Can Biomass CHP Replace Coal Power?

By Ned Stowe | January 07, 2013

A number of recent reports have highlighted the role that combined heat and power (CHP) can play in meeting the nation’s energy needs in coming decades. Distributed CHP systems can replace retiring coal-fired power plants, improve overall efficiency in the electric power sector, and reduce energy costs and greenhouse gas emissions. Most analyses presume new CHP systems will be fueled by natural gas, yet, relatively little attention has been given to the potentially significant contribution biomass CHP systems could make when used in current and future integrated biorefineries.

At the end of August, the White House released an executive order to increase installed CHP capacity in the U.S. by 50 percent, or 40 gigawatts, by 2020. At the same time, the U.S. DOE released a report on the status and trends in CHP deployment, and in October, the U.S. Energy Information Administration released its own report, “Combined Heat and Power Technology Fills an Important Energy Niche.”

The EIA report findings included that there were about 70 GW of CHP generating capacity in the U.S., accounting for almost 7 percent of total U.S. capacity, with 25 GW in the industrial sector, 2 GW in the commercial sector, and 43 GW in the electric power sector. In 2011, the average capacity factor for generators at industrial CHP plants was 57 percent.

It also found that more than 65 percent of CHP plants use natural gas as fuel.

In another recent report by the American Council for an Energy-Efficient Economy, “Coal Retirements and the CHP Investment Opportunity,” it was found that CHP systems could theoretically replace more than 100 percent of the anticipated retirements of coal-fired power plants across a dozen states by 2020, “but given current policies and recent installation trends, it appears taking advantage of that technical potential could be a challenge.”   

The report points out that policies and regulations do not always encourage CHP deployment, and almost all of the states that are facing higher levels of potential coal retirements do not have most of the critical policies in place that yield a healthy investment environment for CHP. Nonetheless, the report finds that “while CHP is not positioned to fully replace the lost capacity, it can play a substantial role in meeting these needs, especially in certain states.”

Aside from recognizing other various benefits, none of the aforementioned reports consider the potentially significant contribution to power production that CHP systems could make in integrated biorefineries fueled by renewable biomass during the next decade, especially in some of the states facing the most retirements of coal-fired power plants.

There are currently about 200 corn ethanol plants operating in the U.S., mostly across the Midwest. All generally operate 24/7 and have high needs for thermal energy and power, and all could have access through existing supply chains to ample quantities of renewable biomass. Further, if the renewable fuel standard is to be met by 2022, as many as 500 new biorefineries will need to be built. Most will have significant needs for heat and power, and most will be using cellulosic feedstocks.

If a large percentage of these ethanol plants installed or converted to biomass CHP systems, they would likely generate several GW worth of surplus electric power for the grid, given the right policy incentives and utility regulatory environment. Power production could be another coproduct of biofuel production, and it could help displace one of the nation’s dirtiest fuels with renewable biomass.

The key headwinds to converting existing ethanol plants is, of course, the low price of natural gas, generally unsupportive policy and utility regulatory environments in many states, and the depressed condition of the corn ethanol industry today in the wake of the drought and sluggish economy. Moving ahead, however, new biorefinery developers may be able to chart a different course with a longer-term view, and help the nation end its dependence on coal power.

Author: Ned Stowe
Policy Associate, Sustainable Biomass and Energy Program
Environmental and Energy Study Institute