Business Energy Provides a Sound Strategy for Peak Shaving & Power Security
As electric utility costs rise and security issues grow, the subject of energy usage continues to command the attention of commercial and industrial building managers.
By Ed Ritchie
With utilities implementing time-of-use and peak pricing programs, penalties on electricity bills for large companies can surge to six figures within a single month. Worse yet, that expensive power is subject to brownouts, terrorism, or a complete blackout from something as simple as a confused bird, as was the case in Sonoma County, CA, where a wild turkey brought down a power line, and with it, the county’s offices and the 911 emergency call center. Incredible! And expensive. But there are solutions, and today it’s easier than ever to find the resources for securing reliable energy while reducing the cost. Moreover, it’s easy to find help, support, and advice. So let’s start with the first step, understanding your energy usage.
It should come as no surprise that the manufacturers of electrical generator sets are highly motivated to help the business community secure low cost reliable power. And it’s a good thing, too, because getting a grip on power consumption may well be easier than deciphering the fine print on a utility bill. If that’s the way you see it, you’re not alone. A study by the Wisconsin Focus on Energy revealed that only 5% of operators see their plant’s energy bills, and only 1% actually understand them. Most utility companies will walk you through a bill, and as we’ll see later, for customers of Con Edison in New York City, it’s more like a limo ride through the process.
But for everybody outside of the Big Apple, the question to answer is—what assets are driving the consumption? Again, engine genset manufacturers pony up, by offering tools and consultations (typically free we might add) to figure out what’s eating up all that power. For instance, Power Suite, from Cummins Power Generation, Minneapolis, MN, helps businesses estimate their onsite power consumption profile. It takes users of all levels of experience, or lack of experience, through sizing a project, with templates and default parameters for the most common kinds of modern electrical loads.
“It’s very easy to use,” says Munir Kaderbhai, Senior Sales Application Engineer, Cummins Power Generation. “Even somebody that has very basic knowledge would just have to enter one key parameter and the tool will suggest some recommended defaults. So, a manager can go in and identify their loads, then press the size button, and get a recommendation for a range of products that could meet their requirements. There are features that allow the user to do some analysis, so, in a situation where a 250-kilowatt generator was recommended but it was beyond the budget, the tool suggests alternatives for adapting a smaller genset, such as changing the sequence of starting power intensive loads. The load range covers from 10 kilowatts, to more than three megawatts, so you can imagine how many applications this tool can be used for. It’s very easy to model different types of loads, even as small as a gas station.”
Initially, the Power Suite software was loaded onto a user’s computer, but it has evolved to a software-as-service tool that’s accessed over the Internet. The online flexibility includes saving data and sharing. Access from the cloud allows Cummins dealers and factory engineers to collaborate on free consultations.
“We have seen many questions from commercial buildings such as hotels and hospitals that requested consulting on genset sizing because life safety loads must be picked up within a few seconds, so the generator has to be big enough to handle voltage or frequency shifts and keep the load connected all within less than 10 seconds,” says Kaderbhai.
For peak shaving scenarios, it’s possible to size the generator for a facility’s base load and an additional load for peak shaving if needed. “Peak shaving is a great tool and method for facilities to save on energy bills,” says Kaderbhai. “As long as you understand the overall load profile and how much of the baseload is taken care of if there is a peak demand rise.”
A manufacturer’s dealer network is eager to help in analyzing the opportunities for peak shaving, according to Matt Owen, Electric Power and Gas Marketing Development and Support, Caterpillar, Inc., Peoria, IL. Dealers can advise
customers, based on their financial specifications, to understand the benefits of owning a natural gas-fueled asset, and the potential return on investment.
“There are a lot of opportunities and questions that the factory dealer can help out with,” says Owen. “When you’re buying a natural gas genset, there are different things you run into rather than just buying from the utility, such as emission regulations and noise permitting, and also performance variables for ambient temperature and altitude.”
Owen adds that running a genset in a combined heat and power (CHP) configuration can boost the return on investment (ROI), citing research by Michael A. Devine, Product Marketing Manager, Caterpillar, Electric Power Division Gas Products. Moreover, these systems don’t have to run 365 days per year to save money. How about as little as 1,000 hours per year? Devine notes that sites such as commercial real estate and office buildings can cost-effectively operate generator sets with heat exchangers to partially offset the cost of fuel for space heating, water heating or dehumidification, thus improving the ROI. Almost any application with roughly 1,000 or more annual operating hours offers potential for economical heat recovery. The only firm requirement is that the value of heat recovered outweighs the added cost of the heat-recovery and control mechanisms during business hours, avoiding utilities’ highest time-of-use rates.
