Cogeneration Could Become Market for Gas Producers
23 April 2013
By Vicki Smith
MORGANTOWN, W.Va. (AP) -- Combined heat and power systems that
produce electricity through a process called cogeneration are a
great potential market for natural gas producers, but experts say
outdated policies and anti-competitive regulations are hindering
Traditional coal-fired power plants generate power and heat, but
the heat is wasted, typically lost in the form of steam from
massive cooling towers. CHP systems capture and reuse that heat,
resulting in double or triple the efficiency, advocates said
Wednesday at a gas industry conference at West Virginia
Natural gas fuels about 80 percent of the nation's cogeneration
systems, said Vignesh Gowrishanka of the Natural Resources Defense
Council. But the process accounts for only 9 percent of U.S. power
The potential exists to double or triple that while lowering
costs, increasing competitiveness and making electrical service
more reliable, Gowrishanka said. There's also a revenue
opportunity in selling either steam or electricity to nearby
But manufacturers and regulators say growth requires changes in
attitudes, energy policies and regulations that favor existing
Illinois-based Recycled Energy Development sells CHP systems, but
vice president Dick Munson said well-intentioned environmentalists
and policymakers inadvertently discourage growth when they set
energy-efficiency goals and specify the technologies that should
be used to attain them.
The market should determine how to meet those goals, Munson
argued. And government should retool regulations such as those
that allow only large utilities to string power lines over public
"We have created a regulatory paradigm that doesn't reward
efficiency or entrepreneurialism,'' he said, and one that relies
on monopolies and red tape. "We have created an electricity system
that the Soviets would have ended.''
A drilling boom is underway in the Marcellus and Utica shale
fields, massive underground gas reserves stretching from New York
across Pennsylvania and West Virginia to Ohio. Munson urged policy
makers to remain skeptical of rosy estimates of the volumes in
"But if we assume we're going to burn more natural gas to make
electricity, he said, "let's' burn it in the most efficient manner
Power generation hasn't changed much in the U.S. in 60 years, but
Cheryl Roberto, a former member of the Ohio Public Utilities
Commission said the pressure to evolve is growing.
Of particular interest, she said, are colleges, prisons and other
institutions that produce electricity using coal- or oil-fired
boilers and heat using separate systems. Those institutions will
soon have to comply with new clean-air regulations, so Ohio and
the U.S. Department of Energy are conducting a pilot project with
"How many boilers do we have in Ohio?'' she said. "A lot, and
that's why this makes sense.''
CHP is not always going to be cost-effective, Roberto said, but it
is technically possible. It could benefit not only the immediate
user but also create self-sustaining "islands of power'' when an
emergency situation that affects the larger electrical grid.
The West Virginia University College of Law hosted the forum to
discuss challenges facing the natural gas industry and policies
that could stimulate demand and stabilize domestic prices.
Organizers say the industry has been too successful for its own
good, with technological advances creating an oversupply and
forcing gas prices so low they jeopardize both future development
and tax revenues.
Kathryn Clay, executive director of the Washington, D.C.-based
Drive Natural Gas Initiative, said vehicles powered by liquid and
compressed natural gas are another huge but largely untapped
Individuals, companies and governments could all save money by
converting vehicles, she said, but gas-producing states can't
capitalize on the opportunity without a strong network of
pipelines and fueling stations.
The U.S. is the world's largest gas producer, she said, but
accounts for only 1 percent of natural gas vehicles.
There are just 1,200 natural gas fueling stations nationwide,
compared with 160,000 gasoline stations. But the growth rate of
fueling stations is accelerating, Clay said.
Today, technology, supplies and environmental attitudes promise
more success than supporters of natural gas vehicles found in the
1980s and 1990s.
Back then, the U.S. was on the verge of becoming an importer of
natural gas, Clay said. Now, without lucrative domestic markets,
gas producers could find themselves on the brink of becoming
Earlier this year, IGS Energy of Dublin, Ohio, said it will build
a $10 million network of compressed natural gas stations for
vehicles along Interstate 79 from Charleston to Mount Morris, Pa.
IGS said it anticipates more stations across West Virginia, and
it's considering a similar network in Ohio.
Last fall, a task force appointed by West Virginia Gov. Earl Ray
Tomblin said low prices support a shift toward CNG vehicles, and
urged the state to examine ways to expand the network of fueling
Tomblin said earlier this year state government should convert at
least one-fourth of its 7,800-vehicle fleet within four years.