Abstract
Texas, the nation's leading state in electricity consumption and generation, has been among the most successful states in encouraging industrial cogeneration, in which one process produces both electricity and either useful steam or thermal energy. With roughly 8000 MW of capacity, Texas leads the nation in thermal cogeneration activity. Of this total, about 3200 is under contract to provide ‘firm capacity’ to the state's utilities. Roughly 10% of the electricity sold by the state's utilities in recent years was generated by qualifying facility (QF) cogenerators. While the state's ‘competitive negotiation’ and ‘mandatory wheeling’ rules have proven generally successful in eliciting an economical non-utility generation source, new challenges are emerging. An examination of the evolution of cogeneration markets in Texas provides considerable insight into the impacts of economic factors and regulatory policies upon the development of cogeneration.
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