Combined Heat and Power



Combined Heat and Power (CHP) is the term for a suite of technologies that essentially recycles waste energy, rather than discard it into the atmosphere. CHP combines waste energy with a fuel source, such as natural gas or biogas, to produce additional output. It produces additional energy, adding as much as 2300 megawatts (MW) to Indiana’s energy capacity at a competitive price, while increasing the competitiveness and efficiency of state manufacturers.  Where a traditional coal plant is only about 33% efficient, CHP increases that productivity to 75% or more, making the process much more environmentally compatible.

CHP Efficiency

One of the primary benefits of CHP is that it is flexible and scalable to meet the specific needs of the user and that it integrates with existing facilities. While most systems use natural gas, CHP can also take a variety of different fuels including biomass, biogas, and landfill gas.

Indiana already has about 2300 MW of CHP capacity deployed in a number of industrial, manufacturing and institutional settings, but at least that much remains “locked in” by antiquated regulatory prohibitions that prevent its robust development.  That is enough to meet much or all the state’s projected additional energy needs in 2030, according to the latest forecast of the State Utility Forecasting Group.

HEC recommends nine steps to alleviate regulatory and economic barriers preventing Hoosiers from seeing the full benefit of CHP, including:

  •  Net metering, interconnection and standby rate policies that fairly allow development and deployment by sending the correct price signals to Indiana businesses and consumers with CHP potential;
  • Feed-in tariffs that allow CHP producers to export their production, rather than utilize it entirely onsite;
  • Financial incentives for CHP projects that contribute to the state’s emission-reduction goals;
  • Feasibility studies for both public and private facilities to better identify potential resources;
  • Portfolio and Integrated Resource Plan standards that explicitly identify and account for CHP development; and
  • Reform of franchise laws that needlessly tie energy production to the whims of incumbent utilities.

Through the aggressive adoption of policies and regulations to support CHP development, Indiana can lower energy costs, lower emissions, and create jobs – well beyond a business-as-usual scenario.  That capability is especially key today, as Indiana tackles growing energy challenges, including:

  • Rising electricity prices due to aging power plant and the rising cost of coal;
  • The need for new generation in the face of the upcoming wave of coal plant retirements;
  • Increasing concern about the resiliency and security of our electricity infrastructure given increased extreme weather events and the rise of cyber-terrorism, which poses a real threat to the grid; and
  • The need to lower greenhouse gas emissions to comply with federal legislation and to mitigate climate change in the long term.

>>Learn more in HEC’s white paper on Combined Heat and Power here.


In addition to economic and resilience benefits, higher efficiency through CHP results in avoided emissions of CO2 and other toxic air pollutants (TAPs) such as mercury, sulfur dioxide, and NOx.

Because of Indiana’s dependence on coal, which makes up over 85% of Indiana’s electricity supply, Indiana has some of the highest emissions levels in the United States. In 2010, according to the EPA Toxic Release Inventory, Indiana had the 4th highest emissions levels in the nation. Of that, 65% came from the electric sector. With respect to carbon dioxide, Indiana has the 4th most carbon-intensive energy supply in the country.

CHP has the potential to not only accelerate a shift away from coal, but also drastically reduce users’ fuel consumption. The figure below illustrates a substantial savings in fuel and emissions when replacing a typical separate heat and power generation scenario with natural gas-fired CHP. The emissions reductions rise substantially when replacing fossil fuels with renewable fuels such as landfill gas or biogas created in an anaerobic digester.

CHP Emissions


Please read HEC’s recent study on Combined Heat and Power here.