Keeping costs down is one task that always tops Frank Frankini's to-do list. And because he serves as senior vice president of engineering and energy operations for Equity Office—the largest publicly held office building owner and manager in the country—this task inevitably involves reducing his employer's energy costs.

That's why Frankini is enthusiastic about the latest partnership between Equity Office and Northern Power Systems.

Northern, a Waitsfield, VT–based firm that designs, builds, and installs electric power systems, is now designing and installing a grid-connected onsite combined heat and power (CHP) system at Equity Office's office building in downtown San Francisco. The project at 201 Mission Street represents the second time Northern has developed such a system for Equity Office. Northern officials earlier designed and installed a CHP system at another large Equity Office building in downtown San Francisco.

The best news about the new system, according to Frankini and officials with Northern Power, is that it will not only benefit Equity Office, but will also have a positive result on the environment. The new system will interconnect with and operate in parallel with Pacific Gas & Electric's downtown network power grid. That means that the public utility only has to handle power needs above and beyond what the onsite system can supply, reducing the building's draw on the city's overburdened power supply.

Thanks to this "green" benefit, the CHP system will help the office building qualify for California's Self-Generation Incentive Rebate, which provides cash incentives to residential and business customers who, as the name suggests, produce their own energy through the self-generation of electricity.

The key members of the partnership between Equity Office and Northern Power hope this stream of positives—reduced energy costs, environmental benefits, and government incentives—will inspire other large companies to seek out cogeneration systems of their own. When more large energy consumers do this, say officials with both companies, the strain on the country's public utilities will be lessened greatly.

For this reason, then, success at 201 Mission Street is important.

"As a large, sophisticated operating company we are interested in controlling costs and minimizing costs both to us and to our clients," Frankini said. "We have an energy policy that includes procurement, conservation, energy investment, monitoring and generation where it makes sense. We are very supportive of combined heat and power because of the positive energy effects it has on us and on the country in general. The positive environmental impacts it has on the country are very important to us."

Officials with Northern are currently in the engineering phase of the project, says Charles Curtis, vice president of the energy firm's onsite generation business unit. Once construction begins, now estimated to take place in August, the entire job should wrap up in nine or 10 months.

Once the project is done, Curtis says, it should serve as another reminder of the benefits of onsite cogeneration projects.

"There are so many benefits to a project like this," Curtis says. "There are cost savings for the host facility or customer, reliability benefits, and environmental benefits. I think as more customers see these benefits, the popularity of these projects will just increase."

The Basics

Every CHP project is different. But the Equity Office endeavor is similar to all CHP projects in one respect: It is designed to provide the San Francisco office building with improved energy efficiency.

And that's important. The building is no ordinary office complex. Located between Beale and Main streets in the heart of San Francisco's downtown financial district, the building stretches 30 stories into the sky and boasts 490,000 square feet of office space. Needless to say, it requires a lot of energy to operate, heat, and cool.

The facility is also home to several high-profile and exclusive professionals. This means that Northern officials had to design a system that wouldn't affect the way these tenants do business. As an example, Curtis mentions that Northern had to make sure that the noise from the generators running its CHP didn't intrude on the building's outside patios, where these tenants would take their lunch breaks.

"This is a class 'A' facility," Curtis says. "You have to keep that in mind when you're designing something like this."

The 750-kilowatt CHP system will run thanks to the power generated by a pair of Waukesha 375-kilowatt natural gas–fired engine generator sets. The Waukesha generators will provide power to two of the building's three electrical services. Waste heat from the engines and exhausts will produce hot water to fuel the building's heating system.

Northern officials predict that the new system, once finished, will deliver about 40% of the building's annual electricity and 90% of its annual steam demand.

As an added bonus, because the CHP will recover and use waste heat, the system's overall fuel efficiency will rise to about 80%. This easily beats the typical industry efficiencies of 40% that result from utility-produced power. This qualifies Equity Office's CHP as a "green" system.

