Dan Rafter 2017-11-16 12:48:16
The Lotte New York Palace hotel in midtown Manhattan is a sprawling place, boasting 813 guest rooms and 86 suites, in addition to 22,000 square feet of meeting and event space, a spa, and a fitness center. For years, the hotel was powered using city steam, the most expensive fuel source in New York City. But in 2013, the hotel’s management decided to save some money. So the Lotte began working with RSP Systems—a distributor for Capstone—and its local utility on a new onsite power generation option. The solution? The hotel installed a combined cooling, heating, and power system—better known as a CCHP system—designed and developed by RSP Systems. The goal was to reduce the hotel’s overall energy costs and increase its energy efficiency. The hotel’s microturbines are divided into two banks of six, with each set of microturbines displacing the load on a separate utility service. The integrated combined heat and power portion of the system is made up of 12 65-kilowatt (kW), dual-mode Capstone microturbines with integrated heat exchanger modules that provide up to 780 kW of gross electrical generation capacity, including backup power. The results of this installation have been impressive. The CCHP system has reduced The Lotte New York Palace Hotel’s carbon footprint by 481 tons per year by recapturing the thermal energy it produces, and then using that heat onsite. The system has also reduced the building’s operating expenses and its reliance on the grid. The Lotte hotel isn’t the only smaller commercial building that has benefitted from the installation of a CHP system. There was a time when these combined heat and power systems were mostly found to reduce the energy costs of large-scale industrial facilities. Today, the owners of smaller commercial facilities, hospitals, data centers, and university buildings are investing in CHP systems to reduce their energy bills and to make sure that their power won’t fail when the public grid does. This trend toward smaller-scale installations is fueling a new round of growth in the CHP market, say the manufacturers of these systems. And it’s a trend that is showing no signs of slowing. James Crouse, executive vice president of sales and marketing with Capstone, says that the CHP market continues to grow. The reason for this growth? In part, building owners, manufacturers, and distribution companies are getting more creative about how they set up CHP systems. “The opportunities in this market are growing,” says Crouse. “You do have to educate people on the benefits of CHP; that hasn’t changed. But we are seeing a lot of building owners finding new and creative ways to employ CHP technology.” Manufacturers and their distributors are working closely to meet the evolving needs of building owners, says Crouse. And Crouse says the days of one-size-fits-all CHP systems are disappearing. He believes that this evolution will only continue as more building owners turn to combined heat and power as a way to reduce their energy bills and save money. “The CHP industry is reaching more customers today—all types of building owners,” says Crouse. “We are working with the owners of commercial buildings, industrial-type buildings, all types of buildings. We are finding ways to reach them with solutions that meet their needs. As the business grows, we’ll see even more of these interesting, creative ways to meet their onsite energy needs.” Education remains key for CHP manufacturers, though. There are still plenty of building owners that don’t understand what CHP is, how it works, and how it can save them significant amounts of money each year. Crouse says that companies like Capstone are spending more time today on efforts to educate these owners. Distributors of CHP systems and equipment are out everyday calling on end-users, says Crouse. They talk with these building owners about the benefits of CHP, how easy the systems are to maintain, and how effective they are in slashing energy bills. “A lot of this work is missionary in nature,” says Crouse. “Until you have an opportunity to meet with business owners and building owners, you don’t know if they have the desire to look for a solution to save money and reduce their emissions.” Crouse says that the increasing desire for companies to achieve independence from the public grid and to set up their own microgrids has also provided a boost to the CHP business. But again, there are too many possible customers that don’t understand how CHP systems can help them establish a microgrid of their own, says Crouse. “Today, customers who are interested in a resiliency solution or a microgrid don’t always understand how CHP can be an anchor or base load for that resiliency or that microgrid application. It’s our job to educate them about this possible use of CHP. It’s our job to add that to the discussion around CHP.” Of course, while energy independence and the goal to become greener are often key reasons why companies and building owners turn to CHP, the main driver for the industry’s growth continues to be cost savings. Building owners and companies are looking at any way possible to reduce operating costs. CHP systems, which reduce the amount of energy pulled from the public grid, can help companies achieve this basic goal, says Crouse. “The primary driver for almost all of our projects is economics,” says Crouse. “Companies are looking for ways to reduce their energy costs. But depending on the corporate culture, mandates, or other factors, there could be other reasons for a CHP installation.” Some companies do want to reduce their carbon footprints, and turn to CHP as a way to do this, says Crouse. Others are seeking increased power security. “These are all becoming secondary drivers,” says Crouse. “Almost always, though, the primary driver is saving money on the energy bill—saving enough money to justify the investment in a CHP installation.” Microgrids have become hot topics, as a growing number of bigger users, like cities and states, rely on them to gain energy independence for some of their most important facilities and buildings. The term is used fairly broadly, but in general, microgrids are—as the name suggests—extremely small, independent power grids, usually generating from 30 to 100 kW of energy. The facilities that are connected to microgrids use these private, independent grids as a way to create power security. The grids can be connected to the public power grid. but if there is a power