New York's Cooperative and Condominium Community

Habitat Magazine Business of Management 2021



Installing a Cogeneration System

The property management company for our cooperative has been approached by an energy contractor about installing a cogeneration system to reduce our electrical and heating costs. We’re a five-building complex with about 1,200 units, which, because of our size, apparently makes us an ideal candidate for a cogeneration program. What’s involved in setting up such a system, and what type of cost savings can be expected?

Cogeneration, sometimes referred to as “distributed generation” or “combined heat and power,” is a process that produces electricity and heat simultaneously. In a cogeneration system, a fuel-burning turbine drives a generator to produce electrical power. The heat produced from that process, which escapes as a wasted byproduct in a conventional power setup, is instead captured and used to produce heat or hot water, and can also create cool air. For condominiums and cooperatives, a cogeneration program offers potential savings by reducing peak electrical demand in the summer, and lowering heating costs in the winter and hot water costs year round. In addition, the system can be used as an emergency electrical backup during a power outage.
Cogeneration has been utilized for more than a century, mostly in industrial, commercial, and institutional settings. Hospitals and nursing homes, for example, have been big users of distributed generation systems. Until relatively recently, however, the technology was rarely employed in residential properties because only the largest apartment buildings had energy demands large enough to take advantage of combined heat and power. But with more efficiently designed systems and more compact power equipment, cogeneration is finding a home in more condominium and cooperative complexes.

In a residential cogeneration system, a microturbine about the size of a refrigerator is fired through fuel injection. Natural gas is often the fuel of choice because it burns more cleanly and emits fewer noxious fumes than diesel. Propane, bio-gas, and kerosene are other fuel options. The fuel is mixed with air in a compressor, and the resulting combustion turns a single shaft, producing electricity through a generator. Up to 90 percent of the waste heat released from the combustion is collected and passed through an exchanger. The captured heat can then be used to heat the domestic water supply, as steam or hot water for heating, or even for cooling when sent through a steam absorption chiller.

A cogeneration system works in conjunction with the building’s existing electrical and heating systems, but it does not replace them. A microturbine won’t supply enough electrical power for an entire large property, for example, but it can provide a steady supply of such power throughout the year, thereby reducing the amount required from the electric utility. Moreover, the electricity produced by the microturbine will shave the peak loads that buildings experience during heavy air conditioner use in the summer. Because of this supplemental capacity, Con Edison provides reduced electrical rates year round for buildings that run a cogeneration system.
Similarly, the building will still have to rely on its traditional heating plant in the winter, but a microturbine will supply supplemental heat, reducing the plant’s required output. In addition, a cogeneration system can be configured to heat the building’s domestic hot water year round, drastically reducing boiler use in the summer. Depending on the property’s hot water usage, the heat captured from the microturbine may even be sufficient to eliminate the need for the plant to fire up at all during the summer.

Residential cogeneration systems work best in large buildings with heavy power demands. The buildings with the highest potential for energy savings are multi-family dwellings (roughly 100 apartments or more) that have high electrical and heating usage for 16 hours a day or more, six days a week. Hard numbers on costs and savings are difficult to come by because the size and energy demands of apartment buildings vary so widely, but according to a 2004 report by the New York City Energy Policy Task Force, cogeneration systems average 70 to 95 percent efficiency compared to an estimated 50 percent efficiency of conventional heating systems. Cogeneration companies claim that their systems are up to two-and-a-half times more efficient than the electric utility and that they can reduce monthly energy expenses from 30 to 60 percent. The estimated average payback period for a typical large apartment building is said to be three to five years.

In addition to the energy savings, the other advantage to a cogeneration system is its use as a backup power supply during an outage. Even though the cogeneration equipment is connected to the utility’s electrical grid, the system can be configured to operate independently in an emergency. During a power interruption, a controller disconnects the microturbine from the grid and provides power directly for essential building functions, such as elevators, water pumps, and hallway and stairwell lights (but not individual apartments). When the power returns, the microturbine is automatically connected back to the electrical grid, without manual intervention.
For boards considering implementing a cogeneration program, the first step would be to have an energy management firm conduct a feasibility study. The energy consultant will measure electrical loads at different times of day, including how much the building’s demand fluctuates from high to low. Based on the findings, the consultant will estimate the expected cost savings and payback period of installing a cogeneration system and recommend the proper size microturbines. For example, a 150-unit building with a 1,000-kilowatt (kw) maximum load and a 100-kw minimum load might take a 60- to 90-kw powered microturbine, or perhaps a 60-kw unit coupled with a 30-kw one.

The next consideration is where to place the microturbine. In most cases, outside the building is preferable to inside because an interior space requires proper ventilation and a dedicated chimney stack for the combustion emissions. The system can be installed on the roof, although it may not be feasible to run gas and electric lines from the basement depending on the height and configuration of the building.

Microturbines come with housing for either outdoor or indoor applications to protect them from the elements and to maintain proper system condition. (The microturbine’s efficiency diminishes when its ambient temperature rises above 100 degrees Fahrenheit) The housing also helps attenuate noise: the microturbine emits a steady but not-overbearing whirl, similar to the sound of a jet engine as heard from inside the plane.

Connections to existing building systems are relatively plug-and-play. Plumbing and electrical lines may require some modified fittings and attachments, but, in most cases, major reconfigurations are not required. Installation typically takes four to six weeks and requires the usual work permits from the New York City Department of Buildings.

Keep in mind that cogeneration systems operate on a dedicated basis for the building in which they are installed, or for multiple buildings that share a heating plant. In a multiple-building complex in which each building has its own boiler, separate microturbines would be configured for the individual buildings.

Because they have only one moving part and don’t need lubricants or coolants, cogeneration systems do not require much upkeep. Maintenance entails regular filter changes, injector cleanings, and servicing of gas compressors every 8,000 hours. Microturbines typically come with 10-year warranties, some of which include contract guarantees for given performance levels.

A potential drawback with running a cogeneration program is the extra charges that the electric utility can levy for downtime. The system is designed to run 24 hours a day, except for routine servicing, but if electrical demand drops below a minimum load or there is an insufficient requirement for heat or hot water, the system will shut down. Usually, the utility will require the system to stay up and running roughly 300 days of the year (i.e., around 80 percent of the time) for the property to qualify for a reduced electrical rate.

If your board decides to move ahead with implementing a cogeneration program for your cooperative, it should inquire about rebate programs that the gas and electric utilities may offer. In addition, cooperatives can apply for funding through the Distributed Generation and Combined Heat and Power Program offered by the New York State Energy Research and Development Authority, also known as NYSERDA.

Given the rather large size of your complex, installing a cogeneration system will likely cost several hundred thousands dollars. But it may be worth it for your cooperative or condominium to explore the potential savings that such a program can offer.

Stephen Varone, AIA, and Peter Varsalona, PE, are principals at Rand Engineering & Architecture, which has been providing integrated engineering and architectural services to the co-op and condo community since 1987. Rand will answer your queries about renovation issues. Send questions on building repair and maintenance to

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