The individual components of the system, which will ultimately consist of the two generator sets, hidden in containers, and a separate heat-recovery skid, are each marvels in themselves.

Each of the generator sets, for instance, will include a reciprocating engine generator fired by natural gas. The generator gives off four separate streams of waste heat. Two streams, one each coming from the engine's oil cooler and intercooler, are at such low temperatures that they are not useful for the project, and are instead directed to a separate radiator in the building that is located in a spill air shaft where building ventilation air exhausts.

The other two streams, though, one coming from the engine's water jacket and the other from its exhaust, are both extracted into a heat-recovery steam generator (HRSG). They then create steam for the building's low-pressure system. HRSGs during most of the year will be able to meet the steam needs of the building by themselves.

Unique Challenges

While the basics of the cogeneration project are familiar to Northern's engineers, the specifics change with each building. That is no different in this case.

In the 201 Market Street project one of the biggest challenges Northern faces is in gaining all the permits needed for it. The reason for this is largely a matter of the office building's downtown location.

The CHP system will connect to the public utility grid, of course. The challenge in this, though, is that the public grid is set up in different ways in different locations, Curtis says. In the suburbs, for instance, the utility relies on a radial grid. This grid features a central generation plant with poles and wires expanding in radial lines from that source. Because of this setup, a problem with a facility that has connected its onsite generating system to the grid is less likely to impact the grid's other customers.

In downtown, however, the public utility is almost always a network grid, Curtis says. In this setup, all buildings are connected to the grid on loops. If there is a problem related to a facility's onsite generation system, then, it is far more likely to affect other utility clients, Curtis says. The facilities connected to this grid also usually happen to be a public utility's most demanding customers—high-rise office buildings filled with lawyers, doctors, and other professionals.

"For these reasons, it is a much bigger deal to allow co-generators to connect to that downtown grid," Curtis says.

Northern already made history last year when its previous project with Equity Office, the One Market Street office building also located in downtown San Francisco. That 1.5-megawatt cogeneration system was the first such system to connect to the Pacific Gas & Electric downtown network grid.

Gaining the permits for that project, though, proved to be no easy task. It took Northern officials, in fact, about six months to accomplish it.

"It is very difficult to gain the acceptance and trust that our system will perform in their tolerance levels and never disrupt their network grid," Curtis says. "Our new system will connect to the network grid, too, with essentially the same design. I'll be curious to see if it will still take six months to gain permission the second time around. I don't mean to disparage the public utilities in any way by this; they have a very good reason to want to protect that grid."

To gain acceptance, officials with Northern will probably use the same strategy they used in obtaining permits for its One Market Street project: They'll prove that their onsite system will perform every bit as capably, if not more so, than the public utility's system.

"Last time we were able to demonstrate that we could meet and exceed any of those requirements," Curtis says. "For us it was a long process of sharing detailed design drawings. We ran through every fault scenario under the sun and explained how our system would react to these events. We proved that we wouldn't impact their equipment. It was a rigorous process, but we did earn a permit to operate in parallel with the utility."

The Benefits

Officials with Equity Office chose to pay for its cogeneration system for several reasons. The main one? It will provide the company with some control over always-slippery energy costs.

Energy costs are constantly fluctuating in California. These fluctuations can play havoc with a company's yearly budget forecasting. Thanks to its cogeneration facilities, though, Equity Office will enjoy greater control than its competitors over energy costs.

"I think more people will go this route in the future," Frankini says. "I think it's a natural result of the deregulation, for one thing, that has swept across the country. Then there are the higher energy prices you are seeing across the country. More companies are going to want to get firmer control over these prices. At the same time, there is the desirable benefit of improving the environment. I think this whole concept will sweep across the industry more and more."

The statistics seem to back up this claim. The US Combined Heat & Power Association says that since 1980 about 50,000 megawatts of CHP capacity have been built in the United States. That is a good start. But CHP accounts for only 7% of electricity generation in the United States. The systems, though, have achieved far greater market penetration in other countries. For instance, CHP accounts for almost 60% of electricity generation in Denmark.

