Berkeley Lab Study Evaluates Potential Combined Heat and Power Penetration in California

June 2013

Part of California Governor Brown’s Clean Energy Jobs Plan is the goal of increasing combined heat and power (CHP) generation in the state by an additional 6.5 gigawatts (GW) by 2030. In 2009, the California Public Utilities Commission’s Self-Generation Incentive Program (SGIP) database identified only 0.25 GW of small scale CHP. With the financial incentives of the SGIP program expiring in early 2016, Lawrence Berkeley National Laboratory (Berkeley Lab) researchers evaluated scenarios to identify the optimal paths to meet the remaining CHP generation goal in the commercial sector.

Using the Distributed Energy Resources Customer Adoption Model (DER-CAM), a Berkeley Lab researcher team lead by scientist Michael Stadler evaluated an integrated approach that optimizes the adoption of distributed energy resources (DER). This study focused on commercial-sector CHP, especially those above a 50 to 100 kilowatt (kW) peak electricity load, and its potential contribution by 2020 and by 2030. The study looked at 147 representative sites and in particular concentrated on restaurants because they consume 25 percent of the natural gas in California. The research team conducted more than 8,000 individual optimization runs, with different assumptions for electric tariffs, natural gas costs, marginal grid carbon dioxide (CO2) emissions, nitrogen oxide treatment costs, SGIP, fuel cell lifetime, fuel-cell efficiency, PV installation costs, and payback periods.

Results from assuming an extension of the SGIP to 2020 were encouraging. The most optimistic CHP potential contribution in 2020 was found to be 2.7 GW, given a 46% average electric efficiency for fuel cells, a 10-year payback period for investments, and a focused CO2 approach by building owners.

Results for 2030 were more complicated, because those runs assumed that the SGIP had expired and that carbon-based utility generation sources had decreased. By 2030, the most optimistic modeling scenario showed a 2.5 GW CHP contribution, assuming a 60% electric efficiency and 20‑year lifetime for fuel cells, a 10-year payback period, and building owners implementing a CO2 minimization strategy. However, the results of CHP potential in 2030 showed a wide range, which demonstrated that the interactions between technologies, policies, and customer objectives would need to be well aligned to achieve the optimal result.