State and Local Policy Database

Encouraging CHP as a Resource

While CHP is known for its energy efficiency benefits, few states actively identify it as an energy resource comparable to more traditional energy resources such as centralized power plants. Since CHP savings can be viewed as energy efficiency savings like other energy efficiency measures, the most appropriate place for these efforts to reside is within state energy efficiency goals and programs, though they can sometimes reside in other types of portfolio standards.

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: July 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP. 

Last Updated: August 2017

CHP in energy efficiency standards: On December 18, 2009 the Arizona Corporation Commission (ACC) ordered that all investor-owned utilities and rural electric cooperatives achieve 1.25% annual savings as a percent of the retail energy sales in the prior calendar year, ramping up to 2% beginning in 2014. By 2020, the state should reach 20% cumulative savings, plus up to a 2% credit for peak demand reductions from demand response programs, for a total standard of 22%. CHP is an eligible efficiency measure and utilities can choose to use CHP to meet their goals, although there is no separate CHP target within the EERS.

Last Updated: August 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: July 2017

CHP in energy efficiency standards: There is currently no portfolio standard in place under which CHP is eligible, but two state policies set targets for CHP deployment in California. One is Assembly Bill 32, the California Global Warming Solutions Act of 2006, which calls for 4,000 megawatts (MW) of new CHP resources to result in 6.7 million metric tons (MMT) of greenhouse gas reductions. This policy was expanded through the California Global Warming Solutions Act of 2016. The second is the Governor’s Clean Energy Jobs Program, which calls for the addition of 6,500 MW of CHP by 2030.

Under Assembly Bill 1890 (1996) and Assembly Bill 995 (2000), California established a "loading order" that calls for first pursuing all cost-effective efficiency resources to meet new load. The CPUC considers CHP a key element of this loading order, which is a guiding principle that specifies the state's general preference to pursue opportunities for energy efficiency and renewable generation before constructing new fossil fueled generation resources.

CHP programs:  The state and investor-owned utilities are running several programs designed to acquire cost-effective CHP energy resources. The Qualifying Facilities and CHP Program Settlement is the primary mechanism to require electric utilities to acquire new, efficient CHP resources. A technology incentive is also available through the Self-Generation Incentive Program (SGIP), which provides incentive payments to support the commercialization of new, efficient CHP technologies, among other eligible technologies.

Production Goal: The Qualifying Facilities and CHP Program Settlement established a mandatory requirement for California's three large electric utilities to procure a minimum of 3,000 MW of CHP by 2015 and sufficient capacity and energy from efficient CHP facilities to acheive 2.72 MMTCO2e of emissions reductions by 2020. The program was recently updated in a long-term procurement planning decision (D.15-06-028), which reduced previous procurement targets and required the electric utilities to hold solicitations between 2015 and 2020 to procure energy and capacity from efficient CHP resources sufficient to achieve 2.72 MMTCO2e of greenhouse gas emissions reductions.

Revenue streams: CHP systems in California have access to a feed-in tariff (FIT), which establishes a price paid and approved standard offer contracts for the purchase of excess electricity from eligible CHP generators.  Public Utilities Code 2840 directs the CPUC, the California Energy Commission, and the Air Resources Board to implement the Waste Heat and Carbon Emissions Reduction Act, which required the CPUC to establish a feed-in tariff for CHP systems that are smaller than 20 MW, in operation after January 1, 2008, and highly efficient (operating above a 62% total efficiency). The Measurement and Verification requirements were updated in 2016 to reduce deployment barriers. 

Last Updated: August 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: August 2017

CHP in energy efficiency standards: Connecticut’s energy efficiency targets are administered as part of its Renewable Portfolio Standard (RPS), initiated in 1998 by Connecticut General Statute § 16-245a et seq. In 2005, the state expanded its RPS to include Class III resources such as energy efficiency and CHP, which are supposed to comprise 4% of the state’s total output. To qualify as a Class III resource, CHP must have a minimum operating efficiency of at least 50%.

In 2013, the statute was revised with the passage of H.B. 6360. Among other things, this bill makes CHP more competitive within the portfolio standard by eliminating utilities' conservation savings from the tier of resource applicable to CHP.

Last Updated: August 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: August 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: August 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: July 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: July 2017

CHP in energy efficiency standards:  In 2004, SB 2474 expanded its existing renewable portfolio standard (RPS) to include “electric energy savings brought about by the use of energy efficiency technologies,” which includes CHP. The most recent amendments to the RPS became effective in July 2009. Under the standard, 40% of the state’s electricity must be generated by renewable electrical energy resources by 2030.  Savings from energy efficiency programs and CHP (among other measures) could count towards meeting up to 50% of the standard through 2014, but after 2015, these savings no longer count toward Hawaii’s RPS, and will instead count towards Hawaii’s Energy Efficiency Portfolio Standard (EEPS), which was established in 2009 with the passage of HB 1464. The legislation set a goal of 4,300 gigawatt-hour (GWh) reduction in electricity use by 2030, but final rules for the EEPS have not yet been established.

