A new tax credit is generating renewed interest in an old technology that addresses one of the most common forms of energy loss: waste heat.
The state tax credit, barely a month old, covers up to 35 percent of the cost of technology that captures and recycles heat that escapes up the smokestack from energy-intensive industrial processes at phosphate plants, manufacturing facilities and factories.
North Carolina is the third state to offer an incentive for cogeneration technology, or combined heat and power. The state is offering a $10,500 version of the incentive for residential applications - the only such incentive in the country - even though commercial technologies are not yet widely available for private home use.
Heat can be recycled for heating, sterilization and cooking, or used as an energy source for cooling, dehumidifying and generating electricity. Typical users of cogeneration are small- and medium-size industry, hospitals, hotels and universities.
Cogeneration will increase as energy prices rise and conservation becomes common, said A. Preston Howard Jr., president of the N.C. Manufacturers and Chemical Industry Council.
"There's got to be some benefit for the cost you expend; otherwise, nobody would do it," he said. "What would make more people do it? Increasing the payback."
N.C. State University estimates that it could save $5 million a year with the technology added to a planned 11-megawatt power plant on its main campus. The plant, to be powered by natural gas and oil, will cost $38 million.
However, because NCSU is a tax-exempt entity, it can't take the tax credit, said Jack Colby, the assistant vice chancellor for facilities operations. Instead, the private contractor that will build the campus power plant is looking at ways of structuring the financing of the project so that it can qualify for the incentive, he said.
NCSU's situation is just one example of why such tax credits aren't always practical.
The $2.5 million could make an economic difference on smaller projects, said cogeneration expert Tom Phelps, a principal at the Raleigh office of Stantec, a global engineering and architectural firm based in Edmonton,Canada.
"It may make a difference for selected projects on a small scale," Phelps said. "It has the advantage of essentially taking part of the capital cost out of the cost equation, making the project more competitive."
Beyond paper and pulp
Cogeneration has been around for more than a century and in this state is used primarily by the paper and pulp industry.
The purpose of the incentive is to encourage other industries to try it. To promote the technology, the N.C. Solar Center, N.C. SustainableEnergy Association and N.C. Manufacturers and Chemical Industry Council will include a session on the technology and new tax credit during an energy conference in November.
Phelps said he's working with a client to determine whether the incentive will make cogeneration a financially feasible option. Phelps wouldn't name or identify the client.
Large power plants are less likely to use cogeneration because at the scale of a power plant, the process would capture more heat than could practically be used.
