Passing POWER Act will drive cleaner energy and lower costs

What if every time you stopped to buy gas, you spilled two gallons for every one you put in the tank?

That’s akin to what happens in many power plants and factories, where up to two-thirds of the energy generated escapes, typically as steam sent skyward through smokestacks.

This is not only wasteful and costly; it’s unnecessary. We have proven, affordable technologies that can capture this unused heat and harness it to generate electricity, heating and cooling.

Combined heat and power (CHP) and waste heat to power (WHP) both create electricity — and, in the case of CHP, produce thermal energy — from the hot exhaust vented during power production. And considering that, according to studies by the U.S. Department of Energy and the Oak Ridge National Laboratory, the energy wasted in the U.S. utility sector annually is greater than total energy use in Japan for an entire year, you’d think businesses would be lining up to install CHP and WHP systems.

{mosads}But they aren’t, for a variety of reasons, including a lack of awareness of the technology and the upfront cost of installing a CHP or WHP system.

Fortunately, Congress is considering a bipartisan bill that would help industry lower energy costs — including the expense of installing CHP or WHP — while reducing pollution and greatly increasing resilience to grid failures and other power interruptions.

Known as the Power Efficiency and Resiliency Act, or POWER Act, the bill would provide a 30 percent tax credit for the installation of CHP and WHP systems — the same incentive given for deploying other clean energy technologies, such as wind and solar power. The POWER Act has been introduced in both the House (H.R. 2657) and the Senate (S. 1516), and Congress should move quickly to reconcile and pass this critical legislation as part of a larger package of tax extenders.

The 30 percent tax credit for wind and solar has been a powerful tool in our national energy arsenal; thanks in part to increased investment in the two technologies, the Department of Energy says that solar and wind will account for more than half the country’s new generating capacity installed in 2015. To ensure parity and make our energy use even more efficient, the credit should be extended to the lesser-known CHP and WHP systems.

Companies that can afford the significant capital necessary to install a CHP system can see substantial benefits. The Cox Interior Inc. manufacturing plant in Campbellsville, Ky., for instance, which makes home wood products, operates a five-megawatt CHP system that saves the company $4.5 million per year — and also produces more electricity than the company needs, allowing it to sell about $50,000 worth of power back to the local utility every year.

And Lorin Industries, a Michigan company that anodizes aluminum for the building industry and has recycled its wasted heat since 1943, added capacity to its CHP system in 1990. The move paid for itself in just four years, saving the company $540,000 annually largely because the company no longer needs to purchase electricity during peak times, when rates are elevated.

But without the tax credit offered by the POWER Act, many small and midsize manufacturing and commercial energy users will not be able to reap the long-term financial benefits that companies like Cox Interior and Lorin Industries have enjoyed — savings that the companies have been able to invest right back into their businesses and communities.

There’s one more reason our policymakers should be doing all they can to encourage CHP and WHP adoption. When Hurricane Sandy knocked out electricity to more than 8 million people in 2012, ‎communities, institutions and businesses with CHP generation systems were able to operate independently from the local grid. That allowed places such as Co-op City in the Bronx, Salem Community College and Princeton University in New Jersey, and New Milford and Danbury hospitals in Connecticut to keep the lights and heat on, providing refuge for residents and maintaining essential functions.

Similarly, when Hurricane Katrina struck in 2005, a CHP system meant that Baptist Medical Center in Jackson, Miss., was the only hospital in that metro area to stay open continuously — and to take patients from other medical facilities.

Congress has the opportunity to encourage adoption of technologies that will increase efficiency, reduce pollution, save energy and money, and boost resiliency to grid failures. Passing the POWER Act would be a powerful move in that direction.

Reichert leads the environment work at the Pew Charitable Trusts.