On-Site Energy Management Magazine March/April 2016

March/April 2016

MICROGRID PARTNERSHIPS Demonstrate What’s Possible Page 12

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Essential CHP Project Assessment Steps Page 20

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04 EDITOR’S NOTE

Establish Customer Needs Up-Front

By Tom Bryan

05 EVENTS CALENDAR

On-Site Energy Industry Events 06 BUSINESS BRIEFS

People, Partnerships & New Products 08 ON-SITE ENERGY NEWS

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FEATURES 12 MICROGRIDS

Mapping Out Microgrids

Enhancing on-site energy with islanding capability usually requires customization, but standard methods of assessing and modeling projects are used early on.

By Tom Bryan

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20 CHP

How CHP Gets Going

For commercial and institutional energy customers paying high electricity rates, the viability of combined heat and power usually comes down to hot water.

By Tom Bryan

ON THE COVER: S&C Electric’s David Chiesa stands in a control room serving Oncor’s microgrid in Lancaster, Texas, south of Dallas.

PHOTO: KEVIN BROWN

www.OnSiteEnergyManager.com

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EDITOR'S NOTE

Establish Customer Needs Up-Front

Tom Bryan

Through the lens of project viability, this issue of On-Site Energy Management closely examines two separate but sometimes overlapping categories of distributed energy. We look at how both

microgrids and combined heat and power (CHP) Editor in Chief, On-Site Energy Management projects are presented, vetted and drawn up—betbryan@bbiinternational.com fore they’re built. Turning to experts in both spaces, we find out what motivates customers to initially explore these systems, and what factors eventually distinguish “go” and “no-go” conclusions.

It all starts with qualification, or establishing a discernable need for the system before doing anything else. With microgrids, for example, it’s not uncommon for prospective customers to think they need a full, islanding-capable system with all the bells and whistles of a full microgrid. However, as we learn in “Mapping Out Microgrids,” on page 12, sometimes they need less or more than what’s typical. For instance, one client requesting a microgrid might really need back-up power and an uninterruptible power supply. Another might get by with solar and energy storage. And some will move forward with the robust microgrid they initially envisioned.

Likewise, CHP projects can be paired down, altered, or even deemed unnecessary through feasibility assessment. In “How CHP Gets Done,” on page 20, we find out that the key qualifier for these energy-efficient systems—aside from being captive to high electricity rates—is having ample, year-round hot water demand. As Benjamin Locke, the co-CEO of Waltham, Massachusetts-based American DG Energy, tells us, it’s the “H” part of CHP that often dictates project viability.

Interestingly, at least one of the drivers behind microgrids and CHP is sometimes the same. Both can frequently be traced back to a customer’s desire to improve their energy resiliency. Microgrids, by definition, are all about energy resiliency because they give clients the ability to island from the grid, and move back to it, as needed. To a lesser extent, CHP projects are also connected to energy resiliency ambitions. Spark-spread economics may drive CHP, but back-up power can be a big selling point, too.

www.OnSiteEnergyManager.com VOLUME 1 ISSUE 2

EDITORIAL Editor in Chief Tom Bryan tbryan@bbiinternational.com Copy Editor Jan Tellmann jtellmann@bbiinternational.com

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BUSINESS BRIEFS

People, Partnerships & New Products

Jacobs appoints new industrial business leader

Small-scale CHP guide released

ENER-G has published a new guide on small-scale combined heat and power (CHP). The 20-page manual covers all aspects of selecting, designing and financing CHP systems, from applications, fuel options and economic modeling to financing and integrating the technology into buildings. The “Essential Guide to SmallScale Combined Heat and Power,” provides information on the stages of feasibility assessment and how to comply with the CHP Quality Index, a route to gaining optimal tax exemptions and financial incentives for CHP in the U.K. The guide includes illustrations of CHP economics under various scenarios.

Empower names new operations VP

Michael Belko has joined Empower Energies as executive vice president-operations.

Belko will be responsible for the technical feasibility and successful delivery of the comBelko pany's solar and CHP projects. He will also be accountable for championing continuous improvement across the corporation to drive performance, productivity, and operational excellence. Belko comes to Empower with over 30 years of diverse operations, development and construction experience spanning commercial, residential and utility-scale renewable energy projects.

Most recently, Belko served as president and CEO of RCS Energy Services.

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IDEA, GBCI partner on clean power standards

The International District Energy Association and Green Business Certification Inc. recently announced a collaboration to work together and promote more sustainable, efficient and resilient electricity and thermal grids through the Performance Excellence in Electricity Renewal program.

The announcement was made at the 29th Annual IDEA Campus Energy Conference in Austin, Texas.

Administered by GBCI, the PEER program is a comprehensive framework for defining, assessing and verifying the overall sustainable performance of electricity delivery system design and operations.

The standards enable project teams to assess their current state, develop strategies for improvement, advance the business case and verify the value of system changes. PEER is also the driving force behind the U.S. Green Building Council’s vision to transform power systems, and the nation’s first comprehensive, data-driven approach to evaluating and improving power system performance.

IDEA is an association representing the interests of nearly 2,100 members around the globe who own, operate and optimize district energy networks, combined heat and power systems and microgrids. GBCI administers project certifications and professional credentials and certificates within the framework of USGBC’s Leadership in Energy and Environmental Design green building rating system.

ON-SITE ENERGY MANAGEMENT MARCH/APRIL 2016

Jacobs Engineering Group Inc. has named Robert Pragada president of its industrial line of business. The company’s field services unit will also move under Pragada’s leadership. Pragada returns to Jacobs after serving as president and CEO of The Brock Group since August 2014. Previously with Jacobs, he held a number of senior management positions, including senior vice Pragada president, global sales; group vice president, Northern region; and vice president, field services. Jacobs is one of the world's largest providers of technical, professional and construction services, including resources for district energy projects.

Berkeley Lab microgrid researcher awarded

Berkeley Lab microgrid researcher Michael Stadler is a recipient of the 2016 Presidential Early Career Awards for Scientists and Engineers. It is the U.S. Stadler government’s highest honor for science and engineering professionals in the early stages of independent research careers. As a group leader within the lab's Energy Technologies Area, Stadler has led the development of a microgrid design tool called DER-CAM. He was nominated for the award by the Office of Electricity Delivery and Reliability at the U.S. DOE.

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ON-SITE ENERGY NEWS

NEWS & TRENDS

Work begins on Schneider’s Boston campus microgrid Schneider Electric is moving forward on a microgrid project at its 240,000-square-foot Boston One Campus in Andover, Massachusetts. Like other corporate microgrids installed by companies that typically create them, Schneider will use the system to both test and showcase many of its own solutions.

As planned, the system will be capable of producing 560,000 kWh per year of electricity by late 2016. Beyond saving the company about 5 percent on electricity costs, the microgrid will offer energy resiliency in the event of a power loss from the local utility.

The microgrid will include a

400-kW photovoltaic (PV) array built and operated by REC Solar, which is majority owned by Duke Energy. The system will include Schneider PV inverters that convert DC from the solar modules to AC that will be used by the facility for power. The system will also store up to 1 MWh of electricity using EcoBlade, Schneider's lithium-ion battery brand.