Peak shaving depends on reliable equipment and the configuration of that equipment is critical, says Don Wilkins, Vice President, Advanced Product Development, Power Solutions International, Wood Dale, IL.
“When you’re peak shaving or load sharing, the electronics are critical to the success of the applications,” explains Wilkins. “Especially when you’re running on gaseous fuels, because they tend to vary in quality. So you need high-quality governors and advanced strategies for controlling frequency, because that’s paramount to being successful. Today’s engines need to integrate with the generator system controls and maintain both engine performance and emissions standards, while meeting the requirements of power generation and frequency control.”
PSI has traditionally supplied engines for continuous duty gensets in oil and shale field operations, but is expanding its product line to a new product line of 500 to 1 MW engines for peak shaving, onsite power generation, and gas applications. In September 2013, the company announced that its wholly owned subsidiary, Power Great Lakes, Inc. was appointed a “4000 Series Gas Center of Excellence” by Perkins Engines, Inc. This appointment provides PGL the rights to sell, customize, install, and support the Perkins 4000 Series high-horsepower gas engines in North America. The Perkins 4000 Series systems will range from 23-liters to 61-liters of displacement and are fuel-flexible, capable of running on natural gas and a wide range of alternative fuels.
The expanded product range fits well with peak shaving applications where genset flexibility can maximize a client’s budget, and do so reliability.
“Depending on how the electric current comes to a building, it’s better to parallel smaller units for stability and scalability,” says Wilkins. “Financially, you’re weighing the cost of the gensets versus their operating costs. Acquisition cost is not at all linear to genset size. As units get bigger, the cost per kilowatt for the units actually increases rapidly. So it can be less expensive to get three 400-kilowatt generators rather than one 1,200-kilowatt unit, because the components on smaller engines are made in higher volumes and the cost is better than for the larger, low-volume engines.
“The other consideration is the cost of operation when you’re doing peak shaving,” he continues. “Demand can vary, and if you only need 400 kilowatts and you have a megawatt generator, there is waste. Lastly, it’s good to have redundancy so, if you need to perform maintenance, you may not have to shut down the whole system.”
|Photo Credit: American DG
InVerde CHP units serving a hotel
The design philosophy of switchgear and control systems has also seen an evolution, says Wilkins. “Historically, you had very expensive elaborate central switchgear, but that was cost prohibitive. Now, with microprocessor technology and high-speed communications, the trend in the market is moving towards distributed switchgear. This is where each system now has a master unit that puts the load request out to the other units that have their own automated breakers, and take care of synchronizing and meeting their assignments.”
As equipment designs for CHP get more sophisticated and less expensive, industry analysts expect steady growth for the marketplace, thus bringing CHP closer to mainstream status. According to a report from Transparency Market Research, the market for distributed energy technologies including CHP, solar photovoltaic, wind turbine, and fuel cells in residential, building, institutional, and commercial applications was valued at USD 99.68 billion in 2011, and is expected to reach USD 155.86 billion in 2018, growing at a CAGR of 6.7% from 2012 to 2018. Annual DEG installation capacity was 81,875.7 MW in 2011 and is expected to reach 180,093.6 MW in 2018, growing at a CAGR of 11.9% from 2012 to 2018.
Some of that growth will come from a recent category known as micro CHP systems. These are well suited to small businesses and apartment buildings, and offer some persuasive economics. For example, a micro CHP system saved the Melrose Five Project in the Bronx, NY, $12,936 in building energy costs in its first year of operations. The heat and electricity were generated onsite with an Ecopower Micro CHP system, from Marathon Engine Systems, Troy, WI.
The payback, based on 2011 electricity prices, amounts to 7.3 years. Marathon Ecopowers systems use internal combustion engines that produce 4.7 kWh of electricity, and between 29,000 to 43,000 BTU per hour of heat. At a car wash in New Milford, CT, a demand for hot water and electricity keeps an Ecopower system running almost 24 hours a day, and provides the base operating electricity load to offset utility electricity that can run as high as 0.20 per kilowatt-hour. Gas and electricity savings topped $1,550.00 for the first operational months of January and February.
In both the Ecopower cases above, the customers purchased their CHP systems, but with a power purchase agreement (PPA) as another option, it’s possible to reduce energy costs, have no upfront capital investment, eliminate the peak pricing problem, and say goodbye to those confusing utility bills. The DoubleTree Hotel in Tarrytown, NY, took advantage of a PPA when it installed a 100-kW CHP system, owned and operated by American DG Energy. The 247-room hotel pays a discounted rate for its energy, based on a $2 million contract with a 15-year term.
