The emergence of containerized CCHP has shifted this paradigm. Producing “turnkey” modular systems improves the economic profile of CCHP projects, minimizes quality variance, and allows facilities to scale power production with demand requirements. As a result, utilizing trigeneration technology can cut energy costs, improve facility uptime and reliability, and reduce carbon emissions in both retrofit and greenfield applications for many mission critical facilities — even though it may not have in the past.
The goal of this article is not to suggest that all data centers can benefit from implementing modular CCHP systems, but rather to explain the changes that have occurred in the cogeneration industry and provide a framework for evaluating the applicability of cogeneration in the mission critical community today.
Before discussing the specific applicability of modular CCHP in the mission critical community, a broad overview of the technology is needed. In most forms of electric power generation, fuel (natural gas, coal, etc.) is used to create kinetic energy (energy of motion), which is subsequently turned into electricity.
According to the U.S. Energy Information Administration, in the average U.S. power plant, 35% of this fuel’s potential energy is successfully converted into electricity, while the remaining ~65% is lost in the form of waste heat.1 Two primary factors prevent utilities from improving this efficiency: they are typically reliant on antiquated equipment with limited ability to upgrade, and they cannot repurpose the waste heat because thermal power does not travel well. In addition, transmission losses typically average an additional 2% to 4%, meaning that the average electric utility customer is receiving $.30 of value for every $1 spent.
As a result of this inefficiency, the concept of distributive power (aka onsite generation) has become increasingly popular in recent years. By utilizing modern technology, facilities can generate their own electricity with substantially higher efficiency and, in addition, minimize transmission losses. Cogeneration takes this concept one-step further, by recycling the waste heat created as a natural byproduct of generation and converting it into usable thermal power. In the case of a data center/mission critical facility, the thermal output is typically chilled water created by passing waste heat through an absorption chiller. As a result, modern cogeneration systems are often able to reach efficiencies of 70% to 85%.
Cogeneration systems utilize multiple prime movers including turbines, fuel cells, and biogas engines. Modular CCHP systems, however, overwhelmingly utilize natural gas reciprocating engines due to size, efficiency, and economic concerns.
Solving traditional onsite cogeneration challenges
As previously discussed, there have traditionally been four drawbacks to implementation of cogeneration systems in the mission critical community: cost, quality, scalability, and finding an effective use for waste heat.
Modular CCHP systems solve these problems, and make the ROI of cogeneration implementation significantly more appealing. The systems are manufactured in standardized sizes, meaning that design and engineering are accomplished once, with the cost subsequently being spread over many units. As a result, many CCHP systems deliver two to four year payback periods. In addition, led by the U.S. market entrance of large European cogeneration companies, attractive financing options are widely available. Some cogeneration providers now offer PPAs requiring no up-front capital expenditure from the customer, and provide savings guarantees.
Additionally, up to 85% of the equipment needed for successful installation is factory assembled, enabling manufacturers to implement quality control measures that substantially reduce variance. For the same reason that car manufacturers don’t custom design and engineer every individual car in the dealership, cogeneration companies are able to provide lower cost, higher quality systems via mass production.
Equally importantly, the modular design of many CCHP systems enables the size to scale with a facility’s energy footprint. If a data center with a 10 MW demand increases to a 12 MW demand, an additional 2 MW unit can be added to the existing system with relative ease.
CCHP interaction with cooling solutions
In the right application, CCHP and free cooling are complementary technologies. For facilities utilizing fluid-side economizers and/or centralized chillers, trigeneration systems represent an opportunity to supplement existing efficiency measures with additional free cooling. Benefits for organizations utilizing distributed air systems are more difficult to predict, yet in many instances still warrant evaluation. As with any discussion surrounding free cooling, results can vary wildly based on geographic location, IT requirements, and existing infrastructure.
The utilization of CCHP in liquid cooled facilities represents a fascinating value proposition that is currently the subject of research.
THE BENEFITS OF MODULAR CCHP SYSTEMS
As mentioned, benefits of CCHP vary based on a number of facility specific requirements. In the right application, however, there are three primary benefits to installing CCHP systems in data centers:
- Ten to 30% cost savings. A modular CCHP system reduces costs for mission critical facilities in two primary ways. First, current prime mover technology converts fuel to electricity more efficiently than most existing utility infrastructure. In many cases, electric efficiencies can reach 40% to 42% and transmission losses are eliminated. Secondly, waste heat is converted to chilled water via absorption chilling and can be used to supplement existing chilling capacity, reducing overall electric demand.