The company’s microgrid controller and StruxureWare Demand Side Operation will optimize not only PV energy and storage, but also the facility’s existing natural gas gensets during gridconnected and islanded operation.

StruxureWare collects and man-

GREEN INSIDE: When complete, Schneider Electric’s showcase microgrid will produce 560,000 kWh of electricity. The system includes solar, storage, gas gensets and islanding capability.

PHOTO: SCHNEIDER INC., PERKINS & WILL ARCHITECTURE

ages weather and operational data, optimizing energy performance across the entire chain to deliver cost-effective energy storage and consumption.

Notably, Schneider has chosen a microgrid business model that does not require any capital in-

vestment of its own. The company will reportedly utilize third-party project development facilitated, in part, by a 20-year power purchase agreement with Duke Energy. The arrangement was announced at DistribuTECH earlier this year.

Navy, Boeing test reversible fuel cell technology A newly developed fuel cell energy storage system is being tested at a U.S. Navy microgrid.

The system has been deployed by Boeing at the Naval Facilities Engineering Command, Engineering and Expeditionary Warfare Center in Port Hueneme, California, to evaluate its ability to support the energy needs of military and commercial customers.

The system is a first-of-itskind technology using a reversible solid oxide fuel cell to store energy from renewable resources, including wind and solar, producing clean, zero-emissions electricity. It 8

generates, compresses and stores hydrogen. When the grid demands power, the system operates as a fuel cell, consuming the stored hydrogen to produce electricity.

Boeing’s technology is unique in being able to both store energy and produce electricity in a single system, making it reversible.

“This fuel cell solution is an exciting new technology providing our customers with a flexible, affordable and environmentally progressive option for energy storage and power generation,” said Lance Towers, director of Advanced Technology Programs

ON-SITE ENERGY MANAGEMENT MARCH/APRIL 2016

POWER PORT: Boeing’s reversible fuel cell is now being tested on a Navy microgrid in Port Hueneme, California.

PHOTO: BOEING

at Boeing. “Boeing is known for successful innovation and technology advancement. As the company begins its second century, it’s not surprising that we’d be at the forefront of helping solve the energy

and technology challenges of the 21st century.”

The fuel cell technology was developed in partnership with German-based Sunfire.

ON-SITE ENERGY NEWS

Pennsylvania casino invests in CHP, uninterruptible power system A tribe-owned casino in northeastern Pennsylvania is installing a combined-heat-andpower (CHP) system that will reduce area grid congestion and provide the facility with dramatically improved energy reliability.

UGI Performance Solutions, a division of Pennsylvaniabased UGI HVAC Enterprises Inc., expected to begin working on the Mohegan Sun Pocono project in March and commission the $3 million system by the fourth quarter.

The CHP system’s prime mover will be a natural gas-fueled

reciprocating engine. While most power plants in the U.S. do not utilize their waste heat, Mohegan Sun Pocono's CHP system will capture heat from the engine's exhaust gases and use it on-site.

Aside from energy cost savings, the benefits include reduction in CO2 emissions, a continuous power supply and conservation of valuable fuel resources.

The system will provide 22 percent of the casino’s electrical requirements and achieve a 14 percent carbon footprint reduction. To increase power resiliency for critical electrical loads such

SAFE BET: The Mohegan Sun Pocono’s CHP system will cost about $3 million, with 30 percent of the expense being covered by a state grant.

PHOTO: MOHEGAN SUN POCONO

as slot machines, uninterruptible power supply systems were also added to the project, which will reduce or eliminate power outages.

UGI HVAC will provide the system to the casino as a turnkey solution. UGI Performance Solutions developed a system that addressed several areas of need for the facility. Additionally,

Mohegan Sun Pocono worked with UGI Utilities to upgrade its natural gas service to support the project. The system will cost about $3 million, and 30 percent of the total expense will be financed by a grant from the Commonwealth Financing Authority in Harrisburg, Pennsylvania.

Salvation Army NYC headquarters installing CHP, stand-by power

POWER THAT SAVES: The Salvation Army’s Greater New York Divisional Headquarters in New York City is installing a 100-kW CHP unit.

American DG Energy has reached an agreement to provide its On-Site Utility solution to the Salvation Army Greater New York Divisional Headquarters in New York City.

Under the terms of the agreement, the Salvation Army building will receive a 100-kW combined-heat-and-power (CHP) system and replace existing traditional electric chilling equipment. American DG will sell the associated electricity, chilled water and hot water to the building at a lesser rate than the prevailing utility price. Over the life of the 15-year contract, the host facility will save upwards of $850,000.

The new system includes a Tecogen InVerde Ultera CHP unit. The InVerde uses Tecogen's advanced engine technology, which offers high overall efficiencies, operating cost savings, ultra-low emissions controls and practical long-term serviceability. Using generator and inverter technology,

the units will be able to provide the building with supplemental stand-by generation, or "convenience power,” during utility outages, in addition to operating normally when the utility is up.

“Facilities like the Salvation Army are ideal for the On-Site Utility business,” said Benjamin Locke, Co-CEO of American DG Energy. "We are very happy to work with the Salvation Army and hope that successful completion of this project will lead to similar Salvation Army installation sites.”

American DG Energy sells the energy produced from its on-site energy systems to customers like the Salvation Army as an alternative to the outright sale of energy equipment. Its customers only pay for the energy produced by the system and receive a guaranteed discount on the price of the energy. All system capital, installation and operating expenses are paid for by American DG Energy. www.OnSiteEnergyManager.com

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ON-SITE ENERGY NEWS

Poultry litter boiler project nears completion in NC

FLOOR TO CEILING: The 1,600 HP boiler at Prestage AgEnergy is Hurst’s third iteration of a specialty boiler for poultry litter.

PHOTO: HURST BOILER

Hurst Boiler will soon commission a poultry litter-fueled boiler at a combined-heat-and-power plant in Clinton, North Carolina. It is the third poultry litter system the company has built and installed, but the first in North America.

The 1,600 HP boiler at Prestage AgEnergy is tailored for the facility’s animal waste feedstock.

From fuel receiving to emissions control, the system is designed and engineered specifically for turkey litter.

“While we have been carefully evaluating the potential to use litter in our boilers in the U.S. market, one of our solid fuel boilers in Guatemala began running almost three years ago on 100 percent litter simply because it was the most

cost-effective and reliable fuel,” said Tommy Hurst of Hurst Boiler Inc. “Since then, two more systems have been installed and are providing steam to poultry facilities using only chicken litter.”

Poultry litter is significantly different than other biomass fuels, and using it in boilers designed for biomass has been challenging in the past. In order to overcome those issues, Hurst closely reviewed each aspect of the process, including how facility receiving equipment handles litter and how emissions are treated in the process.

The Prestage boiler is expected to be on line later this spring.

