NYSERDA Supports CHP Buyers and Streamlines the Market

For more than a decade the New York State Energy Research and Development Authority (NYSERDA) has promoted combined heat and power (CHP), also known as cogeneration, as an efficient and reliable energy technology. CHP systems produce electricity from an engine or generator and capture heat generated during this process for separate uses, such as space heating. By recycling the leftover heat, they can produce energy more efficiently than if the electricity and heat were produced separately. Modern CHP systems typically use natural gas, so they have low emissions. Many kinds of facilities use CHP systems, including hospitals, apartment buildings, and large commercial office buildings.

NYSERDA’s interest in CHP emerged in part from a desire to make the state’s electric grid more reliable. Events such as a region-wide outage across the Northeast in 2003 and local blackouts during Hurricane Sandy in 2012 have painfully highlighted the need for secure power sources. Because CHP units generate electricity on-site, they can keep at least part of a facility operating during power outages.

From 2000 through 2012, NYSERDA funded several dozen CHP demonstration projects to test different sizes and types of systems. The agency found that, while many types were available, choosing the right components and sizing the system correctly for a specific building was a complex process. Buyers typically had to hire consulting engineers to guide their decisions, and systems had to be extensively adapted on site. The process was time-consuming, and poor decisions could result in buying mismatched equipment.

To reduce these hurdles, NYSERDA launched a CHP Acceleration Program in 2012. The agency developed a catalog of modular, pre-packaged CHP systems, all of which it vetted for quality, reliability, and durability. “We wanted cookie cutter replication of well-proven designs that many customers could follow,” says Dana Levy, NYSERDA’s program manager for technical development and onsite power applications. Every item had to be capable of operating independently during grid power outages, come with a five-year service plan, and have a bumper-to-bumper warranty.

Initially the catalog included 36 systems from eight vendors; later it was expanded to 141 systems from 13 vendors. The systems ranged in size from 50 kilowatts to 1.3 megawatts —typical sizes for small to medium-sized buildings.

For each system in the catalog, NYSERDA specified the rebate that it would offer to purchasers (typically about 40 percent of the project cost). Customers who chose these systems and whose projects fit within standardized sizing guidelines for common building types received streamlined reviews from NYSERDA. The agency held trade shows where potential customers could meet vendors and compare CHP systems. It also required vendors to take full responsibility for ensuring that systems were installed correctly and performed properly. This approach made vendors key members of design teams early in the process, reducing the chance of buyers choosing components that were incompatible or poorly designed for the space where they would be installed.

In the first 18 months of the CHP Acceleration program, NYSERDA received 29 project applications — a much higher participation rate than its previous demonstration programs. The agency expects its $60 million program budget to leverage $90 million in private investments and reduce New York’s peak electric load by 37.5 megawatts. The program has also streamlined the market for CHP systems by reducing the time required to choose and install them. NYSERDA’s endorsement makes customers more confident in these systems and gives approved vendors a marketing edge.

“We have transformed the way that deals are occurring in the marketplace,” says Levy. “Healthy comparison shopping is happening, and we’re seeing long-term partnerships, as opposed to a focus just on making sales.”

NYSERDA officials would like to see other states adopt its catalog and expand it into a national list of approved CHP equipment. The agency is already consulting with several other states that are interested in building on New York’s success.


This blog post was written by Jenny Weeks and Warren Leon, and was originally published in the Clean Energy States Alliance (CESA)’s 2015 report “Clean Energy Champions: The Importance of State Policies and Programs.” This report provides the first-ever comprehensive look at the ways states are advancing clean energy and suggests how to further encourage clean energy growth. For more information about CESA, please visit www.cesa.org.

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Warren Leon is Executive Director of the Clean Energy States Alliance. He oversees the organization’s day-to-day operations and leads strategy development. He has written and edited many reports for CESA, including serving as lead author for  Returning Champions: State Clean Energy Leadership Since 2015  and  Solar with Justice: Strategies for Powering Up Under-Resourced Communities and Growing an Inclusive Solar Market . Prior to working for CESA, Warren was Director of the Massachusetts Renewable Energy Trust, Executive Director of the Northeast Sustainable Energy Association, and Deputy Director for Programs at the Union of Concerned Scientists. He co-authored the influential book  The Consumer's Guide to Effective Environmental Choices . He holds a Ph.D. from Harvard University.

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