An old idea that's generating new energy
* In Miami, ground will soon be broken for a small gas-fired power plant that will produce electricity for a cluster of Dade County office buildings - and make steam to keep their air conditioners humming.
* In the piney woods near Lewiston, Maine, Bates College will flip the switch this fall on a new wood-fired boiler that will heat all the buildings on campus and generate enough power for 1,200 homes.
* In La Porte, Texas, Diamond Shamrock Corporation operates a natural gas-fired power system that turns out 225 megawatts of electricity, enough for 25,000 homes, along with the steam needed to make chlorine and caustic soda at its local plant.
Across the country, a new generation of independent power producers is springing up. Spurred by high fuel costs and favorable government regulations, everyone from colleges to chemical companies is reviving a way of generating electricity that has been around since before the turn of the century: cogeneration.
Just a few years ago this once familiar technique - the simultaneous production of steam and electricity - contributed barely a spark to the nation's power generation. Today it is suddenly emerging as a significant energy source, eclipsing many of the ''small but beautiful'' methods and forcing utilities to take it into account in future power planning.
''It is growing faster than all the other alternative technologies put together right now,'' says John Eustis, chief of the US Department of Energy's cogeneration branch.
An estimated 5 percent of the nation's delivered electrical energy now comes from cogeneration - a 50 percent increase over four years ago. At least 1,000 megawatts, the equivalent of one average-size nuclear power plant, is being added each year. By the turn of the century, some observers predict that as much as 15 percent of the country's electrical output will be produced by cogeneration.
The driving force behind this boom in electricity as a byproduct is simple economics. With cogeneration, businesses and industries can save on energy by burning a fuel once but using it twice. Typically a fuel is burned in a boiler to produce steam from water. This drives a turbine that generates electricity. The waste heat from this process is then captured to produce steam, which can be used for heating, air conditioning, or some other chore.
Thus the allure lies in its efficiency: While a conventional power plant may convert 35 percent of its fuel into useful electricity - the rest escaping up the stack - a cogeneration plant converts up to twice that. Added revenues can come from the sale to a utility of any power not used by the company. The result: Companies often pay back the cost of the equipment and other expenses involved in setting up a cogeneration system ($30 million to $70 million for a large one) within three years.
The groundwork for much of the current interest in cogeneration was laid in 1978 with passage of the Public Utility Regulatory Policies Act, which requires utilities to buy power from cogenerators. Since then the law has been legally challenged. But the Supreme Court reaffirmed the policy last year, forcing utilities to buy power from the independent generators whether or not they need or want it. It is this ruling that has sparked much of the sudden interest in boilers and turbine blades. ''Once the law was tested, the floodgates were really opened,'' says David Wallace, manager of cogeneration market development at General Electric, the nation's biggest supplier of the equipment.
Interest has been the most pronounced in the Sunbelt, where utility rates are generally above the national average and many energy-intensive industries are concentrated. At the same time, it has mushroomed in states - particularly California - that have policies supporting alternative energy forms.
The biggest users continue to be industries that are energy-hungry or use processed steam: chemicals, pulp and paper, metals, refining, and oil recovery. But the fastest-growing area lately has been among smaller establishments fed up with high power costs: hospitals, schools, shopping malls, jails, and government buildings.
New technologies are also helping to lure customers. One thrust has been the production of more efficient turbines. Another has been the invention of easy-to-install ''modular'' systems. Still a third is the development of systems that will burn cheaper fuel, such as low-grade oil, and coal-derived mixtures. Current systems run on everything from coal to corncobs or peach pits.
With interest in cogeneration rising, a growing number of companies and entrepreneurs are jumping into the market. There's good reason: By one estimate, cumulative sales of cogeneration equipment and services through the next decade will top $16 billion.
Those figures haven't been lost on Wall Street. Financiers are scrambling to underwrite new ventures. ''It is one of the few capital expenditure areas that is hot right now,'' says Chris Foster, energy analyst for Atlantis Inc., a Connecticut-based consulting firm.
Utilities are also being forced to rethink energy strategies to take into account the surge of cogenerated watts. Reactions by power companies have been mixed. Some are embracing cogeneration as a way to add new capacity without investing in costly new plants. Others view the trend as leading to a loss of customers - and profits.
Still, not every business is going to be lighted by small whining turbines. Cogeneration remains too costly to install for many users. Others don't want to mess with the problems of producing their own power, including political ones (dealing with local utilities and regulators). Environmentalism can play a part, too: Some groups have challenged the siting of plants in populated areas.
Robert Patterson, a utility specialist with Arthur D. Little Inc., cautions: ''There is a lot of activity going on now. But it remains to be seen if this is due to speculation on the part of investors or is part of a significant industrial trend.''