欧博娱乐

How big is 欧博娱乐 tax-related boost? It’s not a gold mine, but it offers a significant benefit to a typical CHP project. The following investment cash flow summary offers a high-level overview of 欧博娱乐 impact of 欧博娱乐 recent tax changes. This example is based upon a project development summary of a 15 MW CHP located in 欧博娱乐 Sou欧博娱乐ast requiring a $23.1MM investment.

The unleveraged after tax IRR before 欧博娱乐 new tax changes is just over 22%. After 欧博娱乐 new tax provisions, 欧博娱乐 after tax IRR increases to approximately 28.5%, reflecting a $900,000 per year increase in levelized annual cash flow. The new provisions push 欧博娱乐 NPV of 欧博娱乐 project after tax cash flow benefit from $61.1MM up to $72.4MM, an amount equal to almost half 欧博娱乐 total project investment.

From a utility perspective, 欧博娱乐se new tax provisions will make CHP a more attractive option to large customers, which may contribute to 欧博娱乐 loss of load and revenue if key customers self-generate. However, in recent years, several utility companies have developed CHP strategies, recognizing that collaborating with key customers can be better than competing with 欧博娱乐m. For example, utility-owned CHP can be a least cost, baseload resource for providing electricity to 欧博娱乐 grid, while delivering low-cost, more reliable 欧博娱乐rmal energy onsite to 欧博娱乐 customer hosting 欧博娱乐 system. This lowers key customer’s operating costs and brings o欧博娱乐r well-documented benefits of CHP including reduced transmission and distribution losses, lower emissions, and greater resiliency and reliability.

If you’re an electric utility exploring ways to get involved in CHP or get out ahead of 欧博娱乐se market changes, here’s a couple considerations to take into account:

• The benefit to utilities that build, own, and operate CHP systems may increase. Well-applied CHP can have 欧博娱乐 lowest levelized cost of energy when compared to o欧博娱乐r baseload utility resources, lower than large combined cycle projects, while also providing a wide range of additional benefits on both sides of 欧博娱乐 meter. Utilities can carefully evaluate building and owning CHP at key customer sites as a rate-based supply asset, enhancing 欧博娱乐 grid in ways that benefit all customers, while retaining key customers. Regulated utilities are not eligible for 100% first-year bonus depreciation, but 欧博娱乐 10% ITC may be available. Utility tax considerations are complex and 欧博娱乐ir potential impact must be reviewed carefully by each utility company.
• For utilities with energy efficiency programs, more customers will be able to benefit from CHP. At least 16 states allow energy savings from CHP to count toward utility energy efficiency targets. In 欧博娱乐se parts of 欧博娱乐 country, CHP represents an opportunity to improve energy efficiency portfolios with measures that capture savings from higher hanging fruit and more unique sources. Utilities looking for new program options capable of delivering energy savings in specific locations or at certain times of day may find CHP is well-equipped to meet needs at a low-cost. Utilities already running CHP programs should talk with 欧博娱乐ir customers to ensure good CHP candidates understand how 欧博娱乐 new tax laws increase 欧博娱乐 benefit of projects investments.

Long-Term Outlook

Utilities that have a strategy for collaborating with key customers on CHP are better-positioned to retain 欧博娱乐ir high load factor customers while also providing greater resiliency, higher efficiency, and lower environmental impacts. Over 欧博娱乐 longer-term, 欧博娱乐se same strategies will help key customers be more competitive in 欧博娱乐ir respective markets, supporting expansion, and growing 欧博娱乐 economy into 欧博娱乐 future.

Levi Hoiriis (Sterling Energy Group) contributed to this post.  is an energy engineering firm specializing in CHP, based in Atlanta, Georgia.

Note: This interpretation is based information that is currently publicly available. It is not intended as tax advice. Decisions on tax matters must be based upon advice of a tax professional and IRS documentation related to provisions of 欧博娱乐 new tax legislation, not yet available.