The Merits and Limitations of Cogeneration

Combined heat and power (CHP) was the focus of two panel discussions last month during which utility specialists and facility managers walked through the process of planning for CHP and shared lessons learned from implementation of systems both large and small. The forum at Adelphi University’s campus in Garden City, NY, in late June, was part of an event organized by Ecosystem Energy Services and partner organizations.

Watch this video for a brief summary of the day:

The first session, moderated by Jean-Philippe Drouin, Ecosystem’s lead design engineer, provided a “30,000-foot view” of the CHP market. Panelists, including Joanna Moore of NYSERDA, Daniel. R. Leonhardt of the US Department of Energy, Northeast CHP Technical Assistance Partnership, and Michael Voltz, PSEG-Long Island, presented key resources for organizations considering CHP. They also updated a packed room on the newest incentives offered on Long Island and across New York State to support the technology. Some key takeaways include:

• Perform other energy measures first and then consider CHP to size a system properly. Facilities that reverse this process risk installing a CHP too big for their resulting demand.
• Understand the different financing models, including lease to own, power purchase agreements, energy services performance contracts, design-build-own-operate-maintain-finance, etc.
• Employ a technical expert to be on your side; the DOE, NYSERDA, and PSEG-LI offer these resources, often at no charge.
• Obtain alignment from key stakeholders. Implementation of a CHP system is not a simple plug-and-play; it is crucial to have the buy-in from facilities, finance, external contractors, etc.

Real-life case studies were the focus of the second session, moderated by Katherine E. Kluefer, Ecosystem’s energy solutions executive. Speakers looked at many sides of the CHP equation:

Timothy P. Burton, Adelphi University’s CFO, explained the case for decoupling engineering and financing when implementing an energy-savings project. Instead of having one external firm provide both, he went with Ecosystem as the engineering lead, with First American Education Finance providing financing. The $13.5 million project is expected to generate $1.6 million per year in energy savings. To learn more, please visit this page.

Cogeneration’s role in resiliency was powerfully illustrated by NYU-Langone’s Richard Cohen. When Superstorm Sandy flooded the hospital’s basement, its utilities were rendered useless, triggering an evacuation of the entire center. The facility only reopened 6 weeks later, after the major power systems were moved to the hospital’s first floor. Cohen’s team ultimately built a new 8 MW cogeneration facility as the core of a renewed resiliency plan that will ensure NYU-Langone is never again at risk. The self-financed infrastructure upgrades cost more than $100 million and will generate $12-$13 million of savings annually.

Cogeneration is not for everyone, however. Case in point: Long Island University-Post decided to decentralize its campus, despite the lure of cogeneration and easy payback, according to William Kirker. When he took a close look at the university’s year-round heat load and considered replacement of 3.5 miles of underground hot water piping connected to 30 buildings, he realized the cost would be three times that needed to decentralize the entire system; instead they will be replacing the distribution in measured phases rather than all at once. In terms of both budget and operations, the approach made more sense for Kirker and for LIU.

St. John’s University also took a close look at the economics of CHP, and in 2009, the campus performed an investment-grade audit with NYSERDA support, uncovering immediate energy savings opportunities that included the installation of 52,000 LED light bulbs on campus. As Thomas Goldsmith noted, performing these measures first means that if the university decides to move forward with a CHP unit, it will do so with a campus load profile that has been optimized before this major investment is made.

Montefiore Health System, however, is a cogeneration veteran, having installed its first system back in 1994. As an early mover, explained Jeff Hogan, the hospital faced operational challenges as the team had to teach itself how to operate a cutting-edge system. For a successful cogeneration implementation, Hogan advised collecting data, hourly if possible, on building operations and having skilled technical people who are invested in the institution’s success.