All told, these factors represent 10% to 30% in overall energy savings for many mission critical facilities, with simple payback periods of two to four years.
- Reliability improvements. One prevalent misconception in the industry is the belief that CCHP systems are intended to take a facility off the grid. By contrast, with limited exception, modern CCHP systems utilize advanced switchgear technology to run operations in parallel with the grid. Doing so allows data centers to add a layer of redundancy and supplement existing diesel standby capabilities. In the northeast U.S., serious concern arose when diesel fuel became scare in the aftermath of Hurricane Sandy. Natural gas fueled cogeneration improves a facilities’ fuel diversity as well, allowing facilities to run operations on natural gas, diesel, or utility power. This capability maximizes up-time and hedges against fuel risk.
- Environmental impact. There is no ignoring the fact that the green data center movement is important to the industry. In fact, according to Pike Research, the industries investment in environmentally friendly technology was $17B in 2012, with anticipated growth to $45B annually in 2016.2 While there is no one product that solves the industry’s environmental challenges, cogeneration systems can represent a significant piece of the puzzle. By recycling engine exhaust and converting it to usable thermal power, CCHP systems can reduce a facility’s overall carbon footprint between 20% to 30%.
IS YOUR FACILITY A GOOD FIT FOR A CCHP SYSTEM?
There are two primary factors that can be used as rules of thumb to determine whether or not your facility is a good fit for a cogeneration system.
First, location does matter. An important determinant of economic fit for cogeneration solutions is the “spark spread,” or the cost differential between electricity and natural gas. In places with a large spark spread (such as the Northeast, Mid-Atlantic, Texas, and California) the payback period on CCHP systems investment tends to be shorter.
Secondly, existing infrastructure, especially the facility’s cooling system, makes a difference. Organizations with centralized cooling systems tend to be excellent candidates for CCHP. Conversely, integrating CCHP systems with distributed air systems are more challenging.
Unlike other supply-side technologies, almost all CCHP projects done today in the mission critical community are economically viable without government incentives. However, due to environmental concerns and upcoming power supply challenges, the government is strongly incentivizing facility owners to install CCHP systems. On top of a 10% federal tax credit, many states are providing direct cash subsidies amounting to up to 40% of the total project cost. A complete list of state-specific subsidies is available on the EPA’s Combined Heat and Power Partnership website at www.EPA.gov/chp/.
Needless to say, while government incentives are not the key in the decision-making process, they do provide additional incentives for facility owners to convert to CCHP systems.
FINANCING CCHP SYSTEMS
While each CCHP company approaches the purchasing process slightly differently and multiple financial options are available to endusers, broadly speaking, there are two ways to acquire CCHP systems: direct capital expenditures and power purchase agreements.
With capital expenditure purchases, the facility owner purchases the equipment outright and generally realizes a payback period of two to four years depending on the specific application and facility location.
Many companies are also offering power purchase agreements (PPA), wherein the facility owner receives the CCHP system with zero up front capital, but signs a long-term contract to purchase power on a monthly basis from the CHP manufacturer. The costs and benefits vary from firm to firm, but there is no capital outlay and very low risk to the facility owner.
CCHP systems warrant evaluation (or reevaluation) by mission critical facilities. In the right application, facilities save money by producing electricity more efficiently than the utility and recycling waste heat. Concurrently, CCHP installation improves environmental footprint by reducing carbon emissions, leading to substantial government subsidies. Perhaps most importantly, CCHP systems provide an additional layer of redundancy from a diverse fuel source, improving facility up-time and reliability. Modular CCHP systems are not a great fit for every data center, but for many, they represent an excellent value proposition.
1. U.S. Energy Information Administration. “Average Operating Heat Rate for Selected Energy Sources, 2001-2010.” November 2011. http://www.eia.gov/electricity/annual/pdf/table5.3.pdf.
2. Clancly, Heather. "Green Data Market seen Doubling by 2016." ZDnet.com. 17 September 2012. http://www.zdnet.com/green-data-center-market-seen-doubling-by-2016-7000004324/.