Illinois State Information

CHP Installations
Total of 31 CHP systems, producing 112 MW, are known to be in operation. Statistics on the installation of these systems in various commercial sectors and a searchable database of these installations are also available. The database shows the names of the plant owners or operators, plant location and power generation capacity for each installation. If you are aware of other CHP installation sites within Illinois, please submit the information to us with this user-friendly input form.

Since 2001 several new CHP systems have been installed in the state. The new installations include the following facilities:

• 1.2 MW facility at an office complex in downtown Chicago (Equity Office Properties)
• 36 MW facility at the University of Illinois at Chicago
• 2.5 MW facility at the Research Center of the Gas Technology Institute, Des Plaines, IL

In addition, construction was started on a 57 MW cogeneration facility at the University of Illinois at Urbana Champaign.

CHP Market Potential
One DOE study estimates total market potential for the commercial and institutional sector in Illinois to be in the range of 800 to 2,700 installations. Total potential of these systems for producing electric power is estimated to be in the range of 2,400 to 7,500 MW. In addition, there is a potential for 24,000 CHP system installations for multifamily homes. A brief discussion on the potential is given below.

The commercial and institutional market in Illinois represents 5 to 16% of the projected DOE long-term goal of 47 gigawatts of installed CHP capacity that was developed as part of the CHP Roadmap Workshop.

Energy Pricing
Energy pricing, for both fuel and electricity, can have significant impacts on the financial viability of CHP. Further discussion of energy pricing in Illinois is available here and at the EIA website. Please check with your local energy providers for specific pricing in your area.

CHP Partners
There are approximately 125 companies in Illinois that are engaged in CHP system applications or have CHP system capabilities. This indicates a high interest from the private market to the deployment of CHP technologies. This interest is complemented by a multitude of local and regional organizations that are involved with the promotion of CHP applications. A list of these companies is available.

Several groups have been particularly active in promoting CHP technologies in Illinois. This includes the Midwest CHP Initiative, an interest group consisting of regulators and private industry representatives, which meets on a bimonthly basis. The Midwest CHP Initiative organized a one day distributed generation interconnection workshop in February 2002 for state utility regulators in the Midwest. The Illinois Commerce Commission attended this workshop. Another active CHP interest group is the “Joint Task Force Committee of the Midwest Cogeneration Association”, which consists of CHP developers as well as engineering consultants and gas and electricity companies with interests in CHP development. The Task Force provides input, guidance and direction to the Midwest CHP Application Center (MAC).

In the Summer of 2002, the Illinois Department of Commerce and Community Affairs (DCAA), the Illinois Environmental Protection Agency, and the City of Chicago joined the U.S. EPA’s CHP Partnership Program. As part of this partnership, Illinois DCCA, the City of Chicago, the U.S. EPA and the U.S. DOE Chicago Regional Office sponsored a one-day workshop in July 2002 for Illinois businesses on Combined Heat and Power Applications, which was very well attended by various entities interested in CHP in Illinois.

Financial Incentives for CHP Systems
The Governor signed Senate Bill 1565 into law (August 2, 2002), which creates an Energy Efficient Revolving Loan Fund. This Fund provides loans for energy efficient measures to local governments or non-profits engaged in load aggregation and may encourage certain CHP technologies. A brief discussion on this subject is available below.

Utility Contacts
A list of utility companies interested in working with businesses to install CHP systems is available. Some direct links to utilities in Illinois are shown in the following table.

Status of CHP Policy Issues
Summaries of the policy of the State of Illinois in the following areas are available: Access and Interconnection Rules, Rates, Standby Charges and Exit Fees, General Progress with State Electric Deregulation, Emerging Legislation, and Potential Partners / Advocates of CHP. The Illinois EPA has designated Mr. Minesh Patel (Phone: 217-782-2113) as its representative to deal with all CHP siting/emissions applications.

Personnel from the MAC presented and attended a meeting arranged by the MAC and the MW CHP Initiative with the Illinois Commerce Commission (ICC) in October 2002. The purpose of the meeting was to present a case for support and barrier removal to not discourage CHP in Illinois. All ICC members were present (6 in person 1 by phone). Mr. Terry Harvill, the Chairperson, indicated that he would have the Staff review the current status of issues associated with barriers to CHP, especially interconnection and tariffs. With follow-up activities, it is expected that the ICC will re-opened its focus on developing an interconnection standard consistent with IEEE 1547.

