By: Peter Rowles
To steal a quote from the famous playwright William Shakespeare, “To be (a power generator) or not to be (a power generator) – that is the question.”
In my early career, I had some success with selling and installing advanced energy systems such as industrial heat recovery heat pumps, condensing heat exchangers, thermal storage and geothermal heat pumps. I also completed studies on low head hydro, biomass, cogeneration and district heating systems. Many good applications were found for these technologies and over the years there have been many government and utility incentive programs for them. These systems can create significant energy savings and reductions in greenhouse gas emission. However they are complex to design, build and operate, as well, are very expensive.
In many cases, these systems provide an alternative energy source for the end user. In essence, the end user becomes his own energy supplier or power generator. Before making the decision to move down this path the end user has to decide what business am I in? If my company is an industrial, commercial or institutional enterprise does it really want to become a power generator?
The US Department of Energy describes Distributed Energy Resources (DER) as energy generation and storage systems placed at or near the point of use. If implemented properly, these systems can provide the end user with greater reliability, adequate power quality, lower emissions and in combined heat and power (CHP) applications, improved efficiency. Beyond the direct benefits, DER can allow the end user to participate in competitive electric power markets. From a utility infrastructure perspective, DER has the potential to mitigate transmission congestion, control price fluctuations, strengthen security, and provide greater stability to the grid. This is why many utilities and governments support these projects as a means of resolving larger system problems.
Distributed energy encompasses a range of technologies including fuel cells, micro turbines, reciprocating engines, and energy storage systems. Renewable energy technologies—such as solar electricity, solar buildings, small-scale hydropower, geothermal, biopower, and wind turbines—also play an important role.
The non-renewable on-site generation technologies usually rely on natural gas as a fuel source. The costs to implement these systems range from $300 to $1,100/ kW for conventional engines and turbines up to $10,000/kW for fuel cells, which are still considered developmental. The cost of electricity produced by these systems is dependent on the cost of gas, system efficiency and operating and maintenance costs, but generally runs in the range of $0.10 to $0.15/kWh.
From the end users perspective, these technologies are good for peak shaving, emergency power generation or for offsetting electricity demand when purchased electricity rates exceed these levels. If waste heat can be recovered from these systems and used to produce usable heat for space or process needs, then the overall efficiency of the systems can improve to the point where it is economical to run them on a continuous basis to supply end-user energy demand. In these cases, there can be significant direct and indirect greenhouse gas emission reductions.
For renewable energy technologies, the implementation costs can be significantly higher in the range of $4000 to $10,000 per kW. When the Government of Ontario announced the launch of a Feed-in Tariff Program, renewable energy projects became a desirable subject. The FIT program offers incentives of up to $0.80/kWh and includes renewable energy sources, wind, waterpower, renewable biomass, bio-gas, landfill gas and solar. Implementing renewable energy technologies can displace non-renewable energy consumption and provide significant greenhouse gas emission reductions.
Regardless of which type of distributed energy system the end user selects, he will ultimately become his own energy supplier. Becoming your own energy supplier requires a level of operation knowledge and sophistication, which may be beyond most end users. Granted, many engineers dream about big power projects that will serve as a lasting monument to their technical abilities, however, the decision to embark on these projects has to be taken within the context of the company’s energy management plan.
A good energy management plan, as previously discussed will consider large capital projects only after other operational and retrofit opportunities have been implemented. This will help to avoid over sizing distributed energy system. If at this point, it is found that these systems still provide benefits to the end user, I would suggest partnering with a company that will share in the cost and benefits of designing, building and operating a system that meets the end users objectives. This will allow the end user to reap a portion of the benefits consistent with the energy management plan and not lose focus of what business they are in. As Theodore Roosevelt once said, “Keep your eyes on the stars and your feet on the ground.”
If you already have a distributed energy system in your facility, you may have the opportunity to participate in Demand Response programs. This is a topic, which I will discuss, in the next article.
Peter is entrepreneurial energy engineer with over 20 years of experience in the energy industry. Peter is a principal at ICF Marbek.