CHP Slowly Picks Up Steam

Administration makes up to $18 million available for combined heat and power, less than half the $48 million originally allocated

The Christie administration has come up with partial funding for a half-dozen clean-power projects that have been held up since it diverted money targeted to the effort because of the state’s budget crisis.

The money, available from the New Jersey Economic Development Authority, will provide up to $18 million in a competitive grant program that will be jointly administered by the authority and state Board of Public Utilities (BPU). It is expected to fund at least six or seven combined heat and power (CHP) projects, which are small, efficient power plants that produce electricity and steam simultaneously.

Funding for the program is provided by the American Recovery and Reinvestment Act (ARRA), President Obama’s economic stimulus package passed by Congress last year. It falls far short of the $48 million originally set aside to finance 22 combined heat and power projects approved by the state. The Christie administration redirected that money to help plug a hole in the 2010 budget, which ended June 30.

Twice As Efficient as Conventional Plants

New Jersey’s energy master plan calls for the development of at least 1,500 megawatts of CHP plants by 2020 to help meet the state’s power needs. The CHP facilities are generally more than twice as efficient as conventional power plants and produce much less pollution, particularly greenhouse gas emissions that contribute to global climate change.

With $18 million in funding, the program should allow six or seven projects to move forward, according to Joseph Sullivan, BPU’s ombudsman. It is likely the money would be enough to fund CHP projects with a total of 38 megawatts of capacity, said Fred DeSanti, a lobbyist who represents several plants that expect to file applicants for grants. One megawatt is enough to power about 800 homes.

The business community, which had been upset by the diversion of funds earlier this year, welcomed the infusion of financing for the projects.

“Obviously, this will help, but we will continue to work for other funding sources,’’ said Sarah Bluhm, an assistant vice president for the New Jersey Business and Industry Association.

The Administration’s Aim

In announcing the program, state officials said it reflects Gov. Chris Christies’s aim of making energy more affordable, more reliable and more often produced by New Jersey workers. “CHP will be part of the solution and we are pleased to offer businesses and public and not-for-profit organizations an opportunity to save money and create jobs while also reducing energy demand,’’ said Caren Franzini, chief executive officer for the EDA.

BPU President Lee Solomon said the competitive grant program puts New Jersey in a better position to advance CHP projects. He called it another indication that New Jersey will continue to lead in the development of clean energy.

However, the state is currently conducting discussions on whether it should phase out the Retail Margin Fund, which is financed by a surcharge on businesses stemming from the breakup of New Jersey’s electric monopolies. It was the source of funding identified in legislation that would have provided up to $60 million in funding for CHP projects. Business lobbyists have long complained about the surcharge, criticism that grew after the administration diverted $128 million out of the fund to balance the budget. Among other options, the state is also exploring tapping into other clean-energy projects to fund combined heat and power projects.

Meanwhile, yesterday the Assembly Telecommunications and Utilities Committee approved a bill (A-2872) that aims to impose a standardized system for electric utilities in assessing special surcharges on CHP plants for tying into their distribution system. Currently, the charges vary widely from utility to utility, an impediment to developing new CHP projects, according to DeSanti.