outage, the microgrids can operate on their own. This decreases the reliance on aging public power grids. There is plenty of flexibility inherent in these power producers, as microgrids are often made up of a variety of energy sources—often renewables. Some microgrids might rely on microturbines with wind and solar power added to the mix. There is usually an energy storage component, too, that is often a single battery or an entire bank of them. More municipal and state sources—and even private companies—are exploring the benefits of microgrids, says Crouse. This isn’t surprising. The US Department of Energy says that the US experiences more power outages each year than any other country does in the developed world. Microgrids provide a backup power source, should the public power grid go down. Microgrids can save users money, too. This is a particularly important benefit for private users such as databanks, distribution facilities, hospitals, and universities. With a microgrid, private users can exert more control over the amount of energy they consume. Then, there are the environmental benefits. Microgrids rely heavily on renewable forms of energy. Users that invest in them are interested in becoming greener and making less of a negative impact on the environment. “There is a lot of activity today around microgrids,” says Crouse. “Cities, states, utilities—they are all looking at ways in which they can take out loads from critical facilities such as police stations, fire stations, civic offices, and hospitals. They are looking at different ways to fit them onto a controllable microgrid.” Crouse says that the growth of microgrids is providing another boon to the CHP industry. That’s because users can use CHP systems as a key component of these miniature grids. Crouse says that utilities, municipalities, and private users need to find a source of prime power for their microgrids. CHP systems can serve as the anchor or baseload for the microgrid, becoming the prime power source. “When you combine the additional technologies—the solar, battery storage, small-scale wind—into the mix along with the CHP system, you are creating a reliable, efficient form of power generation,” says Crouse. There are statistics showing that the popularity of microgrids is growing. Crouse has seen plenty of anecdotal evidence, too. A growing number of Capstone’s customers are investigating microgrids and are interested in installing CHP systems as part of them. “We are seeing more clients interested in projects involving microgrids,” says Crouse. “People are calling us up to ask about microgrids and the role CHP can play in them. The clients we are working with are trying to determine how to put their buildings onto a microgrid in the most efficient, reliable way possible.” Lidija Sekaric, director of strategy and marketing with Siemens, says that there has been a significant uptick in the demand for onsite energy generation in general. That demand has helped boost the CHP industry, too. The good news? Sekaric and other distributed generation experts expect this demand to rise in the future. And this bodes especially well for CHP systems, which Sekaric says are experiencing an especially big increase in demand today. “The largest growth has been CHP systems themselves,” says Sekaric. Demand has been especially strong for CHP technology to be used in smaller-scale systems, those generating below 500 kW of power, says Sekaric. “When we are looking at onsite systems today, there are many options. There is a wide array of solutions. It’s not just large systems that building owners and companies are looking for today,” says Sekaric. “Many customers are looking for smaller-scale systems that will meet their needs.” What is behind the growth in onsite energy in general and CHP systems in particular? Sekaric points to four driving factors. First, there is cost reduction. Sekaric says that users always want to reduce their costs. This is the main driver that inspires them to investigate CHP systems. But Sekaric says that other factors matter, too. Some companies are looking for more resilient power systems, so they turn to CHP and onsite generation to provide it. Others are focused on reliability. They want power that they know is always going to be available to them. Finally, some users have a more altruistic goal: they want to reduce their carbon footprints. Sure, they probably enjoy the cost savings and increased reliability of CHP systems, too. But they also want their buildings and facilities to make less of a mark on the environment. Sekaric says that CHP systems used in smaller-scale settings are especially effective in helping users meet all four of these goals. Consider cost reduction. “CHP systems increase the efficiency of energy use in general,” says Sekaric. “With a CHP system, you can go upwards of 80% efficiency rather easily. That will come out to a huge amount of energy savings for users.” Today, building owners have more options when it comes to installing CHP-powered systems. This is a recent change. In the past, Sekaric says, CHP systems tended to rely on turbines that had been developed for large-scale energy generation. These put out a lot of power and heat. Now that the technology behind CHP equipment has evolved, manufacturers can offer more efficient and less expensive CHP options. They scale systems so that they are a better fit for smaller users such as hospitals and data centers. “All of the manufacturers in this industry are expanding this way,” says Sekaric. “We are all offering a wider variety of products today.” CHP systems are becoming less expensive today, too, which is more good news for building owners. Sekaric says that technology has improved enough to where it costs less to manufacture the equipment that makes up a CHP system. This means that the systems themselves cost less today than they did, say, five or 10 years ago. At the same time, the cost of natural gas has dropped, too. This makes fueling CHP systems a less costly proposition. And this is the just the start, says Sekaric. She expects the cost of operating CHP systems to continue to drop. That’s because the makers of these systems are working on boosting their fuel flexibility. The goal now is to allow owners to rely on more than one type of fuel to power their CHP systems. “This is something that OEMs are working hard on today,” says Sekaric. “Maybe owners would like to use landfill gas that might power a CHP system for a time. The