India manufacturer orders three GE 616 diesel engines Walton Group, a multinational electronics, appliances and automotive manufacturer, has selected Clarke Energy to supply three GE high-efficiency 616 diesel engines to generate on-site power at the manufacturer’s factory in central Bangladesh. The three 2.5-MW units are the first 616 diesel engines to be deployed in the country. Clarke Energy is GE’s authorized multigas and diesel engine distributor there.

The diesel engines are expected to provide more reliable power to support factory uptime in the face of increasing power 10

grid instability in Bangladesh. The diesel units also will deliver significant cost savings by both reducing the factory’s fuel consumption and also reducing the amount of lubrication oil used. The reduction in fuel consumption is also expected to deliver considerable carbon dioxide emissions reductions.

“GE’s 616 diesel engine offers high efficiency with extended spare parts availability,” said Alamgir Hossen of Walton Hi-Tech Industries Ltd. “These factors mean reduced operational costs for our business. Clarke Energy also is

ON-SITE ENERGY MANAGEMENT MARCH/APRIL 2016

FACTORY FORCE: Clarke Energy is supplying three GE 616 diesel engines to an electronics, appliances and automotive manufacturer in Bangladesh.

PHOTO: GE

globally recognized as offering among the highest standards of life-cycle services support. This was the combination Walton Group was seeking.”

Two of the diesel engines

were delivered in January, and the third was scheduled to be delivered in March. All three units will be commissioned in April.

ON-SITE ENERGY NEWS

Northern Power Systems offers fixed-rate lease on distributed wind Distributed-scale wind turbine maker Northern Power Systems is now offering a lease program to allow host customers to take advantage of wind energy with 100 percent financing and fixed-lease payments.

The NPS 100 wind platform is targeted toward medium-level power users, like community wind gardens feeding 15 to 20 homes, farms with substantial agricultural machinery or small factories or businesses that want to lock in flat electricity rates, save money and eventually own the asset.

Northern Power’s financial solutions partner, LFC Capital Inc., created the LFC Clean Energy Ownership Program

for commercial and industrial companies seeking greater overall value from clean energy systems than what could be achieved through power purchase agreements. The program is especially appealing to companies such as limited liability corporations that cannot directly benefit from a federal tax credit. The LFC program uses a traditional operating lease and purchase options after six and seven years to provide companies with a predictable low-cost of ownership while satisfying tax rules. Companies obtain an attractive return on investment by keeping all energy savings over the life of the wind system. The program is available in all 50 states.

WIND FIX: Northern Power Systems’ leasing program is designed to enable commercial customers to benefit from on-site wind power without paying for the up-front costs.

PHOTO: NORTHERN POWER SYSTEMS

www.OnSiteEnergyManager.com

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MICROGRIDS

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ON-SITE ENERGY MANAGEMENT MARCH/APRIL 2016

MICROGRIDS

Mapping Out

Microgrids Every distributed generation project with islanding capability is unique and usually custom-made. There are, however, off-the-shelf methods of assessing and designing them.

By Tom Bryan Photos By Kevin Brown

Last May, when a big Texas utility told S&C Electric Co. and Schneider Electric that it needed a small microgrid built—and quickly—both companies were ready for anything Oncor could throw at them. De-

cades of switching, protection and storage jobs had rendered both firms unflappable in the face of extraordinary client requests. Oncor was about to test their mettle.

The Dallas-based utility, which serves 10 million people in the Lone Star State, informed both participants that it wanted a microgrid completed well inside of a year. Accepting the challenge, S&C and Schneider responded big. Over the next nine months, the companies met Oncor’s request, encouraging their client to build a larger, more sophisticated microgrid than it had initially envisioned. By March, the job was done.

“It was an unprecedented turnaround,” says David Chiesa, a senior business development director at S&C. “But Oncor did as much to make that happen as anyone.” While most microgrid projects take a year or more to complete, Oncor’s aspiring plan to get its demonstration system up and running inside of six months was made possible by its own engagement on the project and its ability to swiftly procure the system’s distribution and generation equipment while project engineers worked feverishly. “The collaboration was brilliant, and from

ON-SITE CREW: Oncor worked closely with both S&C Electric and Schneider Electric on its swift-moving microgrid project last year. Pictured here, left to right, with Chiesa are Floyd Ross, Oncor Microgrid site owner, and Bryan Sonnier, Oncor network technician.

www.OnSiteEnergyManager.com

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MICROGRIDS

SUN AND SHADE: The microgrid’s solar car port, a 100-kW system, is a standard south-facing array.

TACTFUL TURBINE: Oncor’s 65-kW Capstone microturbine is fed by propane tanks to function as both base load and supplemental load, based on the state of the microgrid.

DEMO PANEL: This small 6-kW solar panel is west facing and designed to show the difference between west-facing solar generation and south-facing solar generation (pictured above).

an engineering standpoint it was truly a lot of fun,” Chiesa says. “It was a good group of people from both Schneider and S&C, and our customer was wonderful to work with.”

The result, today, is not just a working microgrid, but a true demonstration center complete with what Oncor calls an “immersion” room. “You walk in there and you’re immersed in the experience. It tells the story of why Oncor wanted to try out these technologies, how they’re using the microgrid and why it’s going 14

to benefit their customers in Texas down the road,” Chiesa says.

Of course, Oncor’s microgrid isn’t just for show. It is a fully functional and operationally supportive power structure.

Serving a crucial system recovery center near Dallas, the microgrid provides backup power for a critical environmental and communications building on site. The system includes a solar photovoltaic (PV) carport, a microturbine, two types of energy storage, medium voltage automatic switching and a pair of diesel generators. It is ca-

ON-SITE ENERGY MANAGEMENT MARCH/APRIL 2016

pable of islanding, as needed, and peak shaving, or load shedding, when beneficial. The microgrid has four zones and nine power generating devices, in total.

Chiesa, who regularly hosts S&C clients at the site, says Oncor installed the system because the business case for microgrids and energy storage has gained critical mass for utilities. “They want to be ready for this when customers start putting these types of systems on the grid,” he says. “The business paradigm for utilities is changing, and Oncor is an example of a forward-thinking utility preparing for what’s to come.”

S&C, which has a rich history

in the switching and protection business, is also one of the largest energy storage integrators in the world. Chiesa says the company got into the energy storage market early and followed suit with microgrids. “We entered this sector before people were even calling them microgrids,” he says. “Getting into microgrids wasn’t a huge leap for us. Because if you look at a microgrid, you have to be able to separate from the grid—you have to be able to island—and that’s right in the wheelhouse of our distribution-automation capabilities: the ability to self-heal, and the ability to switch from one energy source to another without human interaction.”

MICROGRIDS

SHED POINT: The microgrid includes an electric vehicle charging station located directly under the west end of the solar car port. It is one of the system’s loadshedding points.

CHANGE UP A transformer is used to feed Oncor’s environmental building from the renewable busbar, which collects power at 480 volts and transforms it to 208 volts to feed the building.

Chiesa and others say defining what their customers want from a microgrid can sometimes be as difficult as describing what microgrids are, who needs them and who doesn’t. Ultimately, almost every microgrid project is largely unique and custom-built.

