A CHP system produces both electricity and useful thermal energy from a single fuel source like natural gas, biomass or coal. In traditional separate systems, a power plant produces just electricity while a boiler produces heat. With CHP, the heat that normally goes wasted during power generation is recovered to provide space heating, hot water or for industrial processes. This dual generation allows for fuel savings of upto 40-60% compared to separate generation.

Policy Support and the Road Ahead

While Combined Heat And Power has substantial advantages, some barriers remain around high upfront costs, interconnection challenges and lack of awareness. To overcome these hurdles and facilitate large-scale roll out, supportive policies are needed.

The federal government under the Infrastructure Investment and Jobs Act has allocated billions towards CHP incentive programs, tax credits, research funding and workforce development initiatives. With such public investments in distributed energy resources, new CHP capacity additions are estimated to grow over 50 GW by 2050.

Individual cities and states are also enacting their own customized legislation to spur in-state manufacturing and procurement of CHP systems. Mandating interconnection standards streamlines project development. Beneficial policies include investment tax credits, rebates for commercial and industrial customers, greenhouse gas credit trading and more.

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