Legal Perspectives: Emergency Generation in High-Rise Residential Buildings
Access to upper floors presents similar problems for residents unable to negotiate flights of stairs. The author recalls struggling to carry a 92-year-old woman up fourteen flights of stairs with the building superintendent during a power outage in his residential building. In retrospect, it is easy to conclude that this is an impractical and hazardous means of transportation. Sudden loss of light or non-operation of security systems can also cause serious problems. Failure to supply electricity or to adequately prepare for a loss of electricity can subject building owners, whether tenants or shareholders/residents of cooperative apartments, to liability for injury or property damage.
The lease is the basic contract that governs the relationship between owners and tenants. In cooperative apartment buildings, the contract is called a proprietary lease. Such a lease may require the owner to provide elevator power, common-area lighting, heat, and other life-critical services. Some jurisdictions, New York City for example, also impose code requirements relating to the provision of heat and light in common areas. There have been lawsuits regarding to a building’s failure to provide security in the form of lighting or take other measures. In these circumstances, a blackout is not an excuse for failing to provide lighting when emergency options exist.
Multi-family residential buildings might consider an emergency generator. An emergency generator can, in certain instances, be used to produce income for enabling a building to participate in independent system operator programs. Such a generator, however, is not intended to meet day-to-day electric needs and does not provide thermal energy.
Operators of high-rise residential buildings should consider cogeneration, which produces both electrical and thermal energy, as another alternative. A cogeneration system is typically sized to meet a building’s thermal load in and not its electric demand, since it is unlikely that a building’s thermal needs would justify cogeneration units sized to meet its peak electric demand.
The reliability provided by a cogeneration system depends upon the type of system installed. A system that has black start capability (called a synchronous unit) can operate independently of the utility system and can be set up to feed certain key circuits in the event of a blackout. Other types of cogeneration systems, called induction units, are generally less expensive and are only able to operate when excited by the utility distribution system.
Synchronous cogeneration systems can be operated side-by-side with emergency generators to supply all of a building’s electricity needs during a power outage. Utilities in large cities may restrict the use of synchronous cogeneration, so part of any analysis of a potential cogeneration system is to understand the utility interconnection requirements and the related state regulatory agency rules as to interconnecting cogeneration units. Depending upon the size of the cogeneration unit, the building may also have to enter into an interconnection agreement with the utility.
Cogeneration provides both thermal energy (space heating/cooling, dehumidification, water heating) and electricity. By capturing the thermal energy and recycling it for the heating and cooling needs of the building, cogeneration substantially increases the efficiency of generation resulting in lower fuel needs, lower emissions, and reduced energy bills.
Multi-family buildings typically decide to install cogeneration systems when a boiler needs to be replaced, the building desires to air-condition one or more common areas, or the building perceives an opportunity to save money on energy. Sometimes the installation helps a building meet one or more of these goals. Cogeneration systems may be eligible for subsidies or tax breaks.
For residential buildings, cogeneration systems can be especially efficient and practical. Multi-family residential buildings tend to have favorable load curves, meaning that they typically have reasonably level electric load curves every day, aside from energy consumption peaks on weekday evenings, when people return home from work.
Noise is another consideration when placing cogeneration units. These systems are not typically loud, but they do make noise and are often placed inside insulated cabinets. Cooling equipment located outside the building utilizes fans that can also produce sound, but slow-turning fans minimize the problem. Some building owners have dealt with cogeneration noise by constructing rooms out of cinderblock within boiler rooms, specifically to house the cogeneration system.
Unhappy residents can be very vocal about noises such as the high-pitched sound produced by microturbines or produced by the fans. These noises, however, can generally be readily mitigated. While it is necessary to meet the city codes, buildings may also want to establish a decibel limit measured within apartments near the cogeneration facility.
It can sometimes be a challenge to find a place to install the cogeneration system. While these units do not typically occupy a substantial space, the space they need is often in short supply in large city high-rise residential buildings where no option exists to put the units outside. Many buildings choose to install cogeneration systems in basement boiler rooms, but they can also be placed on rooftops, setbacks, or even in generator sheds located adjacent to or near the building.
The decision to purchase, lease, or own units should be carefully considered and depends on a number of factors. In light of the capital-cost incentives and other financial benefits, multi-family residential buildings typically purchase the cogeneration system equipment. The design, purchase, installation, operation, and maintenance will require either a multi-part agreement or several agreements. It is desirable, to the extent possible, to contract with the same company to provide all of the services except for the design services. We recommend that the building contract with its own engineer to prepare specifications, assist with the selection of the cogeneration company, and handle such matters as dealing with the utility for interconnection purposes with the utility distribution system.
Buildings may also want to consider black-box arrangements in which a cogeneration company installs and operates the cogeneration system in the building, at the company’s expense, and sells electricity and thermal energy to the building at agreed-upon rates that may be fixed or variable based upon utility rates.
Cogeneration systems must by sized and controlled properly. In a real-world example that occurred a number of years ago, a cogeneration system was interconnected and sized to meet a significant portion of the building’s electric demand. The units were set to run on full production and “follow the load” when an anticipated control system was not installed initially. On occasions when the building’s power demand fell below the amount of power being produced by the cogeneration system, electricity flowed to the utility distribution system. The meter was not set up to run “backwards” (net metering); therefore the building was essentially providing electricity to the local utility free of charge.
It is also necessary to consider the local utility tariff when installing cogeneration so that the building is not at risk for substantial standby charges. There are utility standby rates that put customers installing cogeneration at significant risk of substantially increased utility demand charges in the event that the cogeneration systems experience an unscheduled outage (failed) during a hot summer day.
Since cogeneration systems are generally powered by natural gas, a typical question is what happens if the cost of the gas commodity goes up proportionally higher than the cost of electricity sold by the utility? The answer to that question depends upon the generation “mix” in the surrounding region. You may expect rough parity in these cost relationships over time since the cost of all fossil fuels tends to trend together if the generation mix in this region of power plants that produce power for the utilities includes a significant proportion of gas powered power plants. A building with sufficient gas needs may be able to hedge the cost of gas by purchasing futures contracts or dealing with an aggregator able to handle hedging.