The EIA provides a monthly status of electricity restructuring on a State-by-State basis. They also provide a status of the deregulation of the natural gas industry on a State-by-State basis.

CHP Installation Details
The survey of BCHP installations and potential CHP targets was primarily based on personal interviews as well as the use of published data including websites and promotional materials. Published data also consisted of the Energy Information Administration’s "Inventory of Nonutility Electric Power Plants in the United States", dated November 2000.

The sites identified represent the best efforts of the MAC to identify actual and potential CHP installations in Illinois. Other existing or candidate CHP sites may exist; they can be submitted by clicking here.

(Source: "BCHP Baseline Analysis for the Illinois Market," a report prepared by the Midwest CHP for Buildings Application Center, August 2002.)

(Source: "BCHP Baseline Analysis for the Illinois Market," a report prepared by the Midwest CHP for Buildings Application Center, August 2002.)

As can be seen school/universities and hospitals constitute the biggest installed market segments in Illinois followed by waste treatment facilities and data centers.

CHP Market Potential Details
The potential market capacity for CHP in Illinois is estimated to be up to 7,500 MW in the industrial and commercial sector and an additional 30,000 installations in the multi-family residential sector. This potential may only be realized if the regulatory and policy issues become more supportive of CHP installations. Additional market potential capacity could be realized, if incentives are provided.

Commercial/Institutional Market
One DOE study pertaining to the commercial market potential for CHP in the United States was performed by ONSITE Energy Corporation report that was prepared for the Energy Information Administration and completed in January 2000. It is titled "The Market and Technical Potential for Combined Heat and Power in the Commercial/Institutional Sector." (Click here to see complete report.)

For Illinois ONSITE estimated a total commercial/industrial market potential for CHP between 2,410 to 7,480 MW. This represents 5-16% of the projected DOE long-term goal of 47 gigawatts of installed CHP capacity that was developed as part of the CHP Roadmap Workshop.

Multi-Family Residential Market
Besides commercial and industrial applications BCHP systems also have potential market viability for multi-unit residences (those with 2 or more units). Compared to conventional HVAC systems, the installation of BCHP systems are particularly competitive when it comes to new construction or complete replacement of old HVAC systems.

Since all new and replacement HVAC systems need to be permitted in Illinois, permitting data provides a good estimate of buildings where BCHP systems may be a potential alternative. Applying the following assumptions the potential market for BCHP applications can be estimated:

• New construction remains at or near the same level as in the year 2001 (16, 243 units),
• HVAC systems need to be replaced every 20 years, therefore units installed in 1981 would need to be replaced in the year 2001, and
• The number of HVAC units replaced in 2001 is consistent with the number of units installed in 1981 (7,942 units).

These assumptions were applied to the new building permit data obtained for 1981 and 2001. Excluding the permits for buildings with less than 2 units, 7,942 and 16,243 multi-unit structures were permitted in 1981 and 2001, respectively. Therefore, the market potential for multi-unit residential BCHP installation in Illinois for 2002 is estimated to be at around 24,000 units.

Energy Pricing Details
The EIA's State Energy Price and Expenditure Report 1999 provides a composite table of the historical energy prices in Illinois by sector and fuel type. It can be found by clicking here.

Fuel Costs
Most of the CHP generation technologies use natural gas as a primary fuel, such as reciprocating engines, combustion turbines and microturbines. For these systems fuel constitutes the majority of the variable/operating cost. High natural gas prices, such as those experienced in the year 2000, could have negative affects on the CHP market development.

In an Energy Information Administration report titled "U.S. Natural Gas Markets: Recent Trends and Prospects for the Future," the EIA identifies several reasons for the gas price movement in 2000 among which are significant demand increase following a period of low growth in gas consumption (from 1996 to 1999) and a relatively cold winter in 2000. In its mid-term outlook, the EIA states, "Because natural gas resources are expected to be adequate to meet future demand through 2020 and technological progress for exploration and development is expected to be sustained, natural gas prices at city gate are projected to return to a lower price path around 2005 and gradually increase to about $3.05 per million Btu (MMBtu) in 2020."

