Natural gas is shifting from a regional and often marginal fuel to becoming a focal point of global energy supply and demand – we call it “the Age of Gas.” Earlier this year, GE predicated that gas consumption will grow by more than a third over current global levels by 2025, allowing for cleaner and less expensive fuel options to power the world.
The Age of Gas will unleash an enormous potential for Combined Heat and Power, or CHP. A CHP system employs a natural gas engine or turbine, combined with a cogeneration system, to capture thermal losses (heat) during electricity production. This heat is then converted to improve overall efficiencies of the electricity plant by up to 40 percent, leading up to an impressive 90 percent total efficiency in a CHP plant. Without CHP, a gas engine plant would require separate heat and power systems, producing about 50 percent plant efficiency and lost heat and production.
This video explains the process behind CHP:
CHP is not only about efficiency. It also brings major economic and environmental benefits – less fuel use (natural gas is 33-50 percent less expensive than diesel), lower energy production costs and reductions in greenhouse gasses and local air pollution. Despite these benefits, however, CHP only accounts for ten percent of global electricity generation. In fact, just 82 gigawatts of CHP is being produced in the United States, spread out across 3,700 industrial and commercial facilities to account for a mere eight percent of current US capacity.
What if CHP could really reach its global potential? Would it be significant? Recently, the International Energy Agency (IEA) examined the potential for CHP and developed an “Accelerated CHP” scenario where economically attractive CHP opportunities were exploited around the globe. With this future, the global share of CHP generation increases from 10 to 24 percent by 2030. I think the IEA is on the right track – with the right conditions, our team at GE believes that CHP can expand from providing 10 percent of global electricity today to 20 percent by 2025.
So how are we going to do it? In order to unleash CHP’s full potential, three pieces of the puzzle must fall into place:
- The availability of natural gas must increase.
- Decision makers need to respond to the need to create more resilient communities.
- Energy stakeholders – both producers and consumers – must demonstrate leadership.
Let me explain each of these “pieces” a bit more. As I mentioned earlier, natural gas is poised to capture a larger share of the world’s energy demand, and as its availability increases, so will the opportunities for CHP. Natural gas is already the preferred choice in most CHP applications today, and the continuing growth of infrastructure networks will ensure that gas is easier and less expensive to distribute in the future. In addition, new supply options such as shale gas, coupled with technological innovations that provide greater economics and flexibility, will position natural gas as the fuel of choice for CHP in the coming years.
Beyond natural gas, though, is another important piece to the CHP puzzle – resiliency. CHP and distributed power systems provide insurance against natural disasters in a way that central power generation cannot. In 2012, there were 905 natural disasters that impacted 106 million people and caused economic losses of $160 billion. The most affected areas were the Philippines, China, Pakistan, Nigeria, Iran and the United States.
Hurricane Sandy, which hit the East Coast in October 2012, left 8.5 million people without power for days (even weeks), and since the centralized power network failed, there was a clear need for systems such as CHP to step in and provide power quickly. Think about hospitals, water treatment facilities, and communications networks – the importance of reliable, continuous power such as CHP cannot be overstated.
For CHP’s full potential to be unlocked, though, we need courageous leadership from key energy stakeholders – the third piece of the puzzle. We often talk about government leadership – intelligent, focused policies are needed to remove some of the existing barriers to CHP. National and state-level CHP goals, such as the U.S. target to increase CHP capacity by 40 GW by 2020, will provide the right conditions for growth. Fiscal supports, local infrastructure planning, interconnection measures and R&D support are essential, too. The absence of these policies has been a hindrance to CHP adoption.
Policies will not drive CHP’s potential alone. Industry leadership is the linchpin of CHP’s successes, and it is required from all stakeholders – from equipment suppliers to end users. GE is investing hundreds of millions in technology and products every year, and most of this investment will result in advances for CHP applications. One of our newest technologies is helping power the city of Stadtwerke Rosenheim in Germany, generating 43.8 megawatts, providing 40 percent of the city’s electricity needs and 20 percent of its heating.
Lastly, the future success of CHP will not be completely ensured without leadership from the ultimate users of CHP systems. This leadership includes commercial, industrial, and municipal energy users, to name a few – we all should become part of this movement.
This is a path forward, not just for CHP, but for all clean energy solutions, and we should all ask ourselves: how can we lead it?
Lorraine Bolsinger is President & CEO of GE Power & Water’s Distributed Power.