Midwest Region Overview

The U.S. DOE Midwest CHP Technical Assistance Partnership works in the states of Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Wisconsin.

This section presents state-by-state and regional information in the following areas:

CHP Systems Installed - Data on the total number of CHP installations, their locations and power capacities.

Potential Market for CHP Systems - Information on buildings and facilities where CHP systems could potentially be installed

Energy Pricing - Information on prices of fuel and electricity

Regulations and Permits - Information on regulations and permitting issues for siting CHP systems

CHP Partners - List of companies providing equipment and services for CHP systems

Financial Incentives for CHP Systems - Information on incentives available to businesses interested in installing CHP systems

Utility Contacts - Information for businesses interested in working with their local utility company to install CHP systems

To access the above information for a state, click on the selected state from the map

IllinoisIowaIndianaKansasMichiganMinnesotaMissouriNorth DakotaNebraskaOhioSouth DakotaWisconsin

** Click on a state to learn more about the
status of clean energy in that state

CHP Installations

An overall summary of the CHP installations in the Midwest is shown in the following table

No specific study has been completed by the Midwest CHP Technical Assistance Partnership to ascertain the number of CHP installations in the Midwest Region. Any installations known to the TAPs are identified in our searchable database and also in the section for information on each state where the installations are located. The database provides information on the names of the plant owners or operators, plant locations and power generation capacity of each installation. If you are aware of other CHP installation sites within the Midwest, please submit the information to the TAP by clicking here.

CHP Market Potential

No specific study has been completed by the Midwest CHP Technical Assistance Partnerships (TAPs) to ascertain the market potential of CHP installations in the Midwest Region. The TAP has identified one study that assesses the potential commercial and institutional market on a state-by-state basis. It was completed by ONSITE Energy Corporation in January 2000 for the Energy Information Administration. It is entitled "The Market and Technical Potential for Combined Heat and Power in the Commercial/Institutional Sector." For the eight states in the Midwest Region (Illinois, Indiana, Michigan, Ohio, Iowa, Minnesota, Wisconsin, and Missouri) ONSITE estimated a total commercial/industrial market potential for CHP between 12,420 and 31,840 MW which correlates to 26–68% of the long-term goal of 47 gigawatts of installed CHP capacity that was developed as part of the CHP Roadmap Workshop.

Energy Pricing

Energy pricing for both fuel and electricity has significant impact on the financial viability of CHP. Further discussion of energy pricing in the Midwest can be viewed by clicking here. Check with you local energy provider for specific pricing in your area.

CHP Partners

Architectural and engineering, property management, equipment and manufacturing, energy suppliers, and energy service companies, as well as associations and organizations are important to the successful deployment of CHP. Click on any one of the links above to see more information about the importance and existence of any of these companies and organizations that support deployment of CHP in the Midwest.

No specific study has been completed by the Midwest CHP Technical Assistance Partnership to ascertain the number of companies in the Midwest Region that are engaged in CHP system applications or have CHP system capabilities.

Financial Incentives for CHP Systems

No specific study has been completed by the Midwest CHP Technical Assistance Partnerships (TAPs) to ascertain if there are any financial incentives provided in the Midwest Region. The Database of State Incentives for Renewable Energy (DSIRE) is a comprehensive source of information on state, local, utility, and selected federal incentives that promote renewable energy. To access information go the DSIRE Website.

Utility Contacts

No specific study has been completed by the Midwest CHP Technical Assistance Partnerships (TAPs) to ascertain the participation of utilities within the Midwest Region that are engaged in CHP system applications. Any utilities that the MAC is aware of are identified in our Contact database.

Summary and Status of CHP Policy Issues

No specific study has been completed by the Midwest CHP Technical Assistance Partnerships (TAPs) to ascertain the status of regulations and permits within the Midwest Region that pertain to CHP system applications. Lack of standards for exit, interconnection or stand-by fees, and the lack of supportive regulatory or legislative policy regarding distributed energy are among the biggest obstacles to the success of CHP in many states. In many states it is left up to each individual electric utility to define the guidelines, procedures, and rate structures that affect CHP installations within that electric utility's service territory.

Another circumstance that impacts the economic viability of CHP in the Midwest is the potential for re-negotiated rates. This occurs when the utility is allowed by the state to provide lower rates than in the approved rate structures to industrial or large commercial customers. This is because of the belief that ratepayers benefit from the utility's retention of these customers since revenues received under the discounted rates help minimize potential deficiencies in revenue requirements.