Chicago gas prices move relatively in sync with Henry Hub prices, which is one of the central gas trading points in the US. The mid-term outlook for the Henry Hub prices are that relatively low city gate gas prices of around $3.00/MMBtu are anticipated by 2005. Taking into account some lead time for new CHP installations the winter 2000 gas spike should have little affect on the economics of future CHP projects. Considering the gas distribution cost, the delivered price of natural gas to commercial customers is much higher. For example, in 1999 when the average city gate price of gas was $3.34/MMBtu, the average delivered price of natural gas was $5.30/MMBtu.

Peoples Gas, a large local natural gas distribution company in Illinois, started a 2-year pilot program in November 1997 that provided supplier choice to small commercial and industrial customers. The trial period for the program was extended through June 30, 2000, and then approved on a permanent basis. This program will allow CHP operators to shop around for the best fuel price.

EIA State Data
For a link to the EIA website that discusses gas prices in Illinois click here.
(Sources: Total 2000: Energy Information Administration, Natural Gas Annual 2000
(November 2001). Eligibility and Participation: Estimated by Illinois Commerce Commission and Nicor Energy.)

In 2000, Illinois had 292,487 natural gas commercial customers with annual consumption of 201 billion cubic feet. The average price paid for natural gas purchased from local distribution companies by commercial customers was $6.90 per thousand cubic feet($6.90/MMBtu), which is slightly above the national average of $6.59/MMBtu. This price is inclusive of all costs: gas cost at wellhead plus gas transportation and distribution costs. The average city gate price (wellhead cost plus transportation cost but no distribution cost) in the state was $5.01 per thousand cubic feet ($5.01/MMBtu).

Commercial* Customers Eligible or Participating Retail Choice Programs
(Status as of December 2001)

*All large commercial customers have the option of purchasing natural gas from supplier other than local natural gas distribution companies. The "eligible" and "participating" commercial customers include only small-volume commercial customers.

Electric Pricing
In the annual Energy Information Administration report titled "Annual Energy Outlook 2002 with Projections to 2020," the EIA projects that the average electricity prices will decline from 6.9¢ per kilowatt-hour in 2000 to 6.5¢ per kilowatt-hour in 2020. Electricity industry restructuring contributes to declining projected prices through reductions in operating and maintenance costs, administrative costs, and other costs. Electricity prices are projected to decline to 6.3¢ per kilowatt-hour by 2006 then rise in the last 5 years of the forecast as natural gas prices rise.

Source: Commercial Sector Electric Cost in Illinois, ($1/MBtu=0.3413¢/kWh)

In Illinois, the cost of electricity for commercial has shown a relative decrease over the last recorded 10 year period (1990-1999) based on information from the EIA's State Energy Price and Expenditure Report 1999. The cost of electricity to the commercial consumer has gone from 7.6¢/kWh in 1990 to 7.53¢/kWh in 2000, which is above the U.S. average of 7.36¢/kWh.

Commonwealth Edison (ComEd), as the largest electric supplier in Illinois, has a substantial influence over the economics of CHP in Illinois; their service territory encompasses the majority of the service territory in Illinois, including the Chicago Metropolitan Area.

ComEd's Rate 18 for Standby Electric Service is the rate that most affects the installation and operation of any distributed generation (DG) in their service area. It includes detailed and complicated standby energy and demand charges, which focus on the performance and availability of the distributed generation equipment. If the distributed generation equipment exhibits poor performance and standby power has to be provided by ComEd, the implications of the Rate can be costly. The charges associated with being provided standby power can make the financial aspects of the CHP installation unfavorable, if not completely undesirable, especially for small installations (<1 MW). Many potential CHP installations have not gone forward because of this uncertainty in costs. Standby charges and fees underscore one of the major barriers in determining the actual economics of the installation and operation of DG. For an analysis of the impact of Rate 18 on the financial aspects of a CHP installation click here.

CHP Partner Details
(Source: "BCHP Baseline Analysis for the Illinois Market," a report prepared by the Midwest CHP for Buildings Application Center, August 2002.)

The following lists provide information on architectural firms, property management firms, engineering firms, manufacturers and energy supply companies, which are involved in Illinois with BCHP applications. In addition to that, the lists also provide information on firms which have the interest and capability to get involved with BCHP applications either because they promote energy efficiency, green building technologies or have other BCHP supporting missions.

