Cogeneration Systems Offer Benefits to Owners, Developers
July 07, 2006

By Staff
Appeared in Real Estate Weekly

With energy costs rising, it may be prudent for owners and developers to take a good hard look at the benefits of a cogeneration system for a new or retrofitted commercial office building.

Cogeneration systems offer a host of advantages, enabling an owner to gain a degree of energy independence, while improving power quality, reliability and lowering overall costs.

Simply put, cogeneration is the simultaneous generation of electric power and useful heat that can be used to power, heat and/or cool a building or industrial facility. It has been most prevalent in large-scale applications, used to generate energy for industrial complexes, college campuses, hospitals and commercial buildings in campus-like settings, where there is considerable power and thermal demand. However, as the technology improves-compact and modular and therefore cheaper to install--cogeneration is gaining in popularity for use in high-rise commercial office buildings.

Cogeneration can be a fully self-reliant energy source, generating enough electric power onsite for the entire building, while capturing the waste heat from the generating equipment usually a gas reciprocating engine, combustion turbine, micro-turbine or fuel cell. The recovered waste heat is "free energy" which can be used for space heating, domestic hot water, and space cooling.

In many instances, cogeneration can enable an owner of a commercial office building of 500,000 s/f or larger to realize as much as 35% savings in overall energy costs. Determining the economic feasibility of a cogeneration system requires an analysis of the electric and the thermal load profile of the facility. An engineering firm with experience in the field of cogeneration applications, is the best source for performing an evaluation specific to your site needs.

A number of factors come into play when assessing whether cogeneration makes sense for a particular commercial facility. The first is whether a building has a reasonably high electric load and a high number of operating hours. The second factor is whether there is an adequate thermal energy need (heating, cooling) that would coincide with the electric demand of the facility.

It is important that the thermal load profile closely follow the electric load profile so as to make maximum use of the waste heat energy from the cogenerator.

Another element that comes into play is the building's cost for purchasing electric power and fuel (e.g., natural gas and oil). The difference in the cost of purchasing electric power and fuel is analyzed to determine what is called the "spark spread."

The spark spread is the difference in cost between electrical power and fuel. The larger the "spark spread," the greater the likelihood a cogeneration system will prove to be economically viable.

With new construction, it makes sense to evaluate the viability of a cogeneration system in the early design phase in order to determine if it offers major economic advantages.

Once an anticipated energy profile for a new building is established, a lifecycle cost analysis can be performed to determine if a cogeneration system makes economic sense. If it does, the optimum system size and configuration can be determined to maximize energy efficiency. The average lifecycle of cogeneration equipment is about 20 years.

For those owners and developers who wish to consider cogeneration, there are grants available through the New York State Energy Research & Development Authority (NYSERDA) that offer up to $100,000 for technical assistance to do a study to evaluate cogeneration.

In the past, NYSERDA had programs that provided up to $1 million to implement cogeneration. Owners and developers should check with NYSERDA on current incentives.

In some areas, utility companies might offer rebates as well. And there may be tax benefits associated with sustainable buildings programs from local and state entities.

For owners and developers of commercial office buildings, a cogeneration system may be the solution needed to offset rising energy costs. In today's economy, cogeneration can potentially deliver greater energy independence in a time of energy price volatility.