Last Updated: August 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: July 2017

CHP in energy efficiency standards: Until recently, CHP and waste heat to power were not allowed under the Illinois EEPS Program. A law was passed in 2013 (SB 1603) that changed the definition of energy efficiency: "Energy efficiency measures also includes measures that reduce the total BTUs of electricity and natural gas needed to meet the end use or uses." This opened the door for inclusion of CHP as an allowable technology under the state EEPS program. The Illinois Commerce Commission recently issued its orders for State Energy Office’s and the investor owned utilities’ three-year Energy Efficiency Portfolio plans.

CHP qualifies as an energy efficiency resource, and some of the largest utilities in Illinois, incuding ComEd, and Nicor, now offer per-kWh CHP acquisition programs and incentives for CHP deployment. Details on ComEd’s CHP program can be found here. Details on Nicor’s program can be found here. Utilities must consider CHP within their IRPs. The established goals for ComEd were developed on a per-project basis, and the spending associated with acquiring those projects was approved as part of the company’s broader energy efficiency programming. 

Revenue streams: In 2014, the Illinois Commerce Commission (ICC) ordered the Investor Owned Utilities (IOUs) to investigate CHP for the private sector in Illinois. ComEd and Nicor, Illinois’ largest electric and natural gas utilities respectively, both recently initiated custom programs targeting CHP projects. ComEd offers an incentive for 50% of feasibility assessment cost and 50% of interconnection fee up to $25,000 for customers in its territory 1 MW or greater, and a production incentive of $0.07 per eligible kWh based on review of 12 months of metered data and capped at $2,000,000.

Last Updated: August 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: August 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: August 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: August 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: August 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: August 2017

CHP in Energy Efficiency Standards:  Adopted in 1999, Maine’s Renewable Resources Portfolio Requirement allows electricity generated from efficient CHP systems and other systems that qualify as "small power production facilities" under the federal Public Utility Regulatory Policies Act of 1978 (PURPA) as eligible. CHP counts toward renewable resources in the state, provided it is at least 60% efficient. Maine electricity providers must supply at least 30% of their total sales as renewable resources. In 2007, Maine created mandatory standards for new generation resources, with a goal of 10% of new energy resources to be supplied by renewable resources by 2017.

Production goal: Maine law requires that the utilities (through Efficiency Maine Trust) develop and procure all cost-effective, reliable and achievable energy efficiency resources (MACE) in the state (35-A MRS §§10110 and 10111). Based on the most recent MACE Potential Study, Efficiency Maine Trust is required to pursue 646,022 MWh in CHP savings over the next 10 years. The plan calls for Efficiency Maine to add incremental delivery of 42,000 MWh from CHP in 2017, 53,000 MWh in 2018, and 64,000 MWh in 2019. Qualifying CHP projects will receive from Efficiency Maine a minimum of $100,000 to a maximum of $1 million per facility or up to 50% of the total project costs.

Last Updated: August 2017

CHP in Energy Efficiency Standards: The state’s Energy Efficiency Resource Standard under EmPOWER Maryland ended in 2015 and a new energy efficiency goal of 2% of annual retail sales beginning from 2018 was established. Electricity savings generated from CHP systems are eligible to be counted toward the savings goals.

CHP resource acquisition programs: Utilities in Maryland are running CHP programs to fulfill their three-year plans (2015 – 2017) for meeting the savings target set by the EmPOWER Maryland Efficiency Act of 2008. Baltimore Gas & Electric (BG&E) offers its Smart Energy Savers Program to nonresidential, industrial, commercial, government, institutional and nonprofit electric service customers, regardless of their gas and/or electricity supplier. Delmarva Power and Pepco offer their CHP programs to a similar customer base in their respective territories. These utility-run CHP programs provide financial incentives to commercial and industrial customers that employ CHP to reduce their energy consumption and demand usage.

Revenue streams: CHP systems established under the above mentioned programs have access to various performance-based incentives. For example, BGE, Delmarva Power, and Pepco each program offers offer $0.07/kWh for net electricity produced during the 18 months following system commissioning.

Last Updated: August 2017

CHP in energy efficiency standards: Massachusetts passed an Energy Efficiency First Fuel Requirement bill that requires electric and gas utilities to prioritize cost-effective energy efficiency and demand reduction resources over supply resources. Demand side resources include "energy efficiency, load management, demand response and generation that is located behind a customer's meter including a CHP system with an annual efficiency of 60% or greater with the goal of 80% annual efficiency for CHP systems by 2020."