Architectural and Engineering Firms
Architectural and Engineering firms are important to promoting CHP technologies because the most economical time to install a CHP system is during the construction of a new building or during an extensive renovation, when the central heating and cooling plant is being initially installed or completely replaced. This is because the payback period associated with the cost to install a CHP system need only be justified on the cost differential between the CHP system and a conventional central cooling/heating system which otherwise would have to be installed. Architectural and engineering firms are generally engaged in the design and installation of such facilities in commercial and light industrial buildings. Following is a list of architectural firms and engineering firms that are potential allies in the promotion of CHP installation in Illinois.

Architectural Firms

• Sonoc Architects
  Capabilities: Green Building, BCHP Capabilities
• Farr Associates Architecture and Urban Design, Inc.
  Capabilities: Green Building, BCHP Capabilities
• O'Donnell Wicklund Pigozzi & Peterson Architects, Inc.
  Capabilities: Green Building, BCHP Projects Developed
• Prisco Serena Sturm Architects
  Capabilities: Green Building, BCHP Projects Developed
• Skidmore Owings & Merrill LLP
  Capabilities: Green Building

Engineering Firms

• Avalon Consulting, Inc.
  Capabilities: Energy/CHP Consulting
• Ballard Engineering
  Capabilities: CHP Turnkey Systems
• Cuh2a, Inc.
  Capabilities: HVAC Engineering, BCHP Potential
• Energy Choices, Inc.
  Capabilities: Energy markets/fuel supply consulting
• Epstein and Sons International, Inc.
  Capabilities: HVAC Engineering, BCHP Potential
• Excelon Services, Inc.
  Capabilities: Energy/CHP Consulting
• Flash Power
  Capabilities: CHP Turnkey Installations
• GKC-EME
  Capabilities: CHP Turnkey Installations
• General Energy Corp
  Capabilities: HVAC Engineering, BCHP Potential
• GLHN A&Es
  Capabilities: HVAC Engineering, BCHP Potential
• Globetrotters Engineering Corporation
  Capabilities: HVAC Engineering, BCHP Potential
• IBC Engineering
  Capabilities: BCHP Turnkey Installations
• Jacobs Facilities, Inc.
  Capabilities: HVAC Engineering, BCHP Potential
• KJWW Engineering Consultants
  Capabilities:  HVAC, electrical, plumbing, fire protection, technology, and structural engineering
• La Salle Associates
  Capabilities: BCHP Turnkey Installations
• Montgomery Watson Harza
  Capabilities: BCHP Turnkey Installations
• NICOR Solutions
  Capabilities: BCHP Turnkey Installations
• OptimalPath
  Capabilities: Data Centers
• Patrick Engineering, Inc.
  Capabilities: HVAC Engineering, BCHP Potential
• Primera Engineering
  Capabilities: HVAC Engineering, BCHP Potential
• Sebesta Blomberg & Associates, Inc.
  Capabilities: HVAC Engineering, BCHP Potential
• Stanley Consultants, Inc.
  Capabilities: BCHP Turnkey Installations

Property Management Firms
Property management firms are important to promoting CHP technologies because they are the operators of most commercial buildings in which CHP technologies would be suitable and therefore are interested in reducing energy costs. They often are the decision makers as to what type of central service systems are installed. In many of the buildings that they operate, they are already required by newer building codes to provide some sort of emergency generation electric power generation equipment. Since they are already required to install generation equipment, the cost differential to install CHP over a conventional central heating/cooling system is less and easier to justify. In addition, it gives them the ability to provide higher power reliability to tenants, which is becoming an important issue to many business operators. The following is a list of property management firms that promote CHP installations in Illinois.

