Bridging the gap between economics and ecology with CHP

Garrett Smith, COGENTECH Inc.

Garrett Smith, COGENTECH Inc. Click here to enlarge image

In the wake of increasing power demands, escalating utility costs, and tightening environmental constraints, resource conservation and energy efficiency are rapidly becoming topics of greater interest. At the same time, the North American power industry is in the midst of a paradigm shift (albeit a painstaking one) from large, centrally located power plants heavily reliant on extensive transmission lines, to a more diversified system where generation is more strategically located near electric loads.

The prevailing model supports large-scale (250 MW+) plants as the most economically viable options. Emerging (and undoubtedly important) commercial and residential-scale (1-100 kW) technologies like fuel cells, microturbines, wind, and photovoltaic (PV) power should have their place in a balanced energy portfolio. But, we are systematically overlooking our biggest energy use sector: manufacturing & process industries. Specifically, hundreds of large and medium-sized industrial plants that currently use natural gas for thermal energy production (steam, hot water or direct heating) remain as prime candidates for yet-to-be-installed mid-scale (500 kW to 25 MW) industrial and commercial cogeneration projects.

Beauty and a conscience

If our current fundamental challenge lies in developing power systems (of meaningful scale) that can aesthetically and environmentally be installed closer to load centers, what better way to meet all requirements than to displace existing gas consumption (often by aging equipment) into state-of-the-art combined heat and power (CHP) systems?

Click here to enlarge image

Proven mid-scale gas turbine and reciprocating engine-based industrial cogeneration technologies have the ability to exceed environmental and public policy requirements. From semiconductors to food processing to swimming pool complexes, modern, high-efficiency distributed CHP systems can meet both increasingly competitive global economic standards and increasingly stringent environmental requirements head on.

Total based on installed costs of roughly $1,000 per kW after accounting for various incentive rebates and/or tax credits, well-planned CHP systems are being installed at costs that rival those of larger, central power stations. After really considering the ultimate large-project costs of real estate, environmental mitigation, legal battles, and increasingly costly T&D upgrades, the true value of the pre-zoned, grid supporting, and mostly automated cogeneration system becomes even more apparent.

All across the western United States, unprecedented retail price increases are being compounded by transmission and distribution system constraints that threaten to leave many of the supply and demand challenges unresolved for years to come (see Customers of the region’s largest utilities (PG&E, SoCalEdison, PGE, Seattle City Light, San Diego Gas & Electric, etc.) are all being battered as decades of utility apathy manifest themselves in the nation’s highest electricity prices (see California electricity price forecast at

Economic upside

While many planners use environmental resistance as an excuse, projects like the Marysville (California) Cogeneration Project at the site of Sierra Cedar Products actually received its air permit approval in just 11 business days. By using state-of-the-art emissions control equipment, a well-designed CHP system will actually result in a net reduction of site air pollution. Shattering the myth that working with air boards is a never-ending grind, even the most stringent of air pollution authorities appreciate this ecologically-sound upside of CHP.

Such is the case with the Oregon Roses Cogeneration project (Forest Grove, Ore.), where a 1 MW gas-fired IC engine manufactured by Guascor, Inc. (Miami, Fla.) and packaged by SIMPOWER, Ltd. (Maple Ridge, B.C., Canada) will provide electricity and heat to one of the region’s most progressive greenhouses. In what is one of the nation’s most efficient energy designs, the cogeneration system will provide useful heat in 3 forms: low pressure steam, hot water, and warm, CO2-rich exhaust gas.

Another noteworthy aspect of the Oregon Roses project is that the greenhouse owners aren’t spending any money on the project: Forest Grove EnergyWorks, LLC (a special purpose company founded by outsourcing partner American Coast Energy) will pay for all of the project under a build, own, operate, maintain (BOOM) arrangement. The privately-funded project will take advantage of the state of Oregon’s business energy tax credit (BETC), and is scheduled for commissioning by Q1, 2003.

Technology trends

Erroneously considered as poor “heat sinks,” semiconductor and other high-tech fabrication facilities are actually ideal candidates for triGeneration systems. As the name implies, triGeneration is simply the simultaneous production of three forms of useful energy from a single fuel source. Such is the case with “HP CHP,” a highly reliable system designed to serve the electrical, hot water, and chilled water needs of the Corvallis, Ore. manufacturing campus of Hewlett-Packard/COMPAQ.

The 25 MW system has been optimized through computer modeling to consist of five identical 5 MW prime movers (gas turbines or gas-fired IC engine-based solutions are being considered) to serve the site electrical load of 20 MW with ‘N+1’ reliability. Accounting for the grid back-up of parallel operations, 99.99999 percent reliability has been computed for this ultra critical application.

Nevertheless, the features of the HP CHP design really shine in the heat recovery and emissions abatement performance. The resource-conserving complex is designed to use a combination of hot water recovery and steam absorption chilling to achieve a thermal efficiency greater than 75 percent. By using cutting-edge NOX and CO reduction methods and displacing the use of existing gas-fired equipment, HP CHP is also slated to reduce site air pollution.