Massachusetts Department of Energy Resources has also established an Alternative Energy Portfolio Standard (APS). The APS sets targets for sales of “alternative” energy to retail customers by electricity suppliers. For the purposes of the APS, CHP is specifically included as an “alternative generation unit.”

CHP programs:  A CHP program is implemented in Massachusetts through Mass Save, which is an initiative sponsored by the Massachusetts utilities and energy efficiency service providers to promote energy efficiency and help residents and businesses manage their energy use. The Mass Save CHP Program was launched in 2010 and it provides incentives to all utility customers considering CHP per kW depending on system size and efficiency.

Production goal: The Alternative Energy Portfolio Standard (APS) prioritizes CHP systems as part of the state’s goal to achieve 5% from electricity from alternative sources by 2020. According to the APS annual compliance report of 2013, almost all of compliance was met using efficient CHP technologies. This 5% goal can be translated into a kWh production goal and the state budget supports acquisition of generation from CHP through the APS.

Revenue streams:  Within the Alternative Energy Portfolio Standard (APS), CHP system owners are eligible to earn a performance incentive (per kWh) that is linked to actual generation in the form of alternative energy credits (AECs).

Last Updated: August 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: August 2017

CHP in energy efficiency standards: The Next Generation Energy Act (NGEA), passed in 2007, established energy-savings goals through the Conservation Improvement Program (CIP), for electric and natural gas investor-owned utilities in Minnesota. H.F. 729, passed in 2013, modified the definition of “energy conservation improvement” in Minnesota Statutes 2012, section 216B.241 to include topping cycle CHP. More information is available here.

Last Updated: August 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: August 2017

CHP in energy efficiency standards: CHP is an eligible energy efficiency measure under the Missouri Energy Efficiency Investment Act, which provides voluntary targets for energy savings from regulated utilities. 

Last Updated: August 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: July 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: August 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP. 

Last Updated: July 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: June 2016

CHP in energy efficiency standards:  New Jersey has not defined CHP as an eligible resource within a binding energy efficiency portfolio standard, but the state’s Energy Master Plan does include a non-binding CHP target of installing 1,500 MW of CHP by 2020.

Last Updated: August 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: August 2017

CHP in energy efficiency standards: In April 2007, Governor Spitzer set a new policy goal to reduce electricity use in 2015 by 15% (“15 by 15”), relative to projected use in 2015. In June 2008, the New York Public Service Commission issued an Order Establishing Energy Efficiency Portfolio Standard (EEPS) and Approving Programs. As New York looks beyond EEPS and toward more market-based transformation efforts through the Clean Energy Fund, it will pursue both resource acquisition and market transformation strategies.

CHP programs:  The New York State Energy Research and Development Authority (NYSERDA) has some of the most extensive experience implementing statewide programs to encourage CHP. After 2015, the incentive program will be a continuation/modification of NYSERDA's previous CHP Acceleration and Aggregation Program (Program Opportunity Notice 2568) and CHP Performance Program (Program Opportunity Notice 2701). These two separate programs have been merged into a single offering, issued as "The CHP Program" and labeled as Program Opportunity Notice 2568. The market transformation activities will strive to reduce soft costs, reduce cycle times, and increase monetization of values, by simplifying and accelerating customer acquisition, facilitating project replication through standardized model contract terms and conditions, and establishing consensus-based methodologies for calculating/analyzing costs/savings data and for assigning a monetized value to the enhanced resiliency provided by CHP. One significant change to NYSERDA’s CHP program, however, is a reduction in eligible system size to 3MW and a future scaling down of incentive levels. 

Production goal: The Clean Energy Fund Investment Plan documents the state’s program budget for acquisition of a defined amount of MWh from CHP resources. The plan includes a three-year budget of approximately $36 million in incentives and services for CHP installations. This level of investment is expected to result in 220,000 MWh in resource acquisition and a reduction of 1,710,000 metric tons of carbon dioxide equivalent during the three-year period.

Last Updated: August 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP. On August 1, 2017, the North Carolina Court of Appeals issued Decision No. COA16-1067, which found that all CHP, including topping cycle CHP, should be classified as an energy efficiency measure. This was a reversal of an order issued by the NC Utilities Commission in 2016. The new decision in 2017 now unambiguously finds that an entire topping cycle CHP system is an energy efficiency measure. 

Last Updated: August 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: July 2017

CHP in energy efficiency standards: Under the state's EEPS, Ohio’s investor-owned utilities were required to prepare and implement energy efficiency plans and CHP was an eligible technology. Though 2014 legislation placed a two-year freeze on energy efficiency requirements, several utilities indicate that they will continue to incorporate energy efficiency in their integrated resource planning processes.