Property Management Firms

• Amdur Associates, Inc.
• American Spectrum Midwest, Inc.
• Baird & Warner Management Group, Inc.
• Brian Properties, Inc.
• Burnham Management Co.
• CB Richard Ellis, Inc.
• Cecil Management Group, Inc.
• CenterPoint Properties
• Chicago Housing Authority
• Coldwell Banker Commercial Devonshire Realty
• Cushman & Wakefield of Illinois, Inc.
• Downs, Mohl & Co.
• Draper and Kramer, Incorporated
• EPT Management Co.
• Equity Office Properties Trust
• Evergreen Real Estate Services, LLC
• First Group Management Co.
• First Realty Co.
• Grubb & Ellis Management Services, Inc.
• Hallmark & Johnson Property Management, Ltd.
• HSR Property Services, LLC
• Insignia/ESG, Inc.
• JFMC Facilities Corp.
• Lincoln Property Co.
• McLennan Property Management Co.
• Mid-America Management Corp.
• NHS Property Management, Inc.
• Nimrod Realty Group, Inc.
• Oakbrook Corp.
• Partnership Concepts Realty Management
• PM One, Ltd.
• Prentiss Properties Ltd., Inc./Midwest
• Promex Midwest Corp.
• Realty & Mortgage Co.
• Regency Centers Corp.
• Related Management Co., L.P.
• S.P. Management, Inc.
• Sudler & Co.
• Trammell Crow Co./Central Division
• Transwestern Commercial Services, LLC
• Village Green Management Co

Equipment Manufacturers and Suppliers
Manufacturers of power generation equipment, absorption chillers, and desiccant dehumidification equipment, and their sales representatives are important to promoting CHP technologies for obvious reasons, to sell their equipment. In most cases these manufactures have established a market presence and have built relationships with those most likely to install CHP technologies.

In the mean time, it is still important to strive to find technically and financially suitable applications where manufactures and their sales can work together, along with engineering and architectural firms to install "custom" systems. The following section is a list of manufacturers that promote CHP installations in Illinois.

Equipment Manufacturers

• ADA Systems
  Capabilities: Evaporative Cooling Systems, Energy Recovery
• Broad
  Capabilities: Thermally Activated Chillers
• Capstone - Illinois Distributor: MWH Energy Solutions
  Capabilities: Microturbines, biogas applications
• Caterpillar
  Capabilities: Electric Generation Equipment, Reciprocating Engines
• Charles Equipment
  Capabilities: Design, install, and maintain CHP equipment
• Cummins Onan Northern Illinois
  Capabilities: Electric Generation Equipment Manufacturer
• Eisenmann
  Capabilities: Air Purification
• Enercon Engineering
  Capabilities: Electric Generation Equipment Manufacturer
• GE Power Systems
  Capabilities: Combustion Turbine Products
• Hess Microgen
  Capabilities: Generators with Heat Recovery
• Huntington Environmental Systems, Inc.
  Capabilities: Emissions Control Equipment
• Ingersoll Rand
  Capabilities: Microturbines
• International Fuel Cells, Inc.
  Capabilities: Fuel Cells
• JTR Industries, Incorporated
  Capabilities: Electric Generation Equipment Distributor
• Kohler Engines
  Capabilities:  Reciprocating Engines
• Munters
  Capabilities: Desiccant Dehumidification Products
• Patten Power
  Capabilities: Electric Generation Equipment Distributor
• Solar Turbines Incorporated
  Capabilities: Electric Generation Equipment, Combustion Turbines Trane
  Capabilities: HVAC systems, Air Handling Products
• Trane
  Capabilities:  Thermally Activated Chillers
• Wartsilla
  Capabilities: Recip. Engines
• Waukeshaw
  Capabilities: Recip. Engines
• Yazaki
  Capabilities: Thermally Activated Chillers
• York
  Capabilities: HVAC Systems

Energy Suppliers
Local energy suppliers are also important to promoting CHP. Many have formed subsidiary companies to promote distributed generation, especially the gas supply companies. However, they are not necessarily considering CHP because they often can justify the cost of distributed generation based on the peak shaving savings of electrical generation. They are not considering CHP because it provides heat in winter and reduces the gas consumption for boilers/furnaces used for heating. In the case of electrical supply companies, distributed generation may be viewed as a threat to the parent company which may have rate structures that pose a disincentive to the installation of distributed generation and therefore to CHP. In these cases, distributed generation is viewed as more acceptable if it is on the electric suppliers side of the meter, which makes CHP a difficult option to promote since the electric generation source may be at some distance form the customer making the use of waste heat impractical. The following section is a list of these companies in Illinois.