In March 2013, Hilton Hotel, DoubleTree’s parent company, boosted its energy savings program to a grander scale by installing a 1.75-MW CHP plant at the Hilton New York, thereby putting distributed energy to work at Manhattan’s largest hotel. The system uses seven gas-driven generators to provide clean electricity (over 50% of the electricity demand) and 2,700 kW of heat for building operations. The system is also expected to reduce operating expenses of the building by nearly half a million dollars each year over the 20-year life of the PPA contract. Anaergia, Burlington, ON, Canada, designed, built, owns, and operates the system, and it meets criteria for the US Department of Energy’s ITC program that promotes electrical efficiency and conservation of resources through CHP systems. The project also qualifies for the New York State Energy and Development Authority (NYSERDA) program to support the energy, economic, and environmental well being of New York State.
The fact that NYSERDA is supporting distributed energy is consistent with a growing trend among state governments and federal agencies, most notably the Department of Energy (DOE) and Department of Agriculture. It’s interesting to note that in New York City, while every watt of electricity generated by distributed energy is one less watt that gets billed by local utility Con Edison, nonetheless, Con Edison has a peak load problem and pays its commercial customers at least five cents per kilowatt-hour for curtailment. The utility provides extensive help for its customers that want to take advantage of peak shaving because the need is urgent. The program shifted into overdrive during New York’s July 2013 heat wave, when the utility called upon participants of the peak-shaving program to shed load for five consecutive days.
To qualify for Con Edison’s program, a commercial customer must have the ability to shed at least 100 kW of load. That’s not much for most medium to large facilities, and it allows for quite a bit of flexibility for businesses that have a high demand for process heat. In fact, the value of heat can make a CHP system ideal for cutting back on gas consumption and mitigating peak power demand charges. For example, Durst Maltz, a malt producer in Germany, reduces its electricity load by 700 kWh with a pair of GC 357 N5 CHP units from MTU Onsite Energy, Mankato, MN. The units also produce about 1 MW of thermal energy, and by harnessing the heat to assist the plant’s huge boilers, Durst saves on natural gas consumption, giving it an overall energy efficiency rating of 90%.
Funding With Energy Service Contracts and Government Grants
High efficiency ratings can also come from CHP systems using fuel cells, and the DOE sees them as a valuable and sustainable resource for peak shaving applications. According to a DOE sponsored report from the Oak Ridge National Laboratory, “High utility demand charges can be reduced through effective energy management and fuel cell CHP technologies that can reduce demand for grid power. Because CHP systems operate in baseload operations, they reduce power demand during all periods. However, the reduction in peak power demand achieved by the fuel cell CHP system is important, and its value should be included in the analysis of system benefits.”
State governments are also waking up to those benefits as they look to cut costs at government facilities by reducing demand for grid power. For example, in late 2012, the Connecticut Department of Transportation flipped the switch on a stationary fuel cell that provides the Hartford bus maintenance and storage facility with 400 kW of power, about 77% of the building’s consumption. Plus, it saves nearly 3.6 million gallons of water per year. The system was provided by United Technologies Company (now ClearEdge Power), Sunnyvale, CA, and the project was funded by a $5.2 million grant from the Transit Investments for Greenhouse Gas and Energy Reduction (TIGGER) Program through the U.S. Federal Transit Administration. The 400-kW fuel cell for the state’s New Haven project is also to be funded by a $5.7 million TIGGER grant.
A combination of government grants and a PPA worked to the advantage of Western Connecticut State University. The campus recently installed a fuel cell power unit for the Science Building at the Midtown campus. Financing was achieved with a 10-year PPA between the university and ClearEdge Power. The installation was made possible by a federal American Recovery and Reinvestment Act grant arranged through the Clean Energy Finance and Investment Authority of Connecticut. The PureCell Model 400 system produces 400 kW per hour of assured electrical power, plus 1.5 million BTU per hour of usable heat.
In terms of cost savings, Luigi Marcone, WCSU Director of Facilities Operations and Environmental Health and Safety programs, says the university will pay for fuel cell generation of electricity supply to the Science Building at a rate significantly below what’s available on the power grid, yielding net savings estimated at an average of about $25,000 per year during the next decade.
