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Funding Resources
Funding Resources
Financing for a combined heat and power (CHP) system can be arranged through traditional lenders and investors, third-party equipment owners, or directly by the company installing the system. Detailed information about financing a CHP system is available in the Streamlining Project Development Section of the Web site. Additional funding might also be available through state and local incentives.
Funding incentives are available in the form of direct financial grants, tax incentives, low-interest loans, or utility and environmental policies that increase the financial prospects for a project. Some incentives are aimed directly at installing CHP systems to reduce load on the grid or to reward efficient generation, while others provide funding specifically for biomass CHP systems. The CHP Partnership maintains a Funding Database to track incentives and provides detailed information on how to access revenue streams that financially reward, or monetize, the environmental benefits of CHP.
Funding Database
CHP and biomass/biogas funding opportunities are offered by various entities throughout the country, many at the state and federal level. These opportunities take a variety of forms, including:
- Financial incentives, such as grants, tax incentives, low-interest loans, favorable partial load rates (e.g., standby rates), and tradable allowances.
- CHP or biomass project development can be expedited with regulatory treatment that removes unintended barriers such as standard interconnection requirements, net metering, and output-based regulations.
The Funding Database lists these and other incentives that might be applicable to your CHP project and organizes funding opportunities in two general categories: type of project and type of incentive.
Type of Project:
- State and federal incentives applicable to CHP systems, such as direct financial incentives or favorable regulatory treatment.
- State and federal incentives applicable to biomass/biogas-fueled CHP and distributed generation projects, including financial incentives and favorable regulatory treatment.
Type of Incentive:
- The financial incentives page includes grants, tax incentives, low-interest loans, favorable utility rates, tradable allowances, and renewable portfolio standards—all of which could help CHP project developers or end users locate additional funding for their CHP or biomass project.
- The regulatory treatment page lists regulations that remove unintended barriers to CHP or biomass project development and can include: standardized interconnection rules, net metering rules, or output-based regulations.
The CHP Partnership updates this information every two to four weeks.
Monetizing Environmental Benefits
Many states provide monetary incentives for energy efficiency and/or renewably fueled electricity generation. CHP can generally qualify for these revenue streams—either as a function of the technology's energy efficiency or if the CHP system uses renewable fuel, like biomass or biogas. Environmental revenue streams are provided to CHP projects as either: (1) a one-time tax incentive; or (2) a tradable commodity that may later be "cashed-in" by the end user or project developer.
The Partnership tracks these different environmental incentives in the Funding Database.
A more detailed explanation of the different types of environmental revenues and an example of the economics of a sample CHP project may be found in the section on Monetizing Environmental Benefits, along with a full report on how a project developer or end user can access and use these revenues.