Combined Heat and Power – Round 2 Lessons Learned

 

This article is the second in a series focusing on the advantages of CHP installations. The two primary reasons for interest in CHP – Combined Heat and Power also know as COGEN - is utility cost savings (cost reductions for both electric and hot water production) as well as continuous power in blackout conditions. With the recent series of hurricanes resulting in numerous blackouts, hospitals and other critical facilities with the foresight to install CHP were able to avoid serious or even tragic consequences as a result of their ability to generate their own in-house power. For those critical facilities without adequate emergency backup power, the tragic results were the subject of numerous front page articles. As well, there were many instances of outages that did not make the front pages of any newspapers, but also ended in tragic outcomes in some cases and inconveniences in all cases - all of which could have been avoided with a reliable CHP installation. 
The primary advantage of a CHP installation for backup power over an emergency generator is cost savings. The savings are the result of a lower overall cost for operating the in house CHP installation as compared to the cost of the monthly utility electric bills or if there is a backup generator, the combined cost of the electric utility bills and the cost of maintaining the emergency generator. It is important, however, to note that a CHP installation does not automatically result in a lower cost. The lower cost potential from a CHP installation comes from the heat by-product of a CHP installation. If the heat by-product can be utilized for hot water production, then the cost advantage kicks in. If the heat byproduct cannot be utilized, then the cost advantage is lost. That is why hospitals, nursing homes and residential facilities are good candidates for a CHP installation because of their 24/7 requirement for hot water. Commercial facilities with limited requirements for hot water often do not achieve the energy cost savings levels to justify the cost of a CHP installation. 
A key factor in any successful CHP installation is longevity of operation. On average, it will take between four to five years of continuous operation to accumulate the savings needed to offset the upfront cost of a CHP installation. By accumulated savings, we are referencing the year over year differential between the costs that would have been incurred for electric and hot water production had the CHP not been installed versus the lower costs of the CHP operation.  To make this work, not only do you need to focus on the quality of the equipment, you also need to focus as well on the quality and longevity of the company that stands behind the equipment. When selecting CHP equipment, it is important to understand the structure of the warranty as well as structure of the maintenance program that will keep your CHP installation up and running. There are a number of unhappy endings for CHP customers who purchased their equipment from CHP manufacturers who then went out of business and were therefore unable able to support their CHP installations - leaving their clients high and dry. The solution here is to only deal with CHP manufacturers that have long and successful track records.  
Here are two relevant case studies addressing the “high and dry” scenario. The first involves a large 500 unit multifamily building on the upper west side of Manhattan. This building decided to install a CHP system following 9/11 and then the 2003 blackout. This installation was the first residential building in New York State to use CHP. However, the problems with this installation soon became apparent. While this CHP system delivered the anticipated cost savings, the installation itself was of marginal quality and poorly maintained by the manufacturer. The end of the first chapter of this story is that following breakdown after breakdown, the equipment failed beyond repair and had to be abandoned. In a situation like this, you would expect the building to throw in the towel with regard to CHP and go back to Con Ed as their primary electric power source. However, that is not what happened here. Even with the first round of disasters, including inferior equipment and poor maintenance, the cost benefits of CHP were clearly demonstrated on the first try. So this building decided on round two for a second CHP. This second time around, the lessons learned from the first try were put to good use. For its second try, the building identified a proven manufacturer – Tecogen – which not only offered quality equipment and a service contract that works, but has its own proven track record. Benjamin Locke of Tecogen is quoted as follows: “ Our CHP customers consistently experience dramatic savings in their utility bills. It’s not uncommon for a project to pay for itself in three to four years, including the cost of the service contract. Importantly, proper service can keep the equipment in good working order for many years with the result that our projects tend to pay for themselves many times over.”
The second case study starts out with “round two” of the case study above. Here Greenhill Management installed a CHP from Marathon, a quality CHP manufacturer, in one of their multifamily buildings. Mike Walsh of Greenhill Management is quoted as follows: “After experiencing initial problems of getting the CHP system up-and-running, I was left questioning whether I had made the right choice in installing this system. However, Marathon returned to make the needed tweaks and correct all of the mechanical hiccups. I am now very pleased with the performance and low maintenance costs of this CHP unit. Both the manufacturer and the installer addressed all of my concerns. After a period of one year, I can say that I am optimistic about realizing the anticipated returns for this installation.” Here Marathan, instead of playing the disappearing act, addressed the needed repairs and adjustments promptly and the CHP installation is now running as originally intended.
CHP offer great solutions, but the smart move is some education before jumping CHP pond. 

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