Heating and Cooling Energy - Hydrogen and Fuel Cells: Advances in Transportation and Power - page 222

to provide CHP in the United States. For distributed generation, a boiler
and steam turbine system can be expensive. But, a process that already
uses a boiler to provide high pressure steam can install a back pressure
steam turbine generator for low cost, high efficiency power generation.
The pressure drops in the steam distribution systems are used to generate
power. This takes advantage of the energy that is already in the steam.
A back-pressure turbine is able to convert natural gas or fuels into
electric power with an efficiency of more than 80%, which makes it one of
the most efficient distributed generation systems. The CO 2 emissions are
low as well as pollution emissions.
The installed capital cost for these systems is about $500/kW. High
efficiency, low cost and low maintenance allow these back-pressure instal-
lations to have payback times of two or three years.
Since electric utilities are in the business of generating and selling
electricity they tend to view small power producers as competitors and
have established rate structures that tend to discourage independent pow-
er generation. The Public Utilities Regulatory Policy Act (PURPA), which
does not cover certain diesel engines, requires utilities to buy surplus
power from and to supply back-up power to small power producers and
cogenerators at nondiscriminatory fair rates.
The competition to a CHP project may also receive price breaks from
the local utility. When the local utility learns that a company is consider-
ing cogeneration, it sometimes offers a lower electricity rate in return for
an agreement not to cogenerate for a certain period of time. This is espe-
cially true for bigger projects or those that might replace a large portion of
its total load with on-site generation. A lower utility bill reduces the future
energy cost savings from the CHP project and thus reduces the return on
investment and increases the payback time. Other barriers to distributed
energy projects besides costs include project complexity and regulations.
A report by the National Renewable Energy Laboratory, studied 65
distributed energy projects and found that various technical, business
practice, and regulatory barriers can block distributed generation projects
from being developed. These barriers include lengthy approval processes,
project-specific equipment requirements and high standard fees.
There is no national agreement on technical standards for grid inter-
connection, insurance requirements or reasonable charges for the inter-
connection of distributed generation. Vendors of distributed generation
equipment need to work to remove or reduce these barriers. The Star-
wood hotel chain faced utility efforts in 2003 to block the installation of a