The Energy Information Administration (EIA) website provides the current status on a monthly basis of the status of electricity restructuring in each state.

The Market Capacity Potential of BCHP in the Midwest

Commercial/Institutional Market

ONSITE Energy Corporation in January 2000 prepared a study for the Energy Information Administration titled "The Market and Technical Potential for Combined Heat and Power in the Commercial/Institutional Sector." (Click here to see complete report.) This study identified potential CHP application sites using the iMarket, Inc. MarketPlace Database to select commercial/industrial building types based on SIC codes. Actual potential may be higher than this because their study focused on applications where thermal energy load was in the form of steam or hot water, and did not take into consideration the use of thermal technologies, such as absorption chillers or desiccant dehumidification, as part of the potential for thermal load.

The potential buildings were: hotels/motels, nursing homes, hospitals, schools, colleges, commercial laundries, car washes, health clubs, golf clubs, museums, correctional facilities, water treatment plants, extended service restaurants, supermarkets and refrigerated warehouses. The buildings were divided into different groups based on their electric demand. The electric demand was estimated using data from Wharton Economic Forecasting. As a result ONSITE selected 1,431,805 buildings in the United states as suitable for CHP applications requiring a capacity of 77,281 MW.

The ONSITE results are summarized on the following map:

Energy Pricing

Fuel Costs

Most of the CHP generation technologies use natural gas as a primary fuel, such as reciprocating engines, combustion turbines and microturbines. For these systems, fuel constitutes the majority of the variable/operating cost. High natural gas prices, such as those experienced in the year 2000, could have negative affects on the CHP market development.

In an Energy Information Administration report entitled "U.S. Natural Gas Markets: Recent Trends and Prospects for the Future," the EIA identifies several reasons for the gas price movement in 2000, including significant demand increase following a period of low growth in gas consumption (from 1996 to 1999), and a relatively cold winter in 2000. In its mid-term outlook, the EIA states, "Because natural gas resources are expected to be adequate to meet future demand through 2020 and technological progress for exploration and development is expected to be sustained, natural gas prices are projected to return to a lower price path around 2005 and gradually increase to about $3.05 per million BTU (MMBtu) in 2020."

According to the EIA's "Short Term Energy Outlook - January 2002," gas prices are expected to fall through 2002 because of reduced consumption, in part due to this warm winter and the slow economy, and increased supply, in part created in response to shortages in the winter of 2000/01. The EIA predicts that average natural gas wellhead price in 2002 will be around $2.00 per thousand cubic feet ($2.00/MMBtu), with price increasing in 2003 to around $2.60 per thousand cubic feet ($2.60/MMBtu) because of predicted improvements in the economy. The EIA in their long-term outlook, "Annual Energy Outlook 2002 with Projections to 2020," predict that natural gas wellhead prices will reach $3.26 per thousand cubic feet ($3.26/MMBtu) by 2020. Taking into consideration the transportation and distribution costs, the delivered price of natural gas to end-use customers is significantly higher than the wellhead price. For example, in 1999 when the average welhead price of natual gas was $2.19/MMBtu, its average delivered price was $5.30/MMBtu.

Reference: Annual Energy Outlook 2002 with Projections
to 2020, EIA, dated 12/21/01, Gas Prices

Midwest gas prices move relatively in sync with Henry Hub prices, which is one of the central gas trading points in the US. The mid-term outlook for the Henry Hub prices are that relatively low gas prices of around $3.00/MMBTU are anticipated by 2005. Taking into account some lead time for new CHP installations the winter 2000 gas spike should have little affect on the economics of future CHP projects.

Electric Pricing

In the annual Energy Information Administration report titled "Annual Energy Outlook 2002 with Projections to 2020," the EIA projects that the average electricity prices will decline from 6.9 cents per kilowatt-hour in 2000 to 6.5 cents per kilowatt-hour in 2020. Electricity industry restructuring contributes to declining projected prices through reductions in operating and maintenance costs, administrative costs, and other costs. Electricity prices are projected to decline to 6.3 cents per kilowatt-hour by 2006 then rise in the last 5 years of the forecast as natural gas prices rise.