Sorting Out Systems

Schneider Electric, a global supplier of low- and mediumvoltage equipment, played a key role in the Oncor project. Philip Barton, Schneider’s North American microgrid program director, says trying to briefly define microgrids can be a “fool’s errand” because there are so many ways to explain their arrangements and functional variances.

“If I absolutely had to narrow it down, I would say there are probably three major categories of

microgrids,” he says, reluctantly bucketing their principal types.

“There are campus-style microgrids, utility-style or transmission and distribution microgrids, and true island microgrids.”

Technically, microgrids are a definable boundary of localized electrical generation sources and load that operates connected to and synchronous with the centralized grid, but able to disconnect and function autonomously as conditions dictate. “To us, it is mostly about the ability to island,” Barton says. “It is distributed generation that can island from the grid, or distributed generation that is an island.”

Campuses, military bases, hospitals and data centers were among the earliest microgrid hosts, long before the electrical system’s modern name was

coined half a decade ago. Barton says new, next-generation microgrids are referred to as “advanced microgrids” because of their incorporation of inverterbased resources, as well as their autonomous and dynamic nature.

Schneider Electric recently announced that it is constructing a microgrid of its own, in partnership with Duke Energy, at its North American headquarters in Boston (see “Work begins on Schneider’s Boston campus microgrid,” on page 8).

Today, Barton says, microgrids can still be segmented by size or sector, but differentiating them by the form of anchor resource they use for islanding is also practical. Barton generally puts microgrids into one of two categories: systems with motorbased anchors and those with inverter-based anchors. Motorbased microgrids generate power by using reciprocating engines

or turbines. Inverter-based resources, on the other hand, make electricity from solar PV, wind turbines, fuel cells and sometimes microtrubines. The latter group requires inverters because they generate electricity in the form of direct current, or DC, which must be converted into alternating current, or AC, to be consumable.

Inverter-based microgrids also require an anchor resource, like an on-site reciprocating engine or battery energy storage system, in order to be capable of islanding.

Jason Abiecunas, a distributed generation and microgrid expert for Black & Veatch, says most of the company’s current microgrid customers are either utilities, university and college campuses or municipalities. He says utilities are generally looking for customer-sited projects where both the utility and customer benefit from the system’s installation. Utilities are also keen

www.OnSiteEnergyManager.com

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MICROGRIDS

on grid-related projects that solve reliability issues or allow the utility to defer investment in transmission or distribution systems.

Just as Oncor installed its microgrid for demonstration, practice and customer immersion, Black & Veatch also created a microgrid at its world headquarters in Overland Park, Kansas, with similar reasoning (see “Headquartering A Microgrid” on page 17). Black & Veatch provides a range of services from macro-level or system planning through engineering, procurement and construction (EPC) of microgrid projects. According to Abiecunas, utilities are actively working with Black & Veatch to understand the potential for distributed resources across their systems and customers. They are not only developing strategies for deploying distributed generation, but also evaluating the impacts of increased DER on the transmission and distribution system.

In addition to being a global EPC contractor, Black & Veatch has specialized business units that get highly involved with microgrid feasibility studies and concept design. “We’ve got a standardized microgrid handbook, for example, that outlines a disciplined process for navigating through project objectives and designing systems in a way that incorporates best practices for microgrids,” Abiecunas says.

Microgrid Motivations

Every microgrid host is ultimately motivated by a unique set of geographic, economic and operational factors. Many clients simply want the ability to voluntarily leave the grid to protect critical operations from the possibility of an outage. “Most mi16

crogrids begin with the idea of improved resiliency,” Chiesa says.

“That’s where almost everyone starts out.”

The dramatic rise of solar PV and other DERs has brought with it the need for “grid forming” energy storage, and solarplus-storage is a natural progression toward a microgrid. “The benefit of energy storage is that it is grid-forming, meaning you can actually generate a voltage signal and current,” Chiesa says.

“That, in turn, allows you to take on other forms of inverter-based distributed generation.”

Just having a DER such as solar PV isn’t enough, though.

Chiesa explains that during superstorm Sandy, many customers on Long Island with rooftop PV were disappointed that their arrays didn’t work when the grid was out. “Those systems would have worked in conjunction with energy storage,” he says. “They needed an anchor resource for a voltage signal.”

Just as solar alone is not capable of providing buildings or campuses with islanded power in the face of a grid outage, neither are CHP systems, by themselves.

“I know it’s not intuitively appealing that you can’t necessarily generate power from cogen when the grid is out, but that’s often the case,” Barton says. It’s astonishing that some of these campuses spend $50 million for a 25 MW cogen system and don’t spend an extra million to make it work without the grid.”

Not long ago, Schneider looked at its largest university customers and discovered that almost all of them had combinedheat-and-power (CHP) district energy systems. However, only a few of them had the ability to au-

ON-SITE ENERGY MANAGEMENT MARCH/APRIL 2016

tomatically island from the grid.

“Only one in 10 of the university systems out there with cogen have rotating power generation equipment that is able to ride through a grid outage by islanding and load shedding to separate from the electromechanically linked utility generation,” Barton says. “That means there’s a huge opportunity out there.”

What’s Needed?

Microgrids have become a major buzz word in the power sector over the past five years, and cutting through the excitement can sometimes be difficult. Abiecunas says it’s often necessary to start by helping customers determine whether or not they actually need a microgrid or something else. “It helps to take a step back and ask what the system really needs to do for a customer,” he says. “What are the objectives?

What are the requirements? Ask those questions before you start talking about technology pieces and parts. You have to really understand, up front, what services the system needs to provide, and what the customer needs to accomplish. Only then can you start designing a system that works for the client. It may be a microgrid.

It may be CHP. It might be solar alone.”

Chiesa says some prospective customers assume microgrids always house advanced UPS systems. But that’s not the case. “They think that if they have a microgrid, they will never experience a power outage,” he says. “That’s a myth. Microgrids are actually a way to reform the grid quickly and continue operations indefinitely without the larger grid. However, when the larger grid goes away, you almost

always have a brief outage as your microgrid is reforming.”

So Chiesa tells customers looking for completely uninterrupted power that they’ll need a microgrid with a UPS, or perhaps just a UPS coupled with on-site generation. “But a UPS is an expensive piece of equipment, and it would have to be as large as the entire load at the point when you disconnect from the utility,” he says. “That’s usually not financially viable.”

After learning about the costs required to give a microgrid truly uninterruptible power, customers make a choice. “Sometimes they decide that what they really need is backup generation, or better switching, or a UPS,” Chiesa says. “You have to find the right solution to the customer’s problem and you don’t always end up with a microgrid.”

If a customer does decide to move forward with a microgrid, understanding the project’s economic and technical viability comes next. Priority No. 1 is making sure the system is financeable from the start.

Financing Factors

As a microgrid project moves into the feasibility assessment phase of its project development lifecycle, developers and project hosts, together, must immediately consider how the system will be paid for, and even provide payback. “Make sure the microgrid is designed from the beginning in a way that can be financed,” Barton says. “If you get incentives for solar, cogen or other DERs, and you’re not a profit-making, tax-paying enterprise, you won’t be able to leverage those tax credits. You’ll need to work with a developer or

MICROGRIDS

financier to facilitate those economics.”

