electric power market provides new opportunities for innovations
in power generation and smaller-scale distributed systems such as cogeneration.
Although the technical performance and costs of cogeneration systems have improved, there
are significant barriers to their widespread use, which include the following:
- Environmental Policies: Environmental permission for cogeneration systems remains
complex, costly, time-consuming, and confusing. Air pollution permits are required from
state environmental authorities before the plant can be constructed. Current environmental
regulations do not recognize the overall energy efficiency of cogeneration, or credit the
emissions avoided from displaced electricity generation;
- Utility Policies: Many utilities currently charge backup rates and require complex
interconnection arrangements for cogeneration systems;
- Tax Policies: Depreciation schedules for cogeneration investments vary depending on
system ownership. The depreciation period can be as long as 39 years for some types of
owners, much longer than the depreciation period for utility-owned power plants. This
limits the use of alternative financing or ownership arrangements.
The Department of Energy (DOE) is attempting to raise awareness of the energy,
environmental, and economic benefits of cogeneration, and to promote innovative thinking
about ways to accelerate its propagation. Key participants in this challenge will be the state
and regional officials. One target is to expand the use of this technology in government
facilities by working with the Federal Energy Management Programme (FEMP) and facilities
management agencies.
DOE is undertaking its efforts in co-ordination with the United States of Environmental
Protection Agency, which is focusing on environmental permit issues such as application of
output based emissions standards to CHP systems, and the inclusion of cogeneration as a
strategy in State Implementation Plans for the Clean Air Act.