Industrial and Commercial Cogeneration (Part 3 Of
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Chapter 1 Overview Contents Page Introduction . 3 Cogeneration Technologies . 6 The Potential for Cogeneration . 10 Cogeneration Opportunities .. .. ... ... 11 industrial Cogeneration . .. 11 Commercial Building Cogeneration . 12 Rural Cogeneration Opportunities . 13 Interconnection Requirements . 13 impacts of Cogeneration . .. .. .. .. .. ... ... ..... 15 Effects on Fuel Use..... 15 impacts on Utility Planning and Operations . 15 Environmental Impacts . 16 Socioeconomic Impacts. 17 Policy Considerations . 18 Oil Savings . 18 Economic incentives for Cogeneration . 19 Utility Ownership . 20 Interconnection Requirements . 20 Air Quality Considerations. 21 Research and Development. 21 Chapter 1 References . 21 Tables Table No. Page l. Summary of Cogeneration Technologies . 8 2. lnstalled lndustriaI Cogeneration Capacity . 11 Figures Figure No. Page I. Historical Overview of Electricity-Generating Capacity, Consumption, and Price, 1902-80 . 4 2. Conventional Electrica! and Process Steam Systems Compared With a Cogeneration System . .. .. .. .. .. .. ... ... ......O . 7 Chapter 1 Overview INTRODUCTION A major focus of the current energy debate is Cogeneration is an old and proven practice. how to meet the future demand for electricity Between the late 1880’s and early 1900’s, oil- and while reducing the Nation’s dependence on im- gas-fired cogeneration technologies were increas- ported oil. Conservation in buildings and in- ingly used throughout Europe and the United dustry, and conversion of utility central station States. In 1900, over 59 percent of total U.S. elec- capacity to alternate fuels will play a major role tric generating capacity was located at industrial in reducing oil use in these sectors. But cost- sites (not necessarily cogenerators) (see fig. 1). effective conservation measures can only go so Because electric utility service during this period far, and the industrial and commercial sectors was limited in availability, unreliable, unregu- ultimately will have to seek alternative sources lated, and usually expensive, this onsite genera- of energy. Moreover, electric utilities may face tion provided a cheaper and more reliable source financial, environmental, or other constraints on of power. However, as the demand for electric- the conversion of their existing capacity to fuels ity increased rapidly and reliable electric service other than oil, or on the construction of new alter- was extended to more and more areas in the early nate-fueled capacity. 1900’s, as the price of utility-generated electric- ity declined, and as electric generation became A wide range of alternate fuels and conversion a regulated activity, industry gradually began to technologies have been proposed for the indus- shift away from generating electric energy onsite. trial, commercial, and electric utility sectors. One By 1950, onsite industrial generating capacity ac- of the most promising commercially available counted for only about 17 percent of total U.S. technologies is cogeneration. Cogeneration sys- capacity, and by 1980 this figure had declined tems produce both electrical (or mechanical) to about 3 percent. At the same time, cogenera- energy and thermal energy from the same pri- tion’s technical potential (the number of sites with mary energy source. Cogeneration systems a thermal load suitable for cogeneration) has recapture otherwise wasted thermal energy, usu- been increasing steadily. ally from a heat engine producing electric power (i.e., a steam or combustion turbine or diesel en- There has been a resurgence of interest in re- gine), and use it for applications such as space cent years in cogeneration for industrial sites, conditioning, industrial process needs, or water commercial buildings, and rural applications. A heating, or use it as an energy source for another cogenerator could provide enough thermal ener- system component. This “cascading” of energy gy to meet many types of industrial process use is what distinguishes cogeneration systems needs, or to supply space heating and cooling from conventional separate electric and thermal and water heating for a variety of different com- energy systems (e.g., a powerplant and a low- mercial applications, while supplying significant pressure boiler), and from simple heat recovery amounts of electricity to the utility grid. Because strategies. Thus, conventional energy systems cogenerators produce two forms of energy in one supply either electricity or thermal energy while process, they will provide substantial energy sav- a cogeneration system produces both. The auto- ings relative to conventional separate electric and mobile engine is a familiar cogeneration system thermal energy technologies. Because cogener- as it provides mechanical shaft power to move ators can be built in small unit size (less than 1 the car, produces electric power with the alter- megawatt (MW)) and at relatively low capital cost, nator to run the electrical system, and uses the they could alleviate many of the current prob- engine’s otherwise wasted heat to provide com- lems faced by electric utilities, including the dif- fort conditioning in the winter. ficulty of siting new generating capacity and the 3 4 ● Industrial and Commercial (generation Figure l.