To be clear, Barton says, the technical practicality of a microgrid is not a prequalification of its economic feasibility. Many would-be hosts have an idealized understanding of what a hybrid microgrid will look like. They might, for example, get hung up on the idea of a small microgrid with a solar array, micro-CHP,

and a light battery system. “That might look good on paper, but you probably don’t have a single financing project there, but three,” Barton says. “That’s a pitfall for a neophyte microgrid developer.”

All things considered, microgrids need to meet a plethora of technical, legal and financial requirements in an almost concurrent manner. “People make

the mistake of thinking that just because they’ve met the technical and legal qualifications for a project, that it’s viable,” Barton says.

“Then they find out that it’s not financeable, or that it can be financed but not permitted. Maybe that’s because the utility has too much renewable energy and variability on that circuit already.”

Abiecunas agrees that the financial picture has to be clear

from the start. “The projects we see go forward are typically those that have economic benefits that pencil out early, in addition to the resiliency and sustainability benefits,” he says. “Like any capital project, a microgrid has to make sense at the bottom line.”

Also, knowing how a microgrid will perform long before it’s built is vital to economic modeling. Power Analytics, an early continued on page 18...

Headquartering A Microgrid At its world headquarters in Overland Park, Kansas, Black & Veatch has created a microgrid that serves a 12,600-foot section of the sprawling complex known as the Rodman Innovation Pavilion. A few years ago, the company renovated and completely modernized the entire complex. The $60 million makeover provided Black & Veatch with an ideal opportunity to add a microgrid to the building.

“There were a number of different options that we studied—simple to complex—but at the end of the day, we decided that it would benefit both us and our clients the most to create something advanced, a full microgrid,” says Jason Abiecunas, distributed generation and microgrid project manager at Black & Veatch.

The microgrid is designed to cover the

SAMPLING SOLAR: The microgrid has three rooftop solar photovoltaic panel groups: monocrystalline, polycrystalline and alternating current, or AC, modules. In total, they provide 50 kW of electricity at their peak output.

PHOTO: BLACK & VEATCH

load for only the Rodman Innovation Pavilion, which is roughly 10 percent of the electrical load for the whole corporate campus. The generation assets on site include two natural gasfired 54-kW microtrubines, a solar photovoltaic array, ground-source heating and cooling and an energy storage system. “The microtrubines are combined heat and power units, so we use waste heat in the wintertime to create hot water going into our boilers,” Abiecunas says. “We offset upwards of 40 percent of the heating energy in the east side of our building during the winter. The microtrubines essentially run 24/7.”

Abiecunas says Black & Veatch was motivated to build the system to demonstrate its technologies, including remote monitoring and diagnostics, in the context of a microgrid. They also wanted to gain experience integrating microgrids with existing facilities and advanced controls. “It’s a showcase of Black & Veatch’s solutions and a learning laboratory for both us and our clients.”

Since the microgrid’s unveiling last April, hundreds of people—both community groups and clients—have toured the facility. Utilities have expressed especially keen interest in the system. “They want to know how microgrids work, and how they can benefit from them,” Abiecunas says. “It’s been a huge benefit for us to be able to host interested utility partners, show them the system and how it’s integrated, and start to walk down that microgrid path together.”

CLEAN SPACE: The central lobby of the 12,600-square-foot Rodman Innovation Pavilion serves as the main entrance of the corporate complex. In addition to housing a microgrid, the pavilion also includes displays featuring nearly a century of company projects.

PHOTO: BLACK & VEATCH

ON RESERVE: The microgrid uses battery storage to capture energy from on-site generation resources and deliver electricity to the facility during times of high electric demand. The microgrid can also be islanded from the external grid in the event of a power outage.

PHOTO: BLACK & VEATCH

POWER PLUNGE: Oncor’s Microgrid Immersion Room is a full audio-visual experience showcasing the microgrid’s technology.

pioneer in the microgrid space offering realtime monitoring and control, uses its Energy Alignment Plan to couple power engineering and financial analyses on the front end of projects. Kevin Meagher, the company’s chief operating officer, says the tool is designed to help clients quickly arrive at “go/no-go” decisions on microgrids and other DER investments. “There are a lot of components— both hard and soft dollars—that go into the value of a microgrid, and we base almost everything we do on our software’s power modeling,” Meagher says, adding that the Energy Alignment Plan is a precursor to full-fledged feasibility analysis.

Looking beyond asset financing and energy-cost reductions, Meagher says microgrids can also be engaged in economic generation as a power market participant. “One of the most innovative applications we have from a microgrid perspective is what we call ‘power flow optimization,’ which is used to establish locational marginal pricing on the transmission side, and we can apply it to microgrids.

Ultimately, a microgrid should be continually optimizing against many different parameters to maximize its overall performance, including its economic value as a market participator.”

18

THE BRIDGE: The microgrid’s control room is the main point of interface and control for the system. The economic dispatch engine, Schneider Electric’s DSO StruxureWare, is shown on the large screen on the left. The system can be remote monitored or operated from this room.

Interconnection Matters

At some point, every microgrid project has to file for grid interconnection, which requires extensive communication with the utility. Barton says interconnection can be a project snare if not done right. “Start the conversation early,” he says. “Otherwise, you might spend a lot of time and money developing something the utility is going to reject.”

Chiesa says some utilities are more familiar, and more comfortable, with microgrids than others. “Be ready for questions,” he says.

“You’ll have to be able to answer all their questions through your interconnection studies. And you’ll have to run short-circuit coordination to make sure you can protect the system appropriately. A load-flow analysis will be done to make sure new equipment can’t over-duty existing pieces. The equipment has to be capable of handling the stresses you’re going to put on it in a microgrid context.”

Sequence of Operations

The process of interconnection cascades into the creation of a microgrid’s sequence of operations (SOO), which is essentially the system’s power flow plan. Chiesa says this is an opportunity for designers to make sure the microgrid will operate the way a customer needs it to, especially during an outage. For instance, if there are five buildings connected

ON-SITE ENERGY MANAGEMENT MARCH/APRIL 2016

to one microgrid and the system goes down, how does it respond? “The sequence of operations would lay out exactly what happens at each building or zone in the system,” Chiesa says. “Maybe building A is designated to go out first, followed by building B. And maybe building C can’t go down because it’s your customer’s must-have facility. So the SOO would indicate that we must have a UPS for building C, and probably a generator near it.”

Importantly, Chiesa says, microgrid designers need to make sure the SOO jives with earlier assessments including financial assumptions. “If you didn’t include that UPS in the [economic modeling], you made a mistake, and you’re going to have to go back and redo those steps. The sequence of operations is all about setting expectations so what the customer expects matches what you deliver.”

Abiecunas says a good SOO, from an EPC perspective, is the result of scoping and understanding a project thoroughly from the start. “Understanding project requirements naturally leads to sizing the project and specifying generating assets properly,” he says.

