Whitepaper: 01.15.2015

COGEN Gains Popularity

Currently, Texas is the American leader for energy production and consumption as recorded by the U.S. Energy Information Administration (EIA), and the state is also the leading importer and refiner of oil and gas products. With more than 102,000 Texans employed in the renewable energy sector and thousands more working in related fields, the state ranks second nationally for employment in an industry that continues to grow. Additionally, the Texas government has contributed millions of dollars to several state-mandated projects to continue energy research and growth, ensuring Texas remains a leader in energy production and innovation.

Starting as recently as 2001, the U.S. Environmental Protection Agency (EPA) began an initiative to encourage companies to become more energy efficient and protect the environment from harmful energy-generation practices. The EPA initially created a partnership between the government and 17 corporations to employ the use of combined heat and power (CHP) to produce necessary energy on commercial campuses. Over time, more corporations, hospitals and institutions have implemented this method of generating electricity to become more environmentally friendly as well as cost efficient.

This CHP method, also known as cogeneration (COGEN), has the capability to reduce carbon dioxide emissions significantly, with annual energy savings equating to 19 million barrels of oil. Studies have found that by increasing COGEN’s total U.S. electricity generation capacity to 20 percent by the year 2030, the method has the ability to lower U.S. greenhouse gas (GHG) emissions by 600 million metric tons of carbon dioxide, or the equivalent of removing 109 million cars from our roads.

With electricity production methods other than COGEN, a certain amount of energy is discarded as wasted heat. For example, thermal power plants produce heat during electricity generation, which is then released back into the environment. In contrast, COGEN takes some or all of this leftover heat, either keeping it close to the plant or using it as hot water, to create more electricity than originally produced. The leftover heat is actually reused to continue the process of generating electricity.

COGEN currently accounts for nearly 12 percent of total U.S. electricity generation. Texas, home to one-fifth of all U.S. COGEN structures, is leading this trend with a total of more than 17,000 megawatts (MW). Each individual structure can range anywhere from 30 kiloWatts (kW) to 250 MW, depending on the installment of turbines including gas, steam or microturbines.

Many owners are opting to invest in these utilities due to the long-term benefits of COGEN energy methods. As a result, contractors have adapted planning and construction methods to anticipate and react to the challenges that come with building these facilities.

Utilizing COGEN for the VA
McCarthy’s Texas Division recently completed a CHP/COGEN project at the VA Dallas Medical Center for the U.S. Department of Veterans Affairs (VA). While McCarthy has built other major healthcare facilities for the VA, this $23 million project was the company’s first stand-alone CHP/COGEN project in the VA’s nationwide renewable energy program.

This design-build project required the construction of a new electrical building and turbine shelter and the installation of a 5 MW, natural gas-fired turbine with a dual-fuel fired Heat Recovery Steam Generator (HRSG) in the existing boiler house. It also included the installation of a natural gas compressor, Selective Catalytic Regenerator (SCR), a 15-kilovolt paralleling electrical switchgear and black start generator, and modifications to the existing 15-kilovolt electrical distribution system. The project’s main functions include providing a renewable power source, the efficiencies of COGEN, and enhanced energy security at the VA Medical Center.

Planning for and Delivering a COGEN Project
While COGEN projects are more energy and cost efficient, owners must be aware of the extensive time it takes to actually receive the parts for a COGEN system and the time it takes to install them. With the considerable equipment required for a COGEN system coupled with an intensive delivery process, there is a risk of an increased construction timeline of several months. To avoid delays, owners should look for a knowledgeable, experienced design-build contractor to manage all aspects of a COGEN project, from preplanning to design and purchase, delivery and installation of the equipment.

While COGEN is a viable solution for many energy needs, these systems are major investments for an owner looking to install one. COGEN systems can cost upwards of 40 to 50 percent of the overall contract value of the building process. For example, the cost of a 50 MW gas turbine COGEN system might amount to $45 million, with a construction timeline of six to 18 months. A 1 MW COGEN system that might be used for a hospital may come with a price tag of $1.6 million. Although the initial cost is high, the long-term benefits of the systems are realized in overall energy cost savings.

Many COGEN systems maintain a connection to the utility grid for power needs beyond their own abilities and for planned or unplanned blackout or brownout times, but they primarily operate on their own to create electricity. The Texas designated electricity system, or the “Texas Interconnection,” is operated by the Electric Reliability Council of Texas (ERCOT). Texas, separate from the rest of the nation, is the only mainland state with its own grid.

During times when commercial properties can afford to be off the grid and to run on their own COGEN systems, ERCOT will buy back unused electricity from the corporations employing COGEN systems during times of peak energy use. Over time, the payout from ERCOT can be significant, and systems can even start paying for themselves.

With COGEN systems becoming increasingly popular, owners need to determine not only the cost-saving benefits, but also identify a contractor with the experience to design and install these complex systems, all while maintaining the budget to ensure the benefits of a COGEN facility are fully realized. An experienced contractor can help owners decide if a renewable energy source such as COGEN is the best fit for their facility, evaluating both the up-front capital costs and long-term savings. McCarthy continues to work with clients to incorporate COGEN systems into projects and is constantly looking for innovative ways to make the planning and construction process seamless, more efficient and cost effective.

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