Combined Heat and Power: Are State Utility Commissions Obstructing Its Development?

CHP, also known as cogeneration, is an integrated energy technology that produces both electricity and useful thermal energy with a single source of fuel. While CHP faces several state regulatory barriers, not all, and perhaps only a few, require a regulatory response. One option for consideration by policymakers is to focus on market/regulatory failures rather than to subsidize CHP as a second-best policy - for example, by offering 'equal' subsidies across competing technologies. This course of action would likely drive CHP investments toward the socially optimal level.