“Building a microgrid correctly starts with sizing its components properly so it can run with optimal efficiency and minimal curtailment.”

New Ground Rules

Project developers say a litany of cus-

MICROGRIDS

tomer misconceptions about microgrids may come into play during planning. Clients frequently overlook, for instance, the need for specialized protection and grounding. “Switching, protection and grounding are the things people tend not to think about,�

Barton says. “A lot of people are jumping into this microgrid business and they tend to think it’s all about controls. You’d be shocked how far down the road people can get before they start contemplating protection and grounding. The grounds are tied together at the service entrance, but sometimes that point of coupling where we are opening a main switch or breaker is downstream. If you’re not careful, you won’t have a grounding system anymore. That’s not legal and definitely not safe. There are cases where major corporate campuses have gotten way down the road on huge projects before thinking about the grounding issue.�

The role of a circuit breaker, Barton explains, is to protect loads from upstream available fault current. When a microgrid islands, it not only has to be protected from that upstream current, but also from itself. “That doesn’t seem very complicated on the surface, but it can be,� Barton says. “Faults are about both magnitude and duration. So while the magnitude of the fault current can be a lot less when you’re an island, the duration can often be longer because it’s harder to detect.�

Chiesa has experienced similar issues. “It’s not easy to convince customers that they need new transformers with special windings to introduce a ground into a microgrid,� he says, explaining how a recent customer was concerned that an additional ground on a system would cause extreme tripping. “What we had to explain is that when we island—when we separate from the grid—the ground is lost. You need an interlock that enables the winding to be disengaged when you’re grid connected and engaged in island mode, ensuring protection.�

Likewise, Chiesa says, operating procedures have to be changed when microgrids are put in place. Site personnel have to reconsider what is, and is not, energized at a

microgrid site during outage and restoration events. Traditionally, in an outage, utilities get the generating station on line, followed by the nearest substation, then feeders coming out of that substation, and so forth down the line. “You keep working outward until you get to the edge of the grid,� Chiesa says. “Normally, as you leave that area, the power is on behind you and off in front of you. But in the microgrid world, that is no longer a consistent

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paradigm. The power can be on in front of you, behind you, and side to side. You have to be a lot more careful in how you approach restoration.�

Author: Tom Bryan

Editor in Chief, On-Site Energy Management 701-738-4916 tbryan@bbiinternational.com

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CHP

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ON-SITE ENERGY MANAGEMENT MARCH/APRIL 2016

CHP

How CHP

Gets Going In regional markets with high spark spreads, assessing the viability of combined heat and power projects begins with a few simple questions about hot water.

By Tom Bryan

On a cold afternoon in mid-February, Mark Fennell has just returned to his Colmar, Pennsylvania, office after a meeting with a client 90 miles to the north. Mohegan Sun Pocono, a casino and hotel near Scranton, is entering the construction phase of a $3 million combined-heat-and-power (CHP) project that will enable the tribe-owned complex to generate on-site energy from low-priced natural gas. Every CHP project is unique, but the casino matches the profile of a typical UGIPS cogen deal.

“It comes down to the continuous need for hot water,” says Fennell, business development manager for UGI Performance Solutions, the CHP development division of UGI HVAC Enterprises Inc., a wholly owned subsidiary of a multibillion dollar corporation. “If a customer has a year-round need for thermal energy, CHP is almost always going to make sense, especially in this region.”

250 miles to the north, Joe Hickson, vice president of sales and marketing at Holyoke, Massachusetts-based Aegis Energy Services, has also just come back from a site visit with a CHP customer. Aegis not only installs CHP systems, but also manufactures them. The company is well-known throughout the Northeast for its conveniently-sized 75-kW units, which can be installed alone or in multiples. Like Fennell, Hickson tends

COGEN QUAD: The core CHP technology behind American DG Energy’s On-Site Energy offering is the 75-kW Tecogen Cogeneration Module, which can be installed as a stand-alone unit or in multiples, as shown here.

PHOTO: AMERICAN DG ENERGY

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CHP

'Low-cost natural gas coming out of the Marcellus Shale has opened up a tremendous opportunity for businesses. And it’s raised the profile of CHP.' Mark Fennell

22

to think about, and explain, the promise of CHP in the context of thermal loads. “Because that’s what makes or breaks these projects,” he says. “It’s how many hours a day, 365 days a year, you can operate these cogen units. If you have a high thermal load in all four seasons—spring, summer, fall and winter—it will be profitable. Take a typical YMCA, for example, which might have hydronic heat, hot water demand, and an Olympic-size swimming pool. That client is going to have a real need for our products because they’re always heating water. People are taking showers all day long at a facility like that. It’s all about that hot water demand.”

Benjamin Locke, the coCEO of Waltham, Massachusetts-based American DG Energy, agrees. “Absolutely, it’s the ‘H’ part of CHP that moves these solutions forward,” he says. “Everyone uses electricity.

But it’s the buildings that need large amounts of hot water that define our strongest market segments.”

Locke says office buildings, on the other hand, are usually not great candidates for CHP because they don’t have significant thermal loads. At best, they might circulate hot water in the winter to keep offices warm, but their thermal loads in the summer, if at all existent, would not justify CHP. “They use plenty of electricity year round, but they don’t need a lot of heat or hot water through long stretches of the year,” he says. “That’s an issue.”

Defining CHP in thermal energy terms helps American DG Energy quickly segment prospective on-site energy cus-

ON-SITE ENERGY MANAGEMENT MARCH/APRIL 2016

tomers into groups: those that use heavy amounts of hot water, year-round, and those that don’t.

Fortunately, there are plenty of buildings and complexes that do. Just like the tribal casino in Pennsylvania, large residential buildings also have robust, annualized domestic hot water loads.

“People are going to take just as many showers in the summer as they do in the winter,” Locke says. “And if they heat the building with hot water in the winter, then so much the better.”

However, despite the bonus thermal energy usage that pops up in colder seasons and disappears in warmer months, developers like American DG Energy base CHP viability assessments on baseload thermal energy occurring weekly, monthly and annually. Locke and others say CHP, by design, is meant to run just about continuously. “Out of the 8,760 hours in a year, you want that unit running 6,000 to 7,000 hours, or more,” he says.

Core CHP Customers

While most CHP technology hosts share a distinction of having ample, continuous thermal loads, their similarities fade after that. Hickson says the chief verticals for small and micro CHP are multiunit residential buildings, nursing homes, hotels and light industrials like breweries.

Locke, too, says large residential buildings with more than 150 units are ideal candidates for CHP simply because of the sheer volume of hot water the buildings’ tenants consume. And he agrees that hotels are also great hosts. “With hundreds of showers, plus a swimming pool and sometimes a laundry facil-

ity, they’re a terrific fit,” he says.

“It takes a great deal of water to keep sheets clean day in and day out.”

Another specific example of a CHP host with continuous hot water needs is the Salvation Army Greater New York Divisional Headquarters in New York City, one of American DG Energy’s newest clients. Locke says the Salvation Army building will not only produce power and heat with its new trigeneration system, but also supplant its existing electric chilling equipment.

