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As unemployment ranks swell -- <a href="http://www.bloomberg.com/apps/news?pid=20601087&sid=a7jpCSt.gQoM&refer=home">598,000 jobs were cut in January</a> -- it's hard not to look hungrily at green collar jobs. They are the hope of millions, but the reality of few. And unless federal, regional and state policies on energy distribution and taxation change, that may not change.

Kevin Ferguson

February 6, 2009

3 Min Read

As unemployment ranks swell -- 598,000 jobs were cut in January -- it's hard not to look hungrily at green collar jobs. They are the hope of millions, but the reality of few. And unless federal, regional and state policies on energy distribution and taxation change, that may not change.A case in point: combine heat and power (CHP) systems. These are the curious creatures that integrate several components -- a heat engine, generator, heat recovery unit and electrical interconnection -- into one unit. They save energy and money, while reducing pollution. And they can be powered by any number of fuels to produce electricity and heat.

Given their well-documented energy consumption and power inefficiencies, data centers are often good candidates for CHP systems. Indeed, the U.S. Environmental Protection Agency in its August 2007 report, The Role of Distributed Generation and Combined Heat and Power (CHP) Systems in Data Centers, notes that CHP systems offer some of the best savings for many data centers. It further extolled CHP's benefits in an October 2008 report:

"CHP applied in data centers can provide benefits to the facility operator in the form of: reduced energy-related costs and enhanced economic competitiveness; increased reliability and decreased risk from outages; increased ability to meet facility expansion timelines; and reduced emissions of greenhouse gases and criteria air pollutants, including carbon dioxide (CO2), carbon monoxide (CO), nitrogen oxides (NOX), and sulfur dioxide (SO)."

Nothing is easy, however. And a combination of wimpy tax incentives and out-of-date state public utility regulations mean that few of the bigger data centers have been able to take advantage of CHP. There are other obstacles, too: high up-front costs for retrofitting buildings, unfamiliar technology and the current batten-down-the-hatches approach to capital planning.

A December 2008 report from the U.S. Department of Energy's Oak Ridge National Laboratory (ORNL), Combined Heat and Power: Effective Energy Solutions for a Sustainable Future, praises CHP development as "a realistic solution to enhance national energy efficiency, ensure environmental quality, promote economic growth, and foster a robust energy infrastructure."

No good deed goes unpunished, of course. The report continues:

"While the benefits of added CHP capacity are promising, current market conditions and technical barriers continue to impede full realization of CHP's potential. Challenges include unfamiliarity with CHP, technology limitations, utility business practices, regulatory ambiguity, environmental permitting approaches that do not acknowledge and reward the energy efficiency and emissions benefits, uneven tax treatment, and interconnection requirements, processes, and enforcement.

"Addressing these challenges will require a holistic approach involving policy, regulatory, and technical solutions. Improving the fuel efficiency and fuel flexibility of CHP and developing optimized, integrated packaged systems can also lower costs and expand the application of cost-effective CHP."

As of October 2008, 16 commercial data centers in the United States were using CHP, representing a total capacity of more than 16MW. The mix of technologies used for CHP at data centers includes microturbines, fuel cells, and reciprocating engines. To give you a sense of how puny that number is The ORNL report notes that there are over 3,300 CHP installations nationwide. Many of those sites may have data centers within them, according to Energy and Environmental Analysis, which maintains the database for ORNL. But it also includes everything from amusement halls to car washes.

Bottom line: there's a lot of unmet demand for CHP-powered data centers, given the right environment.

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