Curtis agrees with Frankini's assessment that more companies and building managers will add CHP systems to their facilities. He points to three factors that he says will fuel the growth of CHP: cost savings for the host facility or customer, reliability benefits above those provided by existing utility grids, and the environmental benefit.

Being a realist, Curtis admits that the first two reasons are far more important, so far, than the third.

"I think first and foremost, our clients are looking at this as a cost-saving opportunity," he says.

This is true in two main ways, Curtis explains. First, energy costs are rising across the country. Curtis points to California as an example; energy costs here have increased 60% during the past four years.

"If you are an industrial plant where power is a major part of your cost structure, you start looking for solutions fast," Curtis says.

Not only has the cost of electricity, gas, and steam gone up, these costs have been extremely difficult to predict from one day to the next, Curtis says. This can make it nearly impossible for large industrial customers, who often are paying anywhere from $4 million to $6 million a year in energy costs, to create a realistic energy-costs budget.

Customers who do turn to CHP systems are being proactive in dealing with these twin challenges, Curtis says. Cost savings from such systems are hard to estimate; figures depend on such factors as how much electricity companies use, when they use it, and during what time of day they hit their peak usage. But in California, Curtis says, companies can reduce their energy costs by 25%–40% on average by turning to cogeneration systems.

Improved reliability is a second major factor fueling the growth of cogeneration, Curtis says. Large power outages, like the much-publicized one that hit the East Coast in August 2003, can play havoc on a company's production. Those outages, though, don't happen often. What is equally challenging to some clients, Curtis says, are the slight flickers or voltage sags that hit the grids of public utilities far more frequently.

Companies that run sensitive equipment or computerized systems that oversee production lines are extremely susceptible to these power sags and fluctuations. These sags, in fact, can completely shut down a computer-guided production process. And in many instances, restarting the process can take several hours. The result, of course, is a major loss of productivity.

Clients running their own cogeneration systems, though, do not have to worry about the reliability of their public utility's power grid.

For instance, Northern has developed a cogeneration system for a bottling plant in Northern California that had been experiencing three to four power lags every month. The plant pasteurizes juices; when its production line shuts down, workers have to throw out an entire batch of juice, rinse out the bottling lines, and start over with a new batch. This process results in a loss of four to six hours of production. When it happens three to four times a month, the lost production begins to show up in a company's bottom line. The plant's onsite generation system is designed to keep those bottling lines up and running during every brief power sag.

"There is a growing concern among customers that they should not be wholly reliant on the utility grid," Curtis says. "The public utility grid is wonderfully reliable. But companies can enhance that reliability with their own power generation. That can be a very attractive benefit. As there are more events like the August 14 big blackout last year, customers are starting to calculate the cost of downtime on their operations. In the old days they happened so infrequently no one figured how much they cost. Now, as outages become more of a fact of life, people are starting to calculate that cost."

The final reason for cogeneration's growing popularity, what Curtis calls the "green factor," is definitely the least important in persuading companies to move to CHP systems. But, Curtis adds, this reason is steadily growing in importance.

"There is more publicity and awareness around global warming," Curtis says. "As states are working to regulate emissions more closely and tightly, more companies will look at standard cogeneration systems."

While the factors of cost savings, reliability, and environmental concerns each vary in importance, all three are critical in persuading customers to turn to CHP systems, Curtis says. For this reason, proponents of cogeneration are unlikely to stop promoting any of these benefits.

"It is very hard to sell one of these projects based on just one of these three factors," Curtis says. "You really need two of the three as far as customers go. If the only benefit you can pitch is that a project is good for the environment, that won't be enough, especially if the cost of the project is three times more than what the customer is already paying. Or if you can point to increased reliability but the cost of the power is through the roof, that won't work either. You need at least two of these benefits to truly convince customers that cogeneration is a good option for them."

The good news, then, for proponents of CHP is that it appears more suppliers are doing just that.

DAN RAFTER is a technical writer based in Chesterton, IN.

DE - September/October 2004