American DG Energy will then sell the associated electricity, chilled water and hot water to the building at a discounted rate to prevailing utility prices.

Most small CHP original equipment manufacturers (OEMs) and installation companies generally pursue projects ranging from 75 kW up to 500 kW. Regional developers such as UGIPS typically handle projects from these sizes up to 5 MW utilizing a variety of prime mover technologies. Larger projects, in the tens of megawatt range typically fall into the large industrial or district energy project categories and are handled by multinational engineering firms and large energy service companies (ESCOs).

Combing for Cogen Hopefuls

Hickson says it’s not enough just to know who your customers are. After all, CHP providers can’t convince health centers, hotels and public complexes to install CHP if they can’t reach them. Fortunately, an increasing number of potential CHP hosts are finding and approaching service providers on their

CHP

CHILL TIME : The added complexity of engineering and installing the cooling component of a trigeneration system will usually extend a project’s timeline. This UGIPS-installed Thermax absorption chiller provides 300 tons of chilled water to a Pennsylvania data center.

PHOTO: UGIPS

own. Hickson says Aegis, which predominately does business in the Northeast, has rolled out an expansion plan rooted in CHP customer education. “It’s taking hold,” he says. “We’re seeing more inquiries from customers who want CHP, or just want to know more about it. That education process, whether you’re running a 300-unit residential building or a commercial facility, has to come from the top down and the bottom up. You need to engage the board, the management, the employees and sometimes even building tenants or residents. You have to hit it from all angles.”

Fennell, too, says a greater percentage of UGIPS’s clients are coming to the company unsolicited, often enticed by the economics of natural gasderived on-site energy. “In the Eastern U.S., the low-cost of natural gas coming out of the Marcellus Shale has opened up a tremendous opportunity for businesses,” he says. “And it’s raised the profile of CHP.” For Aegis, understanding each customer’s overarching energy vision, and what’s driv-

ing those decisions internally, is critical. “Principally, people want to save money,” Hickson says.

“They’re interested in efficiency and clean energy—and that’s important—but their first question is usually, ‘What’s it going to save us?’ Resiliency is the other big issue. Customers want to know if the CHP units will serve as backup generators during power outages. This became especially important in New York City and on the Jersey Coast after Hurricane Sandy. Resiliency is a very big thing nowadays.”

Locke says Massachusettsbased Tecogen, American DG Energy’s preferred CHP systems OEM, is a vital lead generation source. American DG Energy exclusively installs Tecogen equipment through its On-Site Utility offering. “We benefit tremendously from Tecogen’s experience,” Locke says. “They have good relationships with so many engineering companies, ESCOs, construction companies and project developers. When any of those companies are looking to install CHP and don’t have the capital to do it, they get referred to us. And those leads

are already pre-qualified. That’s probably our largest source of not only lead generation but lead qualification.”

Locke says American DG Energy also finds customers at client-specific trade shows like YMCA conferences and hotel seminars. The company also attends and supports state symposiums like those put on by the New York State Energy Research and Development Authority, New Jersey SmartStart Buildings and similar events in Massachusetts.

Fennell says some of UGIPS’s customers, including colleges, hospitals, industrials and recreational facilities, are contacting the company after hearing about projects UGIPS is performing. “They’ll hear about the CHP project we did for Messiah College here in Pennsylvania, or what we’re doing at Mohegan Sun, and they want to know if there’s an opportunity for them to do something similar,” he says.

After that, Fennell says, UGIPS will speak to whoever invites the company in the door.

“It could be the maintenance manager, the owner, the senior VPs, the facility director or the head of operations,” he says.

“Later, as projects move forward, customers will bring in the CFO’s or the finance VPs to understand the economics and start vetting the modeling. We set up workshops to allow different people to get involved.”

Finding new customers is a daily process for Aegis. The company employs business development representatives (BDRs) who spend the first 90 minutes of their workday sourcing CHP leads. Through online research,

data compilation and telephone interviews, the BDRs examine urban districts and boroughs closely, building by building, collecting as much information as possible about each structure’s thermal energy use through online tools like Google Earth and Street View imagery. Their goal is to identify CHP candidate buildings and arrange meetings between the facility site manager and a CHP specialist from Aegis.

“The conversations that ensue determine whether the site is a good fit,” Hickson says.

Viability Assessment

CHP project development, broadly speaking, starts with customer qualification, feasibility analysis, design and engineering, followed by construction and ongoing operations and maintenance.

The qualification process starts with a basic question about power. Aside from an ample, year-round thermal energy load, one of the most fundamental requisites for CHP is the relative high cost of electricity. For that reason, small CHP is common in the Northeast, the Mid-Atlantic and California where electricity rates are 12 to 18 cents per kWh. “We’re not going to install these units in Chicago, which has 8-cent electricity and cheap gas,” Locke says. “You need to have a large spark spread—the difference between gas prices and electric prices. Gas is cheap, and so in places like New York with high power prices, the spark spread is very high. Chicago, on the other hand, has a small spark spread. We follow that spread to determine where these projects make sense.”

Next, Locke says you’ve

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23

CHP

'If you require a significant thermal load year round, cogen will be a profitable solution.'

Joe Hickson

24

got to make sure the facility has enough power load to support CHP. “Power is usually not an issue, but you still have to check that box and make sure they’ve got an electricity load that can handle a 75-kW or 100-kW cogeneration unit,” he says. “You’d be surprised. Some buildings don’t. But hotels, hospitals, and very large residential buildings almost invariably use ample amounts of electricity for this kind of CHP.” Fennell says the qualification step can usually be fulfilled over the phone. At this stage, CHP providers ask prospective clients questions about their energy loads, their fuel source, their hours of operation, where and how they’re using thermal energy: hot water, chilled water, steam, etc. “This is where we try to get an understanding of the facility’s energy profile,” he says. “The secret to CHP really isn’t rocket science.

It’s the ‘combined’ part that matters. Anyone can make heat, and anyone can make power. The trick is making them simultaneously.

And it only works optimally when there’s a good spark spread and the host site has a need for both thermal energy and electricity at the same time.”

Once those principal qualifiers are examined, CHP installers will scrutinize a customer’s utility bills, both electric and gas.

UGIPS, for example, asks its clients for utility data going back 24 months. “We want to understand how much they’re spending and how much they’re using,” he says.

“Those are two different things and we need to understand both.

If they have 15-minute interval data, that’s even better. We’ll take the most granular data they’ve got.”

ON-SITE ENERGY MANAGEMENT MARCH/APRIL 2016

Next, UGIPS inputs that data into more than 40 interconnected spreadsheets. “We typically try to break up their utility bills over every hour of the year,” Fennell says, explaining that breaking power and thermal usage down by the hour is a more accurate way to look at how clients are actually using energy. With an exhaustive utility analysis complete, UGIPS begins making decisions about prime movers (i.e., small or large reciprocating engines, or microtrubines). “It could be an Aegis or Tecogen unit, on the smaller scale, or Guascor or Jenbacher on the larger end,” Fennell says. “We’re technology agnostic. We can plug in different pieces of technology—at different sizes, and with different technical and electrical efficiencies—and look at the economics of each option.”