OEMs are working to make sure that this can happen in the future.” Like Crouse, Sekaric says that the CHP industry has a responsibility to promote the benefits of these systems. That’s the most effective way for manufacturers to boost the number of building owners installing combined heat and power. “It is inevitable that a facility manager overseeing a large complex of buildings would have encountered or even operated or replaced a CHP system,” says Sekaric. “But now CHP systems are trending toward smaller-scale uses. Because of this, there is a need for more education. The industry must educate the owners of these smaller facilities on not just what CHP systems are, but how flexible they can be, and the variety of systems that are now available. They have to inform potential new users that these systems can do heating, cooling, and power production.” It’s important for manufacturers to help educate potential users, too, on what types of situations make the best fit for a CHP system. After all, not every building or facility will benefit economically from having a CHP system. There are several key questions building owners should ask when determining whether a CHP system works for them. For instance, they need to look at how much they are already paying for electricity. Are their electric bills low? Is natural gas cheap? After all, the cheaper the gas, the more economic a CHP system would be. Building owners also need to look at what their load profile looks like. Sekaric says that the owners that benefit from CHP systems the most have a relatively high thermal and electric load. They need to look at whether that electric load is constant or whether it varies during the day or night. Anne Hampson, principal with consulting firm ICF International, knows that big changes have hit the CHP market in recent years. She leads the CHP group in ICF’s Distributed Energy Resources practice, and has more than 15 years of experience in market and policy analysis in the areas of industrial energy efficiency, distributed generation, and combined heat and power. Hampson, then, has studied the CHP market closely. She’s seen the same trend identified by Sekaric, a movement toward smaller-scale CHP installations. “Back in 2002 when we were looking at the CHP market, we found that most CHP systems were installed in large industrial facilities,” says Hampson. “Users faced different issues back then. After about 2005, things started to change. There was a fairly drastic change in the market. We shifted from large systems to having a greater number of smaller systems go in.” Hampson says the shift wasn’t a quick change. She compared it to the movement of a ship slowly changing direction. Though, the trend toward smaller installations has grown more pronounced during the last seven or eight years, says Hampson. “It’s now a fairly consistent movement in the sector,” she says. “There’s been a movement toward installing CHP at smaller commercial facilities rather than just in large industrial buildings.” Why this change? Hampson says that the large-scale industrial facilities represented the low-hanging fruit for CHP systems. Today, technology has advanced enough so that it’s easier for users to install smaller systems into buildings that don’t have as large of a footprint. The systems are also more affordable, making them less of a financial burden for smaller facilities such as offices, hospitals, and data centers. “With some of the tech advancements, they are more accessible for smaller places like hotels and hospitals,” says Hampson. “It’s been a big change from having them accessible to just large-scale facilities such as chemical and paper plants.” Convenience has become a trend in the CHP world, too. Hampson says that ICF is seeing a rise in packaged CHP systems. These smaller systems tend to generate under one megawatt of power. They are easy to install in facilities smaller than most industrial locations. “Having the CHP prime mover, the generator, and heat recovery equipment all packaged together makes for a much easier system to buy and put into place,” says Hampson. “These packaged systems have been enjoying a lot of success. We’ve been seeing the demand for these growing significantly.” Such packaged CHP systems are more common in Europe, where CHP systems in commercial and industrial buildings are far from a rare sight. Hampson says that European companies are now eyeing the United States as a ripe market for packaged technologies. “They are selling a lot of systems today,” says Hampson. “The scalability of the technology has changed the market and the future outlook of the CHP market, too.” US companies and building owners considering CHP systems will always be inspired by cost savings, says Hampson. But Hampson says that a growing number of users are now choosing CHP because they are worried about the resiliency and reliability of the public power grid. This is especially true along the East Coast and in the Northeastern part of the US. Hampson points to Hurricane Sandy. That storm didn’t just cause power outages, it caused outages that dragged on for a significant amount of time. This caused municipalities and commercial users both to ponder the importance of resiliency for critical facilities such as hospitals, says Hampson. When it comes to resiliency and reliability, CHP systems are a better option than generators, says Hampson. Building owners often forget to test their generators on a regular basis. Then, when they are needed, they might not run. “Often, generators don’t function like they are supposed to. CHP operates all the time on a consistent basis,” says Hampson. “In the case of an emergency, it is more likely that CHP will be there, will function. CHP systems aren’t just tested for a couple hours every month or a few months.” Hampson predicts that the CHP market will only continue to grow in the coming years, but that this growth will be a different type than in the past. There is still a place for large-scale CHP systems in industrial facilities, of course, but smaller-scale systems will continue to eat up a greater share of the market, says Hampson. And with the growth of pre-packaged CHP systems, this trend will only accelerate, she says. “There is enormous economic potential in these smaller-scale, packaged systems,” says Hampson. “That is definitely a trend to watch.” DE Dan Rafter is a technical writer and frequent contributor.
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