There is significant potential to improve energy efficiency in West Virginia through co-generation, also known as combined heat and power (CHP).  Co-generation refers to capturing the waste heat from electricity production to generate steam for industrial processes or district heating or, conversely, capturing industrial waste heat and using it to generate electricity that can be sold on the electric grid. Generating heat and power together can achieve thermal efficiency of up to 80%, versus 45% for generating heat and power separately. 

Nationally, CHP accounts for about 8% of U.S. electricity generating capacity - very low compared to countries such as Denmark, Finland, and the Netherlands where it represents more than 30% of capacity.  Achieving 20% of US generation capacity from CHP by 2030 would create nearly 1 million new highly-skilled, technical jobs.

Currently, West Virginia has 382 MW of installed CHP capacity - only 2% of in-state generating capacity.  A 2012 report from the American Council for an Energy Efficient Economy (ACEEE) estimated 1,700 MW of remaining technical potential within West Virginia, mainly in the chemicals and paper industries.  ACEEE further estimated that 588 MW would be economical to develop if utilities were provided incentives to support the development of CHP.  

Under WV law, however, utilities are not required to offer a long-term contract to purchase power from CHP installations at a guaranteed price.  Because utilities can earn a PSC-established rate of return on investments in their own generation, but not power purchased from third parties, they have no incentive to offer a favorable price.  Since CHP developers have to sell their excess power onto the electricity grid, this makes it very challenging to develop a project.

Energy Efficient West Virginia supports state policies that would allow CHP developers to find a fair market for their power.  This could be done through establishing a Clean Energy Standard Offer Program (which would require utilities to purchase power from CHP developers at a guaranteed price for a 15-20 year contract) or by requiring utilities to purchase a certain percentage of their electricity from CHP systems.

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