State Experiences with Financial Incentives to Promote Clean Distributed Energy: Greenhouse Gas Reductions with CHP

Thomas Bourgeois and Chris Young, Pace University Energy Project

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Abstract

Many states have promulgated energy incentive schemes to achieve a wide variety of policy goals. Considering the context of diverse incentives and policies that promote both renewable energy (RE) and combined heat and power (CHP), this paper examines direct capacity grant incentive programs in four states (CA, CT, NJ and NY) to determine broad differences regarding their cost effectiveness, both in achieving installed capacity, and in achieving reductions of greenhouse gas (GHG) emissions. Using two methodologies and assumptions to estimate the GHG reductions attributable to different RE and CHP technology types, the paper determines dollars of incentive per ton of CO2 reduction. CHP incentives generally offer a better value per dollar of incentive distributed than RE incentives if GHG reduction is the primary goal.