Local Energy Suppliers

• AES New Energy Inc
  Capabilities: Electricity Marketing, Onsite Generation and Natural Gas Marketing
• Alliant Energy Corp.,
  Capabilities: Electricity Marketing, Onsite Generation and Natural Gas Marketing
• Ameren Corp.
  Capabilities: Electricity Marketing, Onsite Generation and Natural Gas Marketing
• Blackhawk Energy Services
  Capabilities: Electricity Marketing and Natural Gas Marketing
• CILCO
  Capabilities: Electricity, Onsite Generation and Natural Gas Marketing
• CMS Marketing Services & Trading Co.
  Capabilities: Natural Gas Marketing
• Commonwealth Edison/Excelon Corp.
  Capabilities: Electricity Marketing
• Energon Inc.
  Capabilities: Natural Gas Marketing
• Energy Services Inc.
  Capabilities: Natural Gas Marketing
• Enron Energy Services Inc.
  Capabilities: Electricity and Natural Gas Marketing
• Enron North America
  Capabilities: Onsite Electricity Generation
• Exelon Services, Inc.
  Capabilities: Onsite Electricity Generation
• Gulf Pacific Energy
  Capabilities: Electricity and Natural Gas Marketing
• Lower Electric LLC
  Capabilities: Electricity and Natural Gas Marketing
• Midamerican Energy Co.
  Capabilities: Natural Gas Marketing, Onsite Generation and Electricity Marketing
• Multiut Corp.
  Capabilities: Electricity and Natural Gas Marketing
• Nicole Energy Marketing of Illinois Inc.,
  Capabilities: Electricity and Natural Gas Marketing
• NiCor, Inc.
  Capabilities: Natural Gas Marketing
• NiSource Inc.
  Capabilities: Onsite Generation and Natural Gas Marketing
  Onsite Generation through Primary Energy Inc.
• Peoples Energy Corp.
  Capabilities: Electricity Marketing, Onsite Generation and Natural Gas Marketing
• Reliant Energy Inc.
  Capabilities: Electricity and Natural Gas Marketing
• Santanna Energy Services,
  Capabilities: Electricity Marketing, Onsite Generation and Natural Gas Marketing
• Siemens Building Technologies, Inc.
• VMC Energy Management Inc
  Capabilities: Natural Gas Marketing
• WPS Energy Services Inc.
  Capabilities: Electricity Marketing, Onsite Generation and Natural Gas Marketing
  Onsite Generation through:
  WPS Power Development

Associations and Organizations Involved with CHP Deployment
Federal, State, and regional government entities are becoming interested and concerned about distributed generation within their areas. With that interest comes significant potential opportunities for making CHP systems an important part of their distributed generation philosophy. Government entities are increasing their interest in CHP because of the energy savings and reduced emissions it provides. Many are promoting its deployment. While the Federal government, through the Department of Energy, Office of Distributed Energy Efficiency and Reliability, has provided substantial support, the most effective deployment of CHP technology will come from regional and local activities. This is true because most of the barriers are due to local issues, such as site permitting (especially in areas classified as non-attainment by the EPA, such as Chicago), interconnection requirements and studies, local utility pricing, and local building codes and standards. These barriers can be overcome with support from regional and local entities. The Midwest area and Illinois, are home to many non-profit organizations and associations that have come forward to support the deployment of CHP, in fact the Midwest appears to be leading the way in promoting the deployment of CHP. The following is a list of these associations and organizations associated with Illinois.

• Energy Resources Center - University of Illinois at Chicago (ERC/UIC)
• Gas Technology Institute (GTI)
• Midwest CHP Application Center (MAC)
• Midwest CHP Initiative (MW CHPI)
• Delta Institute
• Midwest Cogeneration Association (MCA)
• Environmental Law and Policy Center (ELPC)
• Center for Neighborhood Technology (CNT)
• Interstate Renewable Energy Council (IREC)
• Midwest Energy Efficiency Alliance (MEEA)
• Manufacturing Extension Program (MEP)
• American Institute of Architects (AIA)
• Building Operators and Maintenance Association (BOMA) - Chicago
• Building Operators and Maintenance Association (BOMA) - Peoria
• Environmental Protection Agency (EPA) Region 5
• Department of Energy Chicago Regional Office
• Illinois Dep. Commerce and Community Affairs, DCCA, (State Energy Agency)
• Illinois Environmental Protection
• Illinois Commerce Commission, ICC, (Public Utilities Agency)