— Historical Overview of Electricity.Generating Capacity, Consumption, and Price, 190240 - - - 1 107 106 105 104 .— ..- 103 1902 1912 1920 1930 1940 1950 1980 1970 1980 Electricity generation becomes a regulated industry SOURCE: Office of Technology Assessment from Edison Electric Institute, Statistical Yearbook of the Electric Utility Industry: 1980(Washington, D.C.: Edison Electric Institute, 1961); Historical Statistics of the United States, Co.- Ionial Times to 1970: Part 2 (Washington, D.C.: U.S. Government Printing Off Ice, 1976). high interest costs currently associated with eration and small power production by utilities, financing large powerplants. The small size of industries, and businesses. cogeneration systems also may be attractive as In response to these requests, OTA undertook a form of insurance against short-term fluctuations this assessment of cogeneration technologies. The in electricity demand growth (in lieu of the cost- assessment was designed to answer four general ly overbuilding of central station powerplants). questions: However, if cogenerators are not designed and sited carefully, and if their operation is not coor- 1. Under what circumstances are cogeneration dinated with that of the electric utilities, they also technologies likely to be economically at- have the potential to increase oil consumption, tractive and on what scale, and what is the contribute to air quality problems in urban areas, potential for new technologies in the future? and increase the cost of electric power. 2. How much electric power is economically or technically feasible for cogeneration to Congress has expressed considerable interest contribute to the Nation’s energy supply? in decentralized energy systems and in cogenera- 3. What are the economic, environmental, so- tion. Cogeneration is a major issue in the National cial, and institutional impacts of cogenera- Energy Act of 1978, parts of which were designed tion? to remove existing regulatory and institutional ob 4. What policy measures would accelerate or stacles to cogeneration and to provide economic retard the use of cogeneration systems? incentives for its implementation. In addition, the House Energy and Commerce Committee, the In order to answer these questions, this report House Science and Technology Committee, and reviews the features of the Nation’s energy pic- the Senate Energy and Natural Resources Com- ture (e.g., supply of and demand for fuels and mittee have held hearings on cogeneration, and electricity) and of the electric power industry that several committees in both Houses of Congress may affect decisions to invest in cogeneration have held hearings on the general concept of systems; describes the major technologies suit- decentralized energy systems. able for cogeneration applications; analyzes the impacts of industrial and commercial cogenera- The House Committee on Banking, Finance, tion on utility planning and operations, on fuel and Urban Affairs requested that OTA undertake use, and on environmental quality; and discusses a study of small electricity-generating equipment. the policy issues arising from existing legislation The request expressed concern that “considera- or regulations related to cogeneration. Because tions of energy policy have not taken adequately electric utilities are most likely to be affected into account the possibilities for decentralizing strongly by onsite generation, the technical, in- part of America’s electrical generating capabilities stitutional, and policy analyses focus on the role by distributing them within urban and other com- of utilities in such generation, and its effects on munities.” Citing the financial problems currently their future planning and operations. faced by electric utilities and the availability of a wide range of new generating technologies, the The main focus of the report is the use of co- committee requested “a careful examination of generation equipment in the industrial and com- the role that small generating equipment could mercial sectors; promising rural applications are play and the economic, environmental, social, discussed briefly. The cogeneration technologies political, and institutional prerequisites and im- addressed in detail include steam and combus- plications of greater utilization