Management decisions for cogeneration : executive summary

Abstract

This report summarizes two interdependent studies which explore the underlying factors in the decision by private, private non-profit, and public sector facility owners to invest in cogeneration technology. They employ factor analysis techniques to explain the decision to invest and discriminant analysis to group the survey respondents into non-cogenerators and potential cogenerators. Data for both studies come from a survey of commercial, industrial, and institutional electric energy consumers who used more than 750 KW demand in any one month of 1981 for a selected electric utility in the Boston area. There were 129 usable responses to the survey or 32.2 percent of the population.

Cogeneration is the sequential production of thermal energy and electricity at one facility. A technology advocated for its high thermodynamic efficiency compared to separate production of steam and electricity, cogeneration represents an opportunity for a facility owner to substitute capital expenditure today for future operating expenditures. For the past six years, projections of increased cogeneration of electricity and steam consistantly occurred in the literature. Over the same period output of steam and electricity from cogeneration plants has declined. In the face of contradictions between thermodynamic efficiency based projections of cogeneration potential and the reality of declining actual use, most reports offer anecdotal references to market imperfections and non-economic decision variables to justify the contradiction.

First, The studies reported here confirm that a number of factors other than purely economic considerations may prevent use of cogeneration technology at the present time. These factors include: Uncertainty caused by regulatory action, Desire for energy self sufficiency by the organization, Financial flexibility, Experience with electricity cogeneration or self generation, Capital budget planning methods

Second, these studies provide a ranking of the factors involved in the cogeneration decision explaining most variance to least variance. However, the ranking of factors provides no measure of the "importance" of these factors in the decision to adopt or not adopt cogeneration technology.

Finally, the results of these studies can be used to provide a rough estimate of capacity (KW) and energy (KWH) available from potential cogenerators in this electric utility service territory and the probability that a facility can be a cogenerator. These studies project a maximum potential of 106 MW and 559,000 MWH of cogenerated electrical energy in the utility service territory between 1982 and 2002.