Positive news out of Washington isn’t always the easiest to find, so it may be surprising to learn that a bipartisan group of federal legislators has come together to support an energy policy which could have important benefits for Wisconsin.
The Power Efficiency and Resiliency (POWER) Act, currently pending in the House (H.R. 2657) and Senate (S. 1516) with a diverse mix of cosponsors from around the nation will increase investment in industrial energy efficiency projects – and that’s good for business in Wisconsin and throughout the nation.
The POWER Act would improve the tax credit for those that install combined heat and power (CHP) systems and provide a tax credit for the commissioning of waste heat to power (WHP) systems.
By producing both heat and power from a single source of fuel, CHP has double the efficiency of central station power generation. WHP captures waste heat that would typically be vented from an industrial facility and uses it to make electricity with no additional combustion and no incremental emissions.
Both CHP and WHP dramatically lower energy use, emissions, and cost. Such systems can be used at hospitals, military bases, manufacturing plants, agricultural facilities, wastewater treatment plants, and numerous other sites throughout our nation. CHP can provide reliable electricity even during grid outages.
These technologies are important to our state. My company, MicroCogen Partners, is one of many businesses working to make Wisconsin’s energy use more efficient through the implementation of small-scale CHP and WHP systems. Companies like mine work with a wide range of partners who can benefit from cogeneration – utility companies, local governments, hotels, restaurants, and even residential homes looking to heat a swimming pool.
And when heat is utilized in these systems, electricity can be generated as a by-product for under $0.04/kw. The resulting heat and energy savings can then be reinvested, helping to grow jobs, increasing competitiveness, and ultimately benefitting local economies.
Increasing the use of technologies like CHP and WHP can help bring manufacturing jobs back to our state and will improve the quality of life. According to two studies by the Department of Energy and the Oak Ridge National Labs, the incentives in the POWER Act could create as many as 1 million highly skilled jobs throughout the country.
Further, these systems benefit consumers by reducing energy costs in the long term and improving the electric grid’s reliability. So when natural disasters occur that cause power outages, facilities using these technologies can keep the lights on – especially important for our critical infrastructure like hospitals and other emergency services.
The challenge is that upfront costs of installing a CHP or WHP system can be prohibitively expensive. Tax incentives help businesses recoup some of these costs, making the investment more attractive. While CHP currently enjoys a federal investment tax credit of 10% for qualifying systems, it is not enough to ensure a return on investment in the short timeframe most businesses and institutions require.
Further, WHP does not qualify for the credit. The POWER Act aims to help alleviate these financial barriers by providing CHP and WHP an investment tax credit of 30 percent, putting these systems on par with other clean and efficient technologies like solar and fuel cells. Improving the tax credit for industrial energy efficiency would enable more businesses in states like Wisconsin to install these systems.
With all the benefits for and applications of CHP and WHP, it’s no wonder the POWER Act enjoys bipartisan support in Congress. Further, the bill is endorsed by more than 200 businesses, trade associations, nonprofit organizations, and research institutions, including more than 20 working in Wisconsin.
Through an increase in the use of CHP and WHP, the legislation will help Wisconsinites save money, reduce pollution, and improve their energy security. I encourage my fellow business leaders to add your voices to our call for Congress to pass this bipartisan measure that will move our nation toward a more efficient, affordable, and resilient clean energy economy.
Mike Cocking is the owner and president of MicroCogen Partners in Cedarburg, Wisconsin. MicroCogen specializes in working with businesses, institutions and residential customers across the Midwest to make their energy use more efficient, lower cost and more reliable.