Revenue streams: Two utilities, AEP Ohio and Dayton Power and Light (DP&L) both recently initiated custom programs for customers in their service territories to install CHP. In May 2015, DP&L launched a CHP incentive program that provides up to $500,000 for CHP projects with generating capacities less than 500 kW (not to exceed 50% of the project cost) The rebates include $0.08 per kWh generated and $100 per kW capacity.

Last Updated: August 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: August 2017

CHP in energy efficiency standards: Energy Trust of Oregon is an independent non-profit organization that establishes long-term energy savings targets and administers the renewable energy and energy efficiency projects undertaken by utilities in the state. Energy savings generated by all types of CHP are eligible to contribute toward Energy Trust's long-term savings goals.

Production incentives: A production incentive for natural gas-fired CHP projects was proposed by NW Natural Gas in 2016. This proposal is still being reviewed by the Oregon Public Utilities Commission. 

Last Updated: August 2017

CHP in energy efficiency standards: CHP is an eligible resource under Pennsylvania’s Alternative Energy Portfolio Standard (AEPS). The standard was adopted in 2004 and then amended in 2007 and requires all electric distribution companies and retail electric generation suppliers to ensure that 18% of their electricity is derived from alternative energy resources by 2020. The standard divides these requirements into three tiers to develop a compliance schedule to gradually reach the 18% goal. CHP is part of Tier II, which must comprise 10% of the total electricity supply by 2020. The other 8% is to be comprised of renewable resources. 

Revenue streams: CHP systems are eligible to receive production incentives (per kWh) through Pennsylvania’s AEPS, which provides compliance credits that are based on production. Also, some major utilities in Pennsylvania, including PECO, First Energy and PPL, offer performance incentives for CHP to their customer base in their respective territories. These utility-run program offerings provide financial incentives to commercial and industrial customers that employ CHP to reduce their energy consumption and demand usage.

Last Updated: August 2017

CHP in energy efficiency standards: Rhode Island established an Energy Efficiency Resource Standard in 2006 requiring regulated utilities to submit three-year energy efficiency resource plans, which explicitly include CHP as an eligible resource. Legislation passed in June 2012 (H.B. 8233) requires utilities to support the installation of efficient CHP systems; each utility must specify in its annual efficiency program and how it will do so.

CHP programs: In 2012, Rhode Island's Least Cost Procurement statute was amended to include a new CHP provision to encourage the consideration of its additional benefits. See R.I.G.L. § 39-1-27.7(c)(6)(ii) through (iv). Today, National Grid Electric implements a CHP Program that is designed to acquire cost-effective CHP energy resources (like other efficiency resources). All of Rhode Island is served by National Grid and the utility provides eligible CHP projects with a combination of energy efficiency, performance rebates, and advanced gas technology incentives. The total incentive package cannot exceed 70% of total project cost and is subject to budgetary limitations and caps.

Production goal: For 2017, National Grid has a target of 1.5 MW of installed CHP capacity that corresponds to 11,250 MWh of savings. Will the number of projects and sizes many vary, the target is estimated to be achieved through three installations. 

Revenue Streams: CHP systems have access to production incentives through National Grid's CHP Program. For any project greater than 1 new MW, a performance-based energy efficiency incentive, capped at $20/kW-year ($1.66/kW-month) for a period of up to ten years, is available.

Last Updated: August 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: August 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: August 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: August 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: August 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: August 2017

CHP in energy efficiency standards: Vermont Public Service Board (PSB) established a statewide energy efficiency utility, Efficiency Vermont, along with a funding mechanism to support it. Efficiency Vermont is administered by Vermont Energy Investment Corporation (VEIC), which is an independent, nonprofit corporation. The EEU implements that implements the state’s Energy Reduction Goals. The Order of Appointment (OOA) that describes the general responsibilities and scope of activities to be performed by the energy efficiency utility includes guidance related to project and savings eligibility for customer-sited generation including deployed CHP.

Last Updated: July 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: July 2017

CHP in energy efficiency standards: Washington has an energy efficiency resource standard for the state's electric utilities. It calls for electric utilities that serve more than 25,000 customers in the state of Washington to pursue all available conservation that is cost-effective, reliable, and feasible. Specifically, utilities must (1) identify achievable cost-effective conservation potential through 2019, with reviews and updates every two years for the subsequent 10 years and (2) establish and meet biennial targets for conservation.  Highly efficient CHP systems – that is, systems with a useful thermal energy output of no less than 33% of the total energy output – count towards a utility’s conservation target.

Last Updated: August 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: July 2017

CHP in energy efficiency standards:  Wisconsin established an energy efficiency resource standard in 2006. This standard requires that energy efficiency goals be met, and looks to the Wisconsin Focus on Energy Program to achieve these goals. CHP is not specifically identified as an eligible resource within the standard, but Focus on Energy programs support the deployment of CHP in certain sectors of the economy.

Last Updated: August 2017

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: August 2017