California CHP
Sites with Clean Energy: 1,180
Total Installed Megawatts: 8,830 MW

Sample California Organizations using CHP, District Energy, and/or Recovered Surplus Heat include:


  • Rancho Santa Margarita Water District
  • Los Angeles County Sanitation Districts
  • East Bay Municipal Utility District
  • Eastern Municipal Water District
  • Orange County Sanitation District
  • Nestle/Purina
  • Miller Brewing
  • Sierra Nevada Brewery


  • St. Helena Hospital
  • San Diego Veterans Hospital
  • Albertson’s Supermarket
  • Transamerica Pyramid
  • Ritz Carlton Hotel
  • Reagan Library
  • High Desert State Prison
  • Santa Rita Jail


  • Cal State Northridge
  • Cal State Fullerton
  • University of California, Irvine
  • University of California, San Diego
  • Pierce College
  • University of California, Berkeley


California is a leader in use of combined heat and power. With nearly 9 GW of existing CHP and an estimated 11.5 GW of additional CHP potential, the market for CHP is very attractive. With declining natural gas prices and recent movement in some key policy areas, California may be poised for a rapid deployment of clean CHP in the next 5-10 years. Of particular importance is the revamping of the states self generation incentive (SB 412) program which is planning to expand the types of power generation systems eligible for incentives. In addition, recent settlements regarding the states feed in tariff program (AB1613) is now facilitating the deployment of clean CHP systems with the option to export power back to the grid which removes one of the key constraints regarding project engineering.

Interconnection & Net Metering Regulations

In order to connect a generating device to the local grid, an interconnection agreement is needed. California has adopted standards in an effort to streamline this process. In December of 2000, an updated version of the states interconnection standards, Rule 21, was adopted and implemented by the local utilities. Rule 21 describes the interconnection, operating and metering requirements for generation facilities to be connected to a utility’s distribution system, over which the California Public Utilities Commission (CPUC) has jurisdiction.  Additional information can be found at the following site:

The providers of DG/CHP equipment can have their equipment “rule 21 certified”, meaning that the equipment meets the interconnection requirements of the state utilities. This, in principal, can make the interconnection process easier. In each case, an application process is required.

Regarding net metering, each utility has their own guidelines. Currently, small solar, wind, biogas, and <1 MW fuel cell installations are eligible for net metering. Information regarding net metering can be found at:

New legislation regarding feed in tariffs may result in a higher rate paid for surplus electricity generated. The implementation of this legislation is still in process. The salient legislation in this case is AB1613.

Air Regulations

California consists of 35 individual air districts, each of which has authority over generation in its region. Each air district has permitting rules for different types of equipment and generally has variation in the minimum generating capacity for which permits may be needed. The state of California, through SB1298, established guidelines and regulations for generators that are not covered by each air district. In this case, the emission levels for system operated on natural gas are:

Table 1. 2007 Fossil Fuel Emission Standards
Pollutant Emission Standard (lb/MW-hr)
NOx 0.07
CO 0.10
VOCs 0.02

In this case, full credit is given for recovery of waste heat. 1 MW-hr for each 3.4 MBTU’s of heat recovered is credited. To qualify, the DG system must achieve an overall efficicency of 60%
For other fuels, the standards are reduced but will move to the same standards as that for natural gas starting in 2013:

Table 2. Waste Gas Emission Standards
  Emission Standard (lb/MW-hr)
Pollutant On or after January 1, 2008 On or after January 1, 2013
NOx 0.5 0.07
CO 6.0 0.10
VOC 1.0 0.02

Systems meeting these levels are generally exempted from needing a permit.


However, because a system is not certified, it doesn’t necessarily mean it cannot be installed. This will depend on the local air district requirements. Depending on the output capacity, it may be necessary to obtain an air permit. The standards above are offered as a guideline to each air district for setting permit levels. However, each district can set it’s own levels at its discretion and thus permitting has region by region dependency.
Some air districts within the state are also looking at requirements for green house gases and fine particulate. For example, the San Joaquin Valley has established performance standards based on GHG emissions and Sacramento is looking at particulate emissions.

State Incentives and Grants

In California, the major incentive for clean DG is the Self Generation Incentive Program. This program offers rebates on installation of clean CHP systems.More information is available here:


  • 2011 Combined Heat and Power, District Energy, and Waste Heat Recovery Baseline Assessment and Action Plan for the California Market