State Agency Prepares to Push CHP Program

Combined heat and power plays a big part in the Energy Master Plan -- and at the BPU

The state is gearing up a program to promote the building of combined heat and power systems, a top priority of the newly revised Energy Master Plan.

In the next few weeks, the staff of the Board of Public Utilities expects to present a proposal to the five commissioners to allocate $75 million to a fund to encourage development of power plants that generate electricity and heat simultaneously.

CHP, as it is sometimes called, is viewed by many as the lowest-cost way to add power generation and help the state reduce greenhouse gas emissions. The energy plan calls for building up to 1,500 megawatts of CHP generating capacity.

The bulk of that money, $55 million, would be jointly allocated to the BPU and state Economic Development Authority to help finance bigger projects, which would deliver up to 120 megawatts of generation to New Jersey.

With New Jersey saddled with some of the highest energy prices in the nation, the Christie administration and lawmakers believe CHP can help save money. The technology can assist local facilities like hospitals and colleges cut energy costs; it can also reduce congestion on the grid, thus decreasing charges for other consumers. Congestion is a big factor in the high electric bills businesses and homeowners pay in New Jersey.

Beyond the $55 million allocated for the BPU/EDA program, the staff is also expected to recommend another $20 million be set aside for smaller projects involving combined heat and power and fuels cells if they are less than one megawatt in size, according to Michael Winka, director of the Office of Clean Energy at the BPU.

“There has been a lot of interest in these programs,’’ Winka told the board at its bi-monthly meeting this past Friday.

When the state had a bigger pot of money to fund such projects, there had been 31 applications to build up 200 megawatts of CHP, according to the BPU.

Those plans, however, had to be scaled back when the Christie administration diverted money from a special fund that added a surcharge to business energy bills if they did not shop for an alternate energy supplier. The administration’s decision to pull out of a regional initiative to curb greenhouse gas emissions also cost it money, since the program provided funds for alternative energy projects.

With natural gas prices near record lows, the enthusiasm for building CHP projects is growing since most of the plants rely on the fuel to produce electricity. The systems are popular with hospitals, schools, and factories because they can provide a cheaper source of electricity than buying power from the grid, as well as being more efficient and cleaner than some conventional sources.

The BPU staff has convened stakeholder meetings on what shape the new programs to promote CHP should take. The staff is looking into if the programs should involve loans, grants, or a combination of the two, and whether they should be grid-connected and meet certain pollution standards.