Cogeneration comeback in California

Cogeneration, an old energy source, is making a comeback in California because of escalating oil prices, which make it economically competitive once again.

At the turn of the century cogeneration supplied half of all energy consumed in the United States. Today, its use is minuscule, because of the construction of giant power plants and inexpensive oil.

But oil is no longer cheap, and the California Energy Resources and Public Utilities Commissions tout cogeneration as a partial replacement for the black crude. State energy planners predict that cogeneration can yield 10 percent of the state's energy by 1990.

Cogeneration is shared work from the same fuel source.

"Basically, it is the sequential use of energy," says Linda Gustafson, assistant to Claire Dedrick, the state's public utilities commissioner, who cited as an example a cement plant that uses "high-quality, high-temperature steam."

After the steam completes its cementmaking work, the high-temperature heat is exhausted.

"That waste heat can be taken and used to run a turbine to generate electricity," she says. "This is a more efficient use of a fuel source. It allows the fuel to do more work and do it more efficiently."

Cogeneration is 60 to 80 percent efficient in its use of energy, while a plant generating electricity is only 30 to 40 percent efficient, she adds.

A spokesman for the PAcific Gas & Electric Company compares cogeneration to an old-fashioned wood-burning stove. "You threw the fuel in the stove and then used it to both cook on and heat the room," he says.

Cogeneration was popular when the electricity supply was neither reliable nor cheap. In those days manufacturing plants built their own power plants to furnish electricity.

"But when utilities started to build larger plants and use cheap oil, power became very cheap, cheaper than that produced by the individual plants, so it was more advantageous to buy electricity," the PG&E spokesman says.

"With the 1970s, the energy crunch has brought cogeneration back to people's attention and it is correctly viewed as a power source for the 1980s."

Cogeneration contributes about 4 percent of the state's power now. Energy planners hope to nudge that figure close to 10 percent --6,000 megawatts -- by the end of the decade. That would take many small plants coming on line, since most of the approximately 40 cogeneration plants in existence are of less than 10 megawatts.

In contrast, PG&E recently proposed a coal-fired plant pegged at 1,600 megawatts.

Individual industries make money from their small power plants by using the electricity themselves to reduce utility bills, selling the powr to a utility company, or both.

The Energy Commission advocates cogeneration to cut down reliance on imported oil, a mainstay of power plants, and the Public Utilities Commission, following federal regulations, has set up a pricing structure to encourage small cogeneration producers which requires California utilities to buy electricity at "avoided costs"; that is, what it would cost the utility to generate electricity by burning oil.

The cogenerator has a guaranteed market and profit, since cogenerated electricity is less expensive to produce.

Homeowners pay the same for cogenerated electricity as oil-burned, because the utility bought it at an artificially inflated price.

"This results in diversifying sources and encouraging the development of other resources," Ms. Gustafson says.

In 1979 the Public Utilities Commission penalized PG&E for its "nonaggressive pursuit of cogenerated electricity," she adds. Since then PG&E has sought out local industrial plants with which to share in the production of electricity.

The utility asks the local plant to construct the facility while it pledges to buy the electricity.

Asked if PG&E would pursue cogeneration partners are ardently if the complexion of the Energy and Public Utilities Commissions changed, the PG&E spokesman says his firm is "committed to cogeneration."

"I can say with reasonable confidence that cogeneration is not a political phenomenn in California," he continues. "It has undeniable advantages.

"We're committed to it, although we're most anxious to see industries make the capital commitments to get cogeneration going. While there is a great deal of enthusiasm on the part of the [Gov. Jerry] Brown administration, they are not the only ones to recognize it s merits."