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The Biggest Energy Drain

A fifth, and very different, waste-energy stream is low-temperature heat, which is dumped into the air or water in enormous quantities by—of all people—the big centralized electric utilities. You might wonder, why would a company that's in the business of selling energy dump energy? The reason is that, unlike high-temperature waste heat, low-temperature heat can't be used to make electricity, so the central power plants just blow it into the sky or into a nearby river or pond.

However, that doesn't mean that low-temperature heat can't be used. It's just that it can't be used in the places where most central power plants are located—far from the cities or towns they serve. Although electricity can be transmitted many miles over wires, hot air or hot water can't be sent any distance without cooling. But if the heat can be used just a short distance from the power plant, it has an immediate energy-saving and carbon dioxide–reducing benefit.

The main use of low-temperature heat is for warming homes or buildings. In most U.S. communities, space heating is provided by burning oil, natural gas, or propane, or by purchasing electricity from a utility that burns coal or natural gas. In other words, nearly all U.S. homes and buildings (with a few solar or wood-burning exceptions) are heated by fossil-fuel combustion, directly or indirectly. If they could be heated by the low-temperature waste heat from electric-power production, the fossil-fuel combustion now used to produce that heat could be completely eliminated.

The potential for that saving is enormous. With the conventional U.S. electric-power system operating at an average efficiency of just 33 percent (including transmission losses), only one of every three units of energy going into those plants ends up being delivered to consumers in the form of electricity. The other two units are discarded as waste heat. The obvious question is, how can we get the heat to where it can be used?

One answer is a strategy called CHP. Among energy experts, CHP refers not to the California Highway Patrol, but to something that could make an arrest with more stopping power than most policemen ever get to use: It could arrest what is perhaps the single largest of the many leaks that are draining America's energy supply. CHP is the strategy of combined heat and power—producing both heat and power in the same plant as saleable products. Because a conventional electric-power plant produces only electric power in a facility that is typically located in the boondocks, the power must be transmitted over costly (and ugly) power lines to cities. But suppose the power is generated right in the basements (or rooftops) of apartment houses, shopping districts, university campuses, or industrial parks where it is needed, and where the buildings can then use the waste heat for heating and hot water. That kind of system, called decentralized CHP, or DCHP, eliminates not just the financial and environmental costs of buying power from so-called central plants, but also the substantial costs of transmitting power at high voltages over long distances.

The Mittal and Kodak cases previously described are limited forms of CHP because both heat and power are produced and used. Unfortunately, it's not as easy to cite current examples of DCHP used for a shopping mall or office park in the United States because DCHP is, for most purposes, illegal in every one of the 50 states. You can generate electricity for your own use or sell it back to your utility monopoly (at a price it decides), but you can't sell it to your neighbors. It is actually illegal in every state to send electricity through a private wire across a public street. That's why Mittal Steel can't sell clean, cheap electricity to its neighbors in East Chicago, for example. We return to this topic in Chapter 5, but for now let's just say that the laws blocking DCHP need to be modified. If politicians and policymakers are serious about energy independence, the laws that created those utility monopolies in the 1920s, under very different circumstances, will have to be changed.

DCHP is now used routinely in other countries. In much of Europe, a form of CHP called "district heating" has been implemented for decades. Otherwise-waste heat from local power generation is distributed short distances through pipes to nearby users (typically, apartment buildings). It saves fossil fuel that would otherwise be burned just to produce heat, and it replaces the highly inefficient system of conventional space heating by means of a furnace in the basement. But it's practical only in very densely developed areas with power plants nearby. District heating isn't of much use in the United States, with our sprawling cities, suburbs, exurbs, and scattered small towns.

More advanced systems of DCHP, in which gas turbines or diesel engines (or eventually high-temperature fuel cells) generate both heat and power in the same building, are already up to speed in some of the more technologically advanced countries. CHP accounts for more than 50 percent of the electricity produced in Denmark, 39 percent in the Netherlands, 37 percent in Finland, and 18 percent in China. Governments have achieved these results mainly by requiring the utilities to reduce carbon emissions and, consequently, find markets for their heat, which has meant locating new electricity generation right in the places where heating is needed.

Not incidentally, those countries (except China) rank among the top countries in living standards—places where in-house power generation would be unacceptable if it weren't unobtrusive, quiet, and clean. If power and heat could be cogenerated in individual buildings in the United States while retaining connections to the grid, virtually all new additional capacity could be decentralized. That possibility is not a sci-fi dream; it's a right-now reality. Only the laws protecting utility monopolies need to be changed. One of the rules of this book is that everything we propose for the next decade (and most of what we forecast for beyond) can be achieved with existing technology—already in use somewhere in the world—using domestic energy resources. In a 2008 report, the International Energy Agency (IEA) projected that if future demands for new capacity were to be met by adopting CHP, but without significant changes in the laws, global savings in capital costs would be $795 billion. Given the current U.S. share of global energy consumption, the U.S. share of that saving could be between $100 billion and $200 billion. We think the actual potential is higher.

The initial reaction of many legislators, bureaucrats, economic advisors, utility commissioners, and city planners to this idea of decentralized heat and power might be quick dismissal, due to that pervasive belief that central power plants are optimally efficient and that small-scale production could never compete. In the early twentieth century, that was true—and that's how utilities got the legally protected monopolies they now control. But while central power plants have not significantly improved the efficiency with which they generate and deliver power in 40 years, small systems have improved dramatically. Small gas turbines and diesel engines today are almost as efficient for electricity generation as the large steam-generating systems in the central power plants, especially when transmission and distribution losses are taken into account. And when the potential for local use of waste heat is added in, they are far more efficient because they eliminate much of the need for fuel currently burned for space heating and water heating.

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