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Long-term tax credits and fair and transparent interconnection practices have allowed a number of countries to achieve high levels of CHP generation. Source: IEA 2008 CHP Share of Total National Power Production 60% 50% 40% 30% 20% 10% 0% What Is Limiting CHP Adoption in the US? Although much progress has been made in the last decade to remove technical and regulatory barriers to wider adoption of CHP, several major hurdles remain. Regulated Fees and Tariffs Electric rate structures can have significant impact on CHP economics. Many current US rate structures that link utility revenues and returns to the number of kilowatt-hours sold are a disincentive for utilities to encourage customer- owned CHP and other forms of onsite generation. Furthermore, many of the system and societal benefits that CHP provides are not accounted for under current ratemaking processes. Rate structures that recover the majority of the cost of service in non-bypassable fixed charges and/or ratcheted demand charges reduce the money-saving potential of CHP. Facilities with CHP systems usually require standby/backup service from the utility to provide power when the system is down due to routine maintenance or unplanned outages. Electric utilities often petition the regulators for the ability to assess specific standby charges to cover the additional costs they incur as they continue to provide generating, transmission, or distribution capacity (depending on the structure of the utility) to supply backup power when requested, sometimes on short notice. The structure and makeup of these charges is often a point of contention between the utility and the consumer, and without proper consideration of all benefits and costs can create unintended and burdensome barriers to CHP.27 Some utilities have programs that recognize the value to the utility and the ratepayer of avoided costs associated with building capacity and infrastructure. Compensation for those benefits occurs when the CHP operator enters a contract with the utility. Brazil Mexico Japan France Canada Sweden UK Spain USA Italy Germany China Austria Czech Rep. Poland Hungary Netherlands Latvia Russia Finland Denmark 27 EPA, Combined Heat and Power Partnership, http//www.epa.gov/chp/state-policy/utility.html. 22 Combined Heat & Power: Effective Energy Solutions for a Sustainable FuturePDF Image | COMBINED HEAT AND POWER 2008
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