12th International Symposium on District Heating and Cooling

The <strong>12th</strong> <strong>International</strong> <strong>Symposium</strong> on District Heating and Cooling,September 5 th to September 7 th , 2010, Tallinn, Estoniathan doubling the efficiency of conventional powerplants.The Department of Energy has estimated thatincreasing CHP from its current 9% share of U.S.electric power to 20% by 2030 would avoid 60% of theprojected increase in U.S. carbon dioxide emissions(equivalent to taking half of all U.S. passenger vehiclesoff the road); and, generate $234 billion in newinvestments.DHC would be a critical component of this CHP growth.The local electric distribution companies (LDCs) areinterested in DHC as a means to reduce the summerpeak and to release transmission and distributioncapacity to other electric applications that have moreeven consumption during the year.The developers of the building sector are interested inDHC as well, because it would leave more room spacein the building for sale.At the municipal level, the market driver for DHC is thereduction of the GHG emissions. Many municipalitieshave set voluntarily targets to the reduced GHGemissions.4.3. Main BarriersIn general, the barriers are very much the same asalready discussed in Canada. Private sector asinvestor cannot be much interested, because startingthe DHC is risky: long pay-back times ranging beyond10 years, limited access to municipal property,challenging contracting of residential, municipal andfederal buildings, overall billing and collection ofdifferent types of customers.Only little expansion on residential sector isrecognized, and that is because there is voting neededamong the condominium owners. The centralizedenergy systems, that the condo owners are not familiarwith and perhaps difficult for them to understand thebenefits, have not been adopted on the residentialsector in a considerable scale so far.4.4. Current ActivitiesThere are several laws and regulations that areexpected to support DHC development in theU.S.A.[6,7]Rising interest on development and extension ofrenewable energy sources as well as improving overallenergy efficiency is to be converted to legislation at themoment. Unfortunately, DHC has not been successfulin the legislation process so far, but both theDepartment of Energy as well as the DHC and CHPassociations such as IDEA and USCHPA are workingon it.The definition of CHP is rather complicated. TheInternal Revenue Code 26 USC and its § 48 defineCHP as producer of:at least 20 % of its total useful energy in the formof thermal energy which is not used to produceelectrical or mechanical power (or combinationthereof), andat least 20% of its total useful energy in the form ofelectrical or mechanical power (or combinationthereof), andthe energy efficiency percentage of which exceeds60%.The Thermal Energy Efficiency Act of 2009 establishesthe Thermal Energy Efficiency Fund that would awardgrants for DHC, CHP, and recoverable waste energyprojects. It includes biomass facilities. Under a federalGHG emissions regulation program, 2% of emissionallowances established for each calendar year from2012–2050 would be allocated to the Fund.This legislation would dedicate 2% of revenues fromclimate change legislation to fund CHP, waste energyrecovery, and DHC projects. Based on variousestimates, this could mean roughly between $1 billionand $1,5 billion per year for clean energy infrastructure.The Thermal Energy Efficiency Act would provide 40%of its funding for institutional entities (defined as publicor non-profit hospitals, local and state governments,school districts and higher education facilities, tribalgovernments, municipal utilities, or their designees),40% for commercial and industrial entities, and 20% tobe used in the discretion of the Secretary of Energy tofund institutional entity projects, commercial andindustrial projects, or federal facility projects. A matchis required of all non-federal applicants, starting at 25%from 2012-2017, and rising to 50% from 2018 to 2050.The breakdown of how the money would be used is75% for construction of infrastructure, 15% forplanning, engineering, and feasibility studies, and theremaining 10% to be used at the discretion of theSecretary for either infrastructure or planning,depending on the need.In competition with grid power plants receivinggenerous allowances in ACES, CHP systems could beshut down. Unless allowances are allocated to theDHC CHP system, it will have to purchase allowancesfor all gas consumed in the facility, resulting in anadditional cost equal to 15% of the average 2007wholesale power price ($57 per MWh) at the $16 permetric ton allowance price projected by EnvironmentalProtection Agency (EPA) for the year 2020. In contrast,the merchant coal plant will only have a GHGallowance cost of only 5% of the average 2007wholesale power price, because allowances will beallocated for nearly all (83%) of its emissions.221