Quelling concerns

End users are often concerned about their increased exposure to fuel price transients. But, it is common practice to procure natural gas under long-term, fixed commodity price contracts that equate to a low, fixed cost to generate electricity with the high-efficiency CHP system. That way, the strategic CHP system is immune from energy market spikes and the host facility can focus on their core business activities.

In the case of Langer Juice Co. (City of Industry, Calif), another 1 MW Guascor/SIMPOWER IC engine package with custom heat recovery equipment has been built to operate with a net thermal efficiency of more than 80 percent. The fuel chargeable to power heat rate of 5,500 btu/kWh, HHV–over 25 percent more efficient than the industry standard gas turbine combined-cycle plant–allows the project to generate power for fewer than 3.5 cents per kWh (including O&M) with a hedged, stable gas procurement contract.

In other words, even a new commercial gas turbine system cannot generate electricity as efficiently as the properly designed CHP plant. Furthermore, the cogeneration system makes power at the point of use, while the central power station further stifles the end user with ever-increasing transmission and distribution costs.

The $1.3 MM gross cost of the resource conserving project in the LA Basin (sched-.uled to be commissioned later this year) will be offset by the state of California’s self-generation incentive rebate (30 percent) and is projected to save Langers over $0.5 million per year in energy costs.

Many companies who have made the decision to investigate CHP for their location should not be swayed by utility propaganda or threats regarding their ability to make such an installation. From the FERC QF laws (18 CFR Part 292, et. al,, to state protection (California PUC Articles 353, 372 and Oregon Administrative Rule 345, Division 1) the legal rights of CHP project owners are as far reaching as the utility interference is irresponsible.

Standby charges, exit fees, superfluous interconnection costs, spinning reserve tolls, and countless other “discriminatory” utility efforts to stifle socially responsible CHP developments may apply to stand alone generators. But, companies considering the use of qualifying high-efficiency systems should not be intimidated.

With thousands of proven applications in Europe, cogeneration is certainly not new. Over the last decade, many unheeded voices were calling for a greater mix of CHP to help the West resolve some of its looming (and continuing) energy infrastructure woes. The ability of the strategic CHP design to simultaneously reduce energy costs AND air emissions makes it an ideal candidate for revolutionizing Western U.S. energy policy in a proven and practical way.

Recent market chaos and record-setting price increases are battering businesses all along the Pacific coastline, creating stronger motivation than ever before for clean, local safe, efficient and reliable CHP. Savvy businesses like those described above are maintaining their competitive edge by embracing the “win-win” benefits of on-site cogeneration.

A CHP success story: All Systems Cogeneration Inc

All Systems Cogeneration Inc. is a developer and operator of small-scale cogeneration systems. Their combined heat and power plants help meet the electrical and thermal needs of the host facility while reducing energy costs. The company has installed 13 internal combustion engines at eleven different retirement centers throughout the state of New York.

The CHP systems consist of a 60 kW internal combustion engine (manufactured by Coast Intelligen Inc.) with heat recovery from the engine block, engine oil, and exhaust manifold. The engines burn natural gas and use three-way catalysts to lower NOx emissions. The electricity generated by the engines directly feeds into the main distribution panel of the facilities, and the recovered thermal energy serves individual buildings. Thermal output is used for space heating, production of domestic hot water, heating for swimming pools and Jacuzzis, and for air conditioning through a steam absorption chiller.

All Systems Cogeneration Inc. cogeneration plant operating data for 1999:

“- Project design capacity (MWe): &madash;

“- Power to heat ratio

[Note: Data based on 8,500 annual hours of operation. Savings based on 50 percent efficient electric and 83 percent efficient thermal generation with natural gas as the primary fuel. Effective electric efficiency = (CHP power output)/(Total energy input to CHP system – total heat recovered/0.83). Assumes thermal output provided at 83 percent efficiency. NOx emissions compared to electric emissions of 3.6 lb NOx/MWh (1998 national average) and boiler emissions of 0.1 lb NOx/MMBtu.]

The projects implemented by All Systems Cogeneration demonstrate the use of combined heat and power at institutional facilities. Besides saving money for clients by limiting power purchases from the grid, the cogeneration facilities also provide a positive emissions benefit. Compared to separate heat and power, the company’s eleven cogeneration systems annually save a combined total 10 million standard cubic feet of gas, equivalent to 570 tons of CO2. The carbon reduction is comparable to the planting 160 acres of forest or displacing the annual greenhouse gas emissions from 50 households. The combined NOx reductions are equal to the annual emissions from 600 vehicles.

In March 2000, the U.S. Environmental Protection Agency and the Department of Energy recognized the pollution prevention benefits of these CHP facilities with a CHP Certificate of Recognition.

Smith is a licensed mechanical engineer and president of COGENTECH Inc., a CHP project development company serving the industrial and commercial business.communities. He studied advanced CHP design techniques at Oregon State University and has specialized in high-efficiency power generation for over a decade and on over 50 individual projects. He can be contacted at or 503-203-2695

COGENTECH Inc. is a leader in the proactive development of custom, state-of-the-art industrial and commercial CHP solutions. The Portland, Ore. firm is responsible for the development of efficient cogeneration systems in the Southern California, Northern California, and Pacific Northwest regions.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at

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