In the Summer of 2002, the Department of Commerce and Community Affairs (DCAA), the Illinois Environmental Protection Agency, and the City of Chicago joined the U.S. EPA’s CHP Partnership. The EPA’s CHP Partnership is a voluntary program designed to foster cost-effective CHP projects. Through the program EPA engages the CHP industry, state and local governments, and other stakeholders in cooperative relationships to expand the use of CHP. As part of the partnership program, state and local governments agree to host a CHP workshop and review EPA documents detailing state and local regulations that may affect CHP development. Industrial partners agree to work with EPA to evaluate the use of additional CHP at their facilities. As part of their commitment, DCAA, the City of Chicago, the U.S. EPA and the U.S. DOE Chicago Regional Office sponsored a one-day workshop in July 2002 for Illinois businesses on Combined Heat and Power Applications. Industrial partners in Illinois include Abbott Laboratories, Archer Daniels Midland Company, Caterpillar Inc., and Peoples Energy Corporation.

Financial Incentive Details
In August 2002, the Governor signed SB 1565 into law. This law creates the Energy Efficient Revolving Loan Fund, which provides low interest loans to local governments and non-profit organizations for certain energy efficient measures.  Eligible energy efficient measures include bulk purchase of high-efficiency energy equipment or appliances, energy monitoring devices, or clean small-scale energy production devices.  This means that certain CHP technologies and installations may be able to benefit from this Fund. However, the Fund is only available to non-profit organizations and local governments engaged in loan aggregation and not private end-users.

In June 2002, the Illinois Resource Development and Energy Security Act was enacted.  The main purpose of the Act is to provide an attractive environment for companies wanting to build large electric power plants producing at least 400 MW.  The legislation provides incentives, most of which are focused on companies willing to build power plants that would burn Illinois Coal.  It also contains favorable wording regarding renewable energy with goals in line with the “Repower the Midwest Report” developed by the Environmental Law and Policy Center.

The elements of the Act are “to enhance the State’s energy security by ensuring that: (i) the State’s vast and underutilized coal resources are tapped as a fuel source for new electric plants; (ii) the electric transmission system within the State is upgraded to more efficiently distribute additional amounts of electricity; (iii) well-paying jobs are created as new electric plants are built in regions of the State with relatively high unemployment; and (iv) pilot projects are undertaken to explore the capacity of new, often renewable sources of energy to contribute to the State’s energy security. However, it does not appear there is any enforcement mechanism in place.

Status of CHP Policy Issue Details
The purpose of this section is to provide a summary and status of policy related issues pertaining to the advancement of CHP for Buildings in the State of Illinois. The following policy areas are summarized: Access and Interconnection Rules, Rates, Standby Charges and Exit Fees, General Progress with State Electric Deregulation, Emerging Legislation, and Potential Partners/Advocates of CHP.

Access and Interconnection Rules
In Illinois there is no State standard for exit, interconnection or stand-by fees and no regulatory or legislative policy regarding distributed generation. Currently, it is left up to each individual electric utility to define the procedures that affect distributed generation installations. Each utility's approved rate structure and its own guidelines must be followed when installing distributed generation within that electric utility's service territory.

On the policy side, a "hodge-podge" of interconnection standards and especially stand-by charges such as Commonwealth Edison's Rate 18 significantly impede market transformation towards CHP deployment. Some emerging legislation on the other hand, such as the Energy Efficiency Revolving Loan Fund may provide some policy driven incentives in the future.

The Illinois Commerce Commission (ICC), the organization in Illinois that oversees the regulation of the electric industry, has begun working on a project to identify appropriate interconnection standards for distributed generation connected to utility distribution facilities. As of March 2002, economists in the ICC's Policy Department and engineers in their Engineering Department are reading available reference materials and working on developing criteria and hope to have chosen interconnection standards in the near future. This is currently an informal Staff activity without any associated Commission docket, and accordingly no information is on there web site. As of this time industry participation in this activity has not been solicited. Phillip Roy Buxton, Manager of Engineering, Energy Division, is leading this effort for the ICC.

Personnel from the MAC made presentations at a meeting arranged by the MAC and the MW CHP Initiative with the Illinois Commerce Commission (ICC) in October 2002. The purpose of the meeting was to present a case for supporting CHP systems and removing barriers that discourage CHP systems in Illinois. All ICC members were present (6 in person 1 by phone). Mr. Terry Harvill, the Chairperson, indicated that he would have the ICC staff review the current status of issues associated with barriers to CHP systems, especially interconnection and tariffs. With follow-up activities, it is expected that the ICC will re-open its focus on developing an interconnection standard consistent with IEEE 1547.

