Cogeneration--a nice engineering concept, but a lousy economic reality

Implications: Energy effeciency is laudable. But for the most part, manufacturers' financial objectives are so high for return and so short in time as to rarely justify the expenditures need for capital improvements.  Additionally, their time spans of market life is many times shorter than what they imagine them to be, and one is left with stranded investment in the efficiency equipment. The solution is to incite such investment with high, feed-in tarrifs that reward those who provide the societal benefits for the investment made in a short time, and not to compare their econmic attractiveness to large scale, base-load generation costs.  The Atlantic article rightfully points out the strangehold that the utilities have manged to throw on to IEPs (well aided by their Public Utility Commissions).

Analysis: The Atlantic article and the commenting author laudably promote the engineering virtues of optimizing energy efficiency through upstream or downstream recovery processes.  The unfortunate reality of implementing such cogeneration efforts is that many times the host facility does not have or provide the economic stability required to provide an adequate return for the energy efficiency improvements.  There are many examples of qualified facilities built under the auspices of the PURPA of 1978 where the host's business model changed so radically as to jeopardize the generation facility or force it to find a new host.  Additionally, the hosts' need for steam or power cause an associated electric facility to gyrate and produce at uneconomic times for the sale of electricity, hoarding its power during crises and causing it to pump out unwanted and sometimes negative-valued power at off-peak hours.  Lastly, most manufacturing facilities do not have long-term capital return periods.  They want short period paybacks, not the twenty to thirty year time frames that utilities can structure. The solution is to incite such investment with high, feed-in tariffs that reward those who provide the societal benefits for the investment made in a short time, and not to compare their economic attractiveness to large scale, base-load generation costs.  The Atlantic article rightfully points out the stranglehold that the utilities have managed to throw on to IEPs (well aided by their Public Utility Commissions), and, as usual, the "enemy is within" as to providing the right incentives.