The High-Profile Cogeneration Business: Economic Efficiency and Future Prospects

No.030
April 1998
Senior Fellow
Reiji Takeishi

1. A cogeneration system that simultaneously provides both heat and energy is, thermodynamically speaking, the ideal system of energy use. A system of this sort could reduce CO2 emissions by as much as half, and cogeneration systems are being hailed as one of the key systems in Japan's global warming countermeasures.
2. In recent years, the economic efficiency of cogeneration has risen due to improvements in high-efficiency and the miniaturization of equipment; with the potential for both gas cogeneration and oil cogeneration plants to recoup investment costs within 3-5 years, installations are rapidly increasing. In the future, it is predicted that large-scale development in cities and areas of concentrated thermal demand will spur the rapid introduction of cogeneration.
3. In order to increase the adoption of cogeneration, it is necessary to further relax regulations. Specifically, in the electricity sector, prices for purchasing surplus electricity should be raised. Furthermore, if retail sale of electrical power is liberalized, more rapid introduction of cogeneration will follow.
4. From an environmental perspective, there is a possibility that NOx emissions will increase with the introduction of cogeneration. If oil is given a rating of "10", gas produces NOx emissions at a "4". Despite this, the introduction of oil cogeneration to a large-scale complex facility (using two generators at 1,000KW each) would produce three tons a year. Within the regulations of total NOx emissions, and compared to the high-polluting transport industry, it is necessary to think of the social merit of promoting cogeneration.
5. Promoting the installation of cogeneration will increase the need for conducting network-style operations that will link together various individual cogeneration

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