Later, additional site evaluations are performed and all of the facility’s critical equipment is inspected and mapped out: the natural gas line, the existing boiler, electrical systems, piping runs, emergency requirements and more. If everything checks out, an official go-forward proposal will be made to the facility’s board, management or ownership team.

As things advance, the developer will start to address utility interconnection. “Various utilities treat CHP differently,” Locke says. “You need to know up front who the electric provider is, what rules of the road you’re going to have to follow and if you’re going to be able to put in CHP at all. Because ultimately you are interconnected to the utility, and some utilities are easier to work with than others.

In our key markets, those relationships have become pretty strong.”

Finding a good place to put the CHP system is also important. Small CHP systems don’t have large footprints, but developers still need to consider the physical placement of the units early on in the planning process.

Most buildings have existing utility rooms that make good staging areas for CHP. “The benefit of the modular Tecogen units we use is that they can easily be squeezed into a corner of a basement, or even disassembled and reassembled for installation in another basement later on,” Locke says, adding that the units can be placed outdoors, on a building rooftop or on the ground, inside weather-proof enclosures.

The total timeframe for installation can range from a few months to a year. Projects that involve cooling, like the Salvation Army’s system in New York City, tend to take slightly longer than straightforward CHP installations. Locke says a typical single-unit CHP installation at a nursing home, for example, can be completed in a few months.

“For a project like that, we’ll get the equipment from Tecogen in a matter of several weeks,” he says. “The bulk of the project timeframe is not spent on construction, but permitting and planning. Once you get plumbing and mechanical personnel in there on the job, it goes quickly.”

Mismatches and Misconceptions

Despite the wide applicability of small CHP, it simply isn’t a good fit for every building. Hickson says he has heard

CHP

BOXED UP: Compact CHP modules like this 75-kW Aegis ThermoPower unit are well-suited for small cogeneration applications in multiunit residential buildings, nursing homes, hotels and light industrial facilities.

PHOTO: AEGIS ENERGY SERVICES

stories about unprincipled CHP providers forcing “square pegs into round holes” and leaving trails of failed or oversized projects behind. “That’s not Aegis,” he says. “We’d just as soon walk away from something that isn’t a good fit, or we’d suggest changes up front to make it right. Maybe a customer doesn’t need a 300 kW unit, but just a 150 kW unit.

If a customer needs 140 kW, then we’ll give them 150, but not 300. Our owners have always believed strongly in only selling customers what they need.”

Fennell agrees that some clients think, or are told, that they are candidates for larger CHP systems than they actually need.

“And not just larger, but more expensive,” he says, explaining that too many CHP systems are built to handle peak loads that aren’t representative of a sys-

tems true needs. “Some developers miss the boat and overdesign systems. That’s a huge problem because clients will ultimately shut those systems down because they’re not achieving the savings they thought they would.

Other times the maintenance costs are different from what they were projecting.”

In fact, maintenance negligence can be a huge problem for CHP hosts. Hickson says far too many companies have installed CHP units with inadequate longterm maintenance plans. “I was in a facility recently where one of our competitors put in four cogen machines,” he says. “Because of their inability to service those units properly over the past decade, they’re now unused elephants sitting there in their boiler room. People, for whatever reason, sometimes fail to

remember that these are engines.

It’s like your car motor, but it’s running 24/7, or the equivalent of 60,000 miles a month. So we’re talking about 720,000 miles a year. That requires people that are constantly on top of things, changing the oil frequently—and we’re talking 20 quarts in every machine. It takes maintenance.

It takes care.”

Splitting the Savings

Hickson says the biggest hurdle Aegis faces with new customers is building up their understanding of CHP. “But once people start to appreciate what we can deliver, it becomes a nobrainer,” he says. “When you can walk in and reduce somebody’s heating expenses and offer a return on investment in less than five years, it’s a compelling opportunity. Our customers some-

times don't have the funds to invest up front, in that case, we at Aegis will finance the system.”

Through its Shared Savings program, Aegis will design, install, own, maintain, fuel, and operate a CHP system at no cost to the host facility. “We have the ability, if a project makes financial sense, to actually not charge the customer anything for the CHP installation and, instead, offer them a 10 to 15 percent reduction in their electrical cost annually, Hickson says.

Likewise, American DG Energy delivers CHP projects to customers through leasing arrangements under its OnSite Utility brand. “We own the equipment, install, operate it and sell the energy back to the customer each month,” Locke says.

“Customers like the Salvation Army will get a bill from Ameri-

www.OnSiteEnergyManager.com

25

CHP

'Out of the 8,760 hours in a year, you want that unit running 6,000 to 7,000 hours, or more.'

Benjamin Locke

can DG Energy that looks very similar to their utility bill or their gas bill. It outlines how much electricity was delivered, what their discount is, and how much they owe us. It’s that simple.”

In the large CHP sector, ESCOs like Johnson Controls and Honeywell will spend millions developing district energy or energy efficiency systems for entire school districts, campuses or municipalities. “They will finance the entire thing using some sort of power purchase agreement or on-site utility offering to get it done,” Locke says.

“It’s a very important part of the distributed generation model. In the same way, small CHP is an efficiency measure, and you really don’t want to box out anyone from striving toward greater efficiency. Nonprofits like YMCAs don’t have big capital budgets for major efficiency projects. Solutions like ours bring them into the fold.”

INVERTER INSIDE: Tecogen’s InVerde INV-100 Premium Power CHP Module is UL 1741 and UL 2200 certified, allowing the equipment to seamlessly connect to the utility grid without additional permitting requirements.

PHOTO: TECOGEN

Still Cheaper Than Heating Oil

Low heating oil prices have had some effect on the market for gas-based CHP, but Hickson says it is important to take a long-term approach to investing in cogeneration. “Heating oil prices have been low this year, but electrical rates are going to go up,” he says. “Gas will go up, too, but not at the same rate as power. You’ve got coal plants coming off-line and nuclear plants shutting down, and a great deal of infrastructure cost coming into play. Not only do you have the generating costs rising, but the delivery costs as well. Electricity rates are just going to keep rising.”

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ON-SITE ENERGY MANAGEMENT MARCH/APRIL 2016

CHP WITH A VIEW: CHP units like this Tecogen InVerde 100 unit can easily be placed outdoors inside of weather-proof enclosures.

PHOTO: TECOGEN

Locke says that, almost regardless of price, using heating oil to make hot water will always be relatively expensive. “We can usually bring in natural gas, and typically it is a dedicated pipe,” he says. “The utilities are increasingly supportive of CHP in terms of helping you get natural gas into a site at a discount of 5 or 10 cents per therm (Btu). So you put in your own meter that

determines how much gas is being used for CHP, and it’s certainly going to be cheaper than what they’re doing with oil right now.”

Author: Tom Bryan

Editor in Chief, On-Site Energy Management 701-738-4916 tbryan@bbiinternational.com

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