The largest electric utility in Illinois is ComEd. Their "Blue Book" or "Guidelines for Operation of Non-Utility Generation in Parallel with the ComEd System," provides detailed technical guidance on the requirements for interconnection. In addition to the standby costs, there is the cost of commissioning an interconnection study to ascertain the impact of the proposed distributed energy installation on the electric grid. This study will determine the interconnection requirements for the installation. These studies can cost between $3000 and $250,000. The potential end user is required to pay ComEd for the study. Studies are required for all distributed generation installations over 40 kilowatts.

General Status of Progress on Deregulation
The Energy Information Administration (EIA) website provides the current status on a monthly basis of restructuring activity in Illinois.

The Illinois Electric Service Customer Choice and Rate Relief Law of 1997 restructured the state's electric utility industry to offer customers choices about who supplies their electric power, competitive prices for that power, and new services. Non-residential supplier choice was phased in from 1998 through 2000, and residential customers were able to choose their supplier on May 1, 2002; albeit there has been virtually no activity in this area since then.

Illinois has in general taken a wait-and-see attitude towards developing Statewide rules for distributed energy. In the spring of 1999 the ICC sent out a Distributed Generation Questionnaire and received comments back from a variety of interested companies and organizations. A diversity of opinions and suggestions were offered by the entities responding to the questionnaire. In general, the electric utilities stated that the existing regulatory situation works well for the market and little or no changes need to occur. Most of the others offered a variety of changes and suggestions.

As of this date, the ICC has not outlined any concrete initiatives or regulatory changes to reduce barriers for distributed generation installations. While it has issued a report regarding the responses it received to the survey, no plan is being offered at this time. The ICC staff has informally begun to investigate the idea of an interconnection standard for the State but no hearings have yet been scheduled.

Standby Rates
Commonwealth Edison's Rate 18 is the rate that most affects the installation and operation of distributed generation generation, including detailed and complicated standby charges. These standby charges have been known to be the sole stopper of some distributed generation projects in ComEd's territory. Click here to see Rate 18. The complexity of this rate underscores one of the major barriers in determining the actual economics of the installation and operation of distributed generation.

Customers often pay outside consultants to decipher jargon, penalties, access, study-fees and many other rate related matters. This complexity can create uncertainty for customers who need hard answers about the economics of a distributed generation installation, and underscores one of the major hurdles in determining the actual economics of the installation and operation of CHP.

Below is a table outlining the effect of ComEd commercial rates on the economics of a 1,000 kW CHP installation at various configurations at $5/MMBtu gas costs. As shown in the Figure below ComEd commercial rates are designed to reflect the high cost of peak daytime electricity. This figure and the table below show that under this rate structure CHP is economical during the day (9 am to 10 pm) with savings up to $200,000 a year for a 1,000kw BCHP system. Conversely, CHP is uneconomical at night when electricity prices approach 2¢/kWh. Of particular note in the figure is that ComEd's energy charge is approximately 5.5¢/ kWh from 9 am to 6 pm while the demand charge equates to 11.5¢/ kWh for that period. The demand charge can be as high as approximately 90¢/ kWh for peak demand loads that last only 1 hour.

Electric Energy Cost - ComEd Rate 18 (Including 9.7% tax)

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Effect of ComEd Rate 18 on 1,000 kW distributed generation Installation
The table below shows the economic impact of a possible outage of the distributed generation system. Most building owners request consideration of this cost as a contingency factor when considering CHP system economics. The standby charges include an annual customer charge $1,290. In the event of a failure that exceeds 30 minutes the user is assessed a standby charge of approximately $40,000 per 1,000kW of demand. This standby charge covers a 12-month period and adds about 0.5¢/kWh to the cost of generation. The customer would also pay additional energy charges that are in this Table as the costs paid to the utility above what was allocated to run the CHP system.

As you can see from the above, the standby charge alone can significantly reduce the cost savings of a given configuration. In addition, dependent on the assumptions made in the financial analysis concerning failures, variable charges can almost double the fixed charge. It should also be noted that these rates do not have provisions to account for the benefit that the distributed generation provides to the grid.

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For estimating the impact of Rate 18 on your facility, a rate estimator tool is available (Microsoft Excel Spreadsheet) for your convenience.

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