New tax incentives via the IRA are designed to help industrial users achieve NET Zero Emissions and decarbonization goals by allowing unprecedented return on investment when installing Combined Heat and Power Systems, AKA Co Generation.
Since the overall efficiency of CHP systems far exceeds traditional plant utility strategies, and they can be fueled using clean fuels like renewable natural gas or green hydrogen, they represent a unique opportunity for industrials to achieve both sustainability goals and reduce plant energy costs.
Further, when these new tax incentives are coupled with large-scale efficiency upgrades to power and steam systems (boiler replacements, chiller replacements, electrical upgrades), extraordinary financial returns along with achieving sustainability goals are both possible.
The Inflation Reduction Act (IRA), which passed through Congress and was signed into law in August 2022, specifically incentivises installing industrial gas turbine based CHP systems as well as waste heat to power systems. These systems can receive 30- 50% tax credits. Unlike previous tax incentives, these credits are fully fungible and can be applied to reduce future tax bills or sold in the market.
Lathrop Trotter offers combined heat and power systems that could qualify as a sustainability project for these recently passed tax incentives.These tax incentives are rarely offered at this scale. Projects must be started by the end of 2024 to qualify for tax breaks, so the time to act is now.
Benefits of Combined Heat and Power Systems
Lathrop Trotter CHP systems reduce the amount of money that industrial facilities spend on energy – electric and gas/fuel combined. These systems fit well into facilities that have significant thermal loads like steam, hot water, chilled water, and hot air. Industrial facilities that fit this description include food processing, chemicals, metals, medical facilities, campuses, and more. Benefits include:
- Reduced overall carbon emissions between 35-50% due to their increased efficiency
- Improved plant reliability (if the grid goes down)
- Help stabilize the grid, important with all the renewable energy coming on line
- CHP systems are very good matches for microgrids
- Can utilize clean fuels like renewable natural gas, hydrogen, and other opportunity fuels
Lathrop Trotter is Your Experienced Source for Sustainable, Zero Emission Energy Solutions.
Unlike most sustainability measures, Lathrop Trotter combined heat and power systems can help you reach your sustainability and decarbonization goals and actually deliver a significant payback on the investment. The financial attractiveness of these systems will probably never be better, so if you have considered CHP in the past, let’s take a new look.
Lathrop Trotter is here to help you with the concepts, budgets, performance and economic evaluations of using steam and gas turbines, with renewable fuels capability.
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