Cogeneration: producing heat and light--and profits: what role will recycling energy play in the future of renewable energy?

Author:Bailey, Ronald

Two-thirds of the energy people produce is wasted. It goes up power plant chimneys or dissipates into rivers and lakes through heat exchangers. Capturing this wasted heat would greatly reduce fuel costs and dramatically cut the emissions of carbon dioxide, which are thought to contribute to global warming. Cogeneration, or producing and using electricity and heat simultaneously, is the business opportunity being pursued by companies like Westmont, Ill-based Recycled Energy Development (RED) and White Plains, N.Y.-based Trigen Energy.

"The idea is to use energy twice," explains RED chairman Thomas Casten. "One time to make electricity and another to supply thermal energy." In a world in which businesses will have to pay for emitting each ton of carbon dioxide, this kind of energy and fuel efficiency will become very attractive.

How does cogeneration work? Cogeneration is not just one technology, but a suite of technologies whose central goal is to recycle energy. For example, the high pressure, high temperature steam that is used to drive electricity generating turbines can be used to heat buildings or in various industrial processes needing steam. Conversely, steam produced for use in industrial processes can be captured and used to drive turbines to produce electricity.

Cogeneration is not a brand new idea. Thomas Edison's Pearl Street generating plant, opened in 1882, produced both electricity and heat for lower Manhattan. Edison's plant is an example of "district heating," in which steam left over from driving electricity-generating turbines is piped to surrounding buildings to warm them. Steam can be piped about three to five miles. Today, Con Edison runs the largest district heating system in the world; seven cogeneration plants supply heat to 100,000 buildings.

Casten, one of the leading figures in the recycled energy business, has spent more than 30 years developing and operating combined heat and power plants as a way to save money and lower carbon dioxide emissions. As the CEO of the recycled energy companies Trigen Energy and Primary Energy Ventures, Casten oversaw the development of more than 200 cogeneration projects worth about $2 billion. In 2006, he founded RED, (His son, Sean Casten, serves as RED's CEO). Backed by Boston-based Denham Capital, RED plans to deploy recycled energy projects worth $1. 5 billion over the next five years.

The Cogeneration Catch-22

If recycling energy is such a good idea, why hasn't it been done more widely? In a word, regulation. Center on Globalization, Governance and Competitiveness at Duke University analysts Marcy Lowe and Gary Gereffi assert, "The web of U.S. regulatory policies favors inefficient centralized power production and penalizes or blocks decentralized alternatives." Casten points out that utilities have generally opposed cogeneration. "The utility sector is unlike the rest of the economy. It is...

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