NEW YORK (MainStreet) — The Obama administration is implementing a plan to develop the next generation of combined heat and power (CHP) technology, which it claims will help "local communities and businesses make cost-effective investments that save money and energy."

The Department of Energy (DOE) launched seven new regional Combined Heat and Power Technical Assistance Partnerships nationwide as part of this effort. DOE set an objective of a 50% increase from the current capacity. According to DOE, "meeting this goal would help American manufacturers and companies save as much as $100 billion in energy costs over the next decade and reduce emissions equivalent to taking 25 million cars off the road."

This is not a new campaign.The effort originated with President George W. Bush in 2003. At that time, the DOE established regional centers to help organizations understand how CHP can improve their bottom lines and lower energy bills.

What does this all mean for consumers?

DOE was asked this question but did not respond for comment. Others expert who did respond see a consumer benefit but are guarded in their optimism.

"CHP benefits consumers by lowering manufacturers' energy costs," said Marlo Lewis, a senior fellow at the Competitive Enterprise Institute who studies energy issues. "What is unclear is whether additional government support will significantly improve efficiencies beyond what would occur anyway in a competitive marketplace."

What is even more doubtful, he thinks, is whether government can improve the overall efficiency capital by steering it toward a particular technology, such as CHP.

"Really, there's no such thing as a free lunch," Lewish added. "Capital lured by government incentives into CHP is not available for other investments that might do even more to advance consumer welfare."

DOE extolls the virtues of CHP. It claims that it can help make our nation's infrastructure smarter, stronger and better equipped to maintain power against increasingly severe weather events. DOE claims that during and after Hurricane Sandy, CHP helped hospitals, fire stations and multifamily housing in New York and New Jersey continue operations when the electric grid malfunctioned.

DOE is also trying to increase the CHP market. It is supporting research, development and demonstration projects to help the market grow. They claim that industries with high and continuous demand for both electrical and thermal energy – such as food processing, paper manufacturing and metals production – are perfect candidates for CHP installations. DOE's partnership with Frito-Lay to test a CHP system at one of its food processing facilities is an example of how a gas-fired system reuses the excess heat. It warms Frito-Lay's chip fryer oil cutting costs and reducing pollution.

How could anyone be skeptical about recycling heat for uses other than originally intended instead of letting that energy dissipate?

"Because equipment and installation are not free," explained Donald Parker, vice president of Centerboard Corp., an energy expense management firm in suburban Philadelphia. "The amount of heat economically recoverable is defined by the temperatures of the source - waste heat from the generator - and the sink - the process objective. This is called delta T - the temperature difference. No matter how much waste heat is available, the amount of heat available is bound by the temperature of the heating fluid. For the obvious reason of safety, an engine's coolant temperature is limited to about 200 degrees. So if you are heating cooking oil going into a fryer, you can get it to about 180 degree. Not bad, but any excess source heat will be lost to the ambient environment."

"This is largely a feel-good technology that sounds better than it usually is," he added. "It is nearly impossible to make cogeneration work with compelling economics because of the high unit of capacity equipment and maintenance costs, unless you can harvest additional value from use of waste heat."

Parker believes that the problem is that something must be done with the waste heat whenever the generator is running and to make co-generation economical. It needs high, essentially continuously, operating hours. This requires a heating application that operates continuously, like a process hot water system that consumes heat 24 hours, 365 days a year. The application also has to be a relatively low temperature one that can make efficient use of the low grade (relatively low temperature) waste heat.

"Basically, it's a very big answer to a very small problem," Parker said. "It's not that CHP can never work economically, it's just that its market is very narrow. With the government trying to force capacity into the market, it will have to throw other people's money at it like it does with wind and solar generation. Government, however, cannot mandate the effective use of waste heat, so the underlying economics will remain unchanged."

--Written by Michael P. Tremoglie for MainStreet