Reference: Annual Energy Outlook 2002 with Projections
to 2020, EIA, dated 12/21/01, Electric Prices

CHP Partners

Architectural and Engineering Firms

Architectural and Engineering firms are important to promoting CHP technologies because the most economical time to install a CHP system is during the construction of a new building or during an extensive renovation, when the central heating and cooling plant is being initially installed or completely replaced. This is because the payback period associated with the cost to install a CHP system need only be justified on the cost differential between the CHP system and a conventional central cooling/heating system which otherwise would have to be installed. Architectural and engineering firms are generally engaged in the design and installation of such facilities in commercial and light industrial buildings.

Property Management Firms

Property management firms are important to promoting CHP technologies because they are the operators of most commercial buildings in which CHP technologies would be suitable and therefore are interested in reducing energy costs. They often are the decision makers as to what type of central service systems are installed. In many of the buildings that they operate, they are already required by newer building codes to provide some sort of emergency electric power generation equipment. Since they are already required to install generation equipment, the cost differential to install CHP over a conventional central heating/cooling system is less and easier to justify. In addition, it gives them the ability to provide higher power reliability to tenants, which is an important issue to many business operators.

Equipment Manufacturers and Suppliers

Manufacturers of power generation equipment, absorption chillers, and desiccant dehumidification equipment, and their sales representatives are important to promoting CHP technologies for obvious reasons, to sell their equipment. In most cases these manufactures have established a market presence and have built relationships with those most likely to install CHP technologies.

Energy Suppliers

Local energy suppliers are also important to promoting CHP. Many have formed subsidiary companies to promote distributed generation, especially the gas supply companies. Howver, they are not necessarily considering CHP because they often can justify the cost of distributed generation on the peak-shaving savings of electrical generation. They are not particularly interested in CHP because it provides heat in winter and reduces the gas consumption for boilers/furnaces used for heating. In the case of electrical supply companies, distributed generation may be viewed as a threat to the parent company, which may have rate structures that pose a disincentive to the installation of distributed generation and therefore to CHP. In these cases, distributed generation is viewed as more acceptable if it is on the electric suppliers side of the meter, which makes CHP a difficult option to promote since the electric generation source may be at some distance from the customer, thus making the use of exhaust heat from the generation source impractical.

Energy Services Companies

Energy Services Companies (ESCOs) are just beginning to become interested in CHP technologies. With the commercial sector’s growing interest in power reliability and quality, and the onset of restructuring in the Midwest Region and new guidelines on evaluating emissions from CHP installations, the market may be opening up with opportunities for ESCOs to consider CHP as a financially attractive energy saving option.

Associations and Organizations Involved with CHP Deployment

Federal, state, and regional governmental entities are becoming interested and concerned about distributed energy within their areas. With that interest comes significant potential for making CHP systems an important part of their distributed generation philosophy. Governmental entities are increasing their interest in CHP because of the energy savings and reduced emissions it provides. Many are promoting its development. While the Federal government, through the Department of Energy, Office of Power Technologies, has provided substantial support, the most effective deployment of CHP technology will come from regional and local activities. This is true because most of the barriers are due to local issues, such as site permitting (especially in areas classified as non-attainment by the EPA), interconnection requirements and studies, local utility pricing, and local building codes and standards. These barriers can be overcome with support from regional and local entities. The Midwest area is home to many non-profit organizations and associations that have come forward to support the deployment of CHP. In fact the Midwest appears to be leading the way in promoting the deployment of CHP.

There is also the Midwest Cogen Association (MCA) that serves to promote a greater public understanding of cogeneration, independent power production, and distributed generation. In addition, MCA works to improve general business conditions of the industry. The non-profit organization provides pertinent information for its members to conduct research, publish reports, and hold various seminars and workshops with the goal to advance the concept of cogeneration throughout the Midwest. MCA was incorporated in 1984 and covers the states of Illinois, Indiana, Iowa, Michigan, Minnesota, Missouri, Ohio and Wisconsin.

Members of MCA include leaders from a variety of organizations in both the public and private sectors. The membership includes: engineers, end users, equipment vendors, equipment contractors, project financiers, architects, project developers, government officials, educational personnel, and utility representatives.

 

Other Regions

We are one of seven U.S. DOE Midwest CHP Technical Assistance Partnerships across the country.