The California Energy Commission (CEC) has just published its 2012 Integrated Energy Policy Report.  The objective of the report is to examine trends in the electricity, natural gas, and renewable power sectors, evaluate policy issues, and identify research needs in the energy sector.  One topic covered in the report is the potential for expanded use of combined heat and power (CHP) systems.  

The California Air Resources Board has set a target of 4,000 megawatts of additional CHP capacity by 2020, and Governor Brown has set a target of an additional 6,500 CHP megawatts by 2030.  However, the CEC indicated in the report that a number of policies and regulations may limit the market penetration of CHP.  Barriers to increased development of CHP include: disincentives under current cap-and-trade rules; cost and regulatory complexity of interconnection rules, costly nonbypassable departing load, standby, and demand charges; expensive metering requirements; and lack of eligibility for net energy metering.  Until these issues are fully addressed, and more funding is made available from utilities to install systems, expanded use of energy generation systems at industrial facilities will be limited.

The entire Integrated Energy Policy Report can be viewed on the CEC website: www.energy.ca.gov.