Economics at your fingertips  

Incentives for Combined Heat and Power plants: How to increase societal benefits?

Rasika Athawale and Frank A. Felder

Utilities Policy, 2014, vol. 31, issue C, 121-132

Abstract: Investments in new combined heat-and-power (CHP) facilities have fallen short of harnessing what is believed to be CHP's full achievable economic potential and attenuate societal benefits of reducing emissions and increasing resiliency of the power system. Various reasons have been found to explain this “CHP gap,” an example of the “energy-efficiency gap.” This paper examines the effects of understated capital costs and low and volatile CHP capacity factors, which historically are demonstrated by a large number of existing US units, on the economics of CHP facilities and thereby provide a possible explanation for the CHP gap. Given the probability distribution of profitability for a CHP plant, an incentive structure that is modeled similar to insurance against risk of unfavorable outcomes, might compare favorably to the present one-time upfront capital incentive model for attracting new investments. We recommend further research on assurance-based incentives for CHP projects.

Keywords: Combined Heat and Power; Societal benefits; Capacity factor (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/j.jup.2014.10.005

Access Statistics for this article

Utilities Policy is currently edited by D. Smith

More articles in Utilities Policy from Elsevier
Bibliographic data for series maintained by Haili He ().

Page updated 2020-05-02
Handle: RePEc:eee:juipol:v:31:y:2014:i:c:p:121-132