Fuel cells have found favor with clean energy advocates because they use hydrogen for the energy production process, so they have very low emissions. However, the vast majority of fuel cells currently in operation start with natural gas as their source of hydrogen, and use a reforming process to extract the hydrogen. The process adds an extra step and isn’t as clean as just using pure hydrogen. One solution to this issue is to use syngas, and this is in production at an Indian reservation in California.
|Photo Credit: Caterpillar
Cat peak energy installation
The Blue Lake Rancheria Tribe of Humboldt County, CA, has launched a fuel cell project that’s integrated with a biomass gasifier and syngas purification unit. It’s the first of its kind, with the potential to double the efficiency of biomass-to-power generation. The process converts locally grown timber by-product feedstock into hydrogen-rich syngas, using pyrolysis gasification technology. The hydrogen fuels a ClearGen fuel cell system from Ballard Power Systems, Burnaby, British Columbia. The plant provides base load power for the Tribe’s commercial enterprises, and byproduct heat keeps swimmers warm in a pool at an adjacent hotel.
The Tribe will integrate the ClearGen system, biomass gasifier and fuel purification unit with support from the Schatz Energy Research Center (SERC), a research and teaching center affiliated with Humboldt State University’s Environmental Resources Engineering program. The project is supported by a proposed funding award to the Redwood Coast Energy Authority, a local-government joint powers agency, from the California Energy Commission’s Community Scale Renewable Energy Development, Deployment and Integration Program. That program focuses on technical solutions enabling communities to rely primarily on locally available renewable resources to provide electricity at competitive rates.
Such funding partnerships are the norm in fuel cell projects, as are PPA contracts, and it’s clearly a matter of paying for the high cost of the technology. According to the National Fuel Cell Research Center, University of California, Irvine, CA, in the stationary power market, fuel cells could become competitive with traditional engine technologies if they reach an installed cost of $1,500 or less per kilowatt. But currently, the cost is in the range of US $4,000+ per kilowatt. Yet, the low emissions of hydrogen fueled electricity generation remains attractive. But what if there was a traditional, low-cost reciprocating engine that could burn hydrogen fuel? As a matter of fact, there is.
Reciprocating engine manufacturer, 2G Cenergy, St. Augustine, FL, recently launched a dedicated hydrogen-fueled CHP system (it can also burn natural gas if needed). With prices of $800 to $1,500 per kilowatt for reciprocating engine CHP system technologies, there could soon be a broad range of applications for a hydrogen-fueled genset that doesn’t need to reform natural gas. Although one stumbling block is the lack of a developed hydrogen fuel supply infrastructure in North America (other than for large industrial users such as oil refineries).
Europe is far ahead of the rest of the world when it comes to hydrogen-fueled power, so it’s not surprising that 2G Cenergy’s first units are deployed at an energy station within the Berlin Brandenburg Willy Brandt Airport. The installation uses two hydrogen-fueled 2G Agenitor CHP systems, with an output currently set at 400 kW per unit (units are capable of 500-kW output). The plant functions as part of a larger hydrogen vehicle fueling project, operated by a multinational oil and gas consortium composed of the Linde Group (industrial gas supplier and hydrogen plant operator), Total (oil and gas distribution, commercial filling stations), Enertrag (renewable energy and wind turbine project operator).
Storing hydrogen safely is a major concern, and the hydrogen gas storage system used at the above-mentioned CHP plant is a breakthrough that could well find its way to North America in the near future. It’s manufactured by McPhy Energy, Grenoble, France, and uses a magnesium hydride technology for solid storage. The airport’s system holds up to 100 kg of hydrogen produced from electrolysis. This storage capability brings us to an exciting possibility. What if hydrogen could be produced from water by an electrolysis process powered by a renewable energy source, such as wind? And we’re talking about cheap wind power produced when it’s typically the most abundant, during off-peak night hours. Then the hydrogen could fuel the gensets during peak shaving periods, and the system would operate free of emissions. Actually, that’s exactly what’s happening at the Brandt Airport.
Efficient and economical energy storage has long been a problem for intermittent renewable energy sources such as wind and solar. But that problem is an opportunity for German energy and wind turbine manufacturer, Siemens. The company is deep in the development of a large-scale electrolysis system to convert wind energy into storable hydrogen. Looking beyond Germany to energy storage across the globe, this is an exciting time. According to a report from Navigant Research, in the first six months of 2013, there were 38 new advanced energy storage projects announced, deployed, or started. That brings the worldwide total to 633 energy storage projects operating or under development.
With multinational corporations such as Siemens pursuing energy storage, and engine manufacturers providing resources and advice for mitigating the high cost of peak utility rates, this is a cost-saving technology worth investigating. Moreover, using renewable and clean energy resources can satisfy sustainability goals, such as a company’s carbon footprint. All told, a peak shaving program is well within reach, and worth the effort.
Author’s Bio: Ed Ritchie specializes in energy, transportation, and communication technologies.