New York's Cooperative and Condominium Community

Habitat Magazine Business of Management 2021

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ARCHIVE ARTICLE

Captured Steam

Not every building is as lucky as the Roosevelt Terrace cooperative in Jackson Heights, Queens. In shareholder Ed Ermler, it has a hands-on president who wears two other hats: he’s a professional managing agent (though not for this building) and also an electrical engineer.

But even without a multi-talented shareholder like Ermler on the case, your board can possibly do what his 4,370-unit, four-building co-op achieved: after using about 2.1 million kilowatts of electricity annually, Roosevelt Terrace saw a 59 percent reduction in energy use. What does that mean? At least $360,000 in savings annually, projects Ermler.

How did they do it? The short answer is: cogeneration, otherwise known as combined heat and power acceleration.

Many boards have heard of cogeneration; it’s a useful way to use your generator for two tasks at once. A cogenerator uses gas or diesel to create electricity as well as thermal energy – heat that can be used to warm the building itself or its water. Where a regular generator creates “waste heat” as a lost byproduct of electricity, cogeneration captures heat that buildings can then use.

And while your board may not have an electrical engineer sitting at the meeting table, if you do decide to go “cogen,” your project might be able to benefit from a unique solution developed by Ermler and his contractor, All Systems Cogeneration, an idea that had an engineer from the New York State Energy Research and Development Authority (NYSERDA) admitting: “It is very cool.”

Is Cogen Right for You?

More on that solution later. First, let’s review the basics. While most buildings are good candidates for cogeneration systems, there are some qualifications that have to be taken into consideration, says Gregg Giampaolo, president of All Systems Cogeneration. You need to have adequate demands both from your thermal (hot water) and electrical set-ups. If your only need for hot water is to supply domestic water in the apartments, for instance, that can be a strong enough load if you have enough units. “Let’s say you have forced air heat,” says Giampaolo. “We can put a hydronic coil in the forced air system to make use of that heat.”

Similarly, on the electrical side, if your building is submetered – meaning that each unit has its own Con Ed meter – the building-wide draw is only in the common areas. That’s not always a deal-breaker. If those common areas provide enough of an electrical demand, a cogen system can still work. In general, master-metered buildings – where the common areas and all the in-unit electricity are bundled together – are the easiest sell for cogen.

While there are many different factors that have to be considered with cogen, Giampaolo says that a building with a 75 kW system would need at least a 60,000 kW electrical load monthly, and a thermal load of about 3,000 therms per month. (That’s usually about 200 units.)

Beyond those requirements, what should you know about running a cogen system? What can you learn from the experiences of Roosevelt Terrace in terms of economics, resident comfort levels, and satisfaction? And how might the new procedure developed by Ermler and All Systems dramatically make your use of cogen more feasible?

The project at Roosevelt Terrace was installed alongside the existing boilers. The first phase – two separate 75 kilowatt (kW) systems – went online in July 2012 in Buildings 1 and 2. The kW size is tied to the electrical demands; more power or hot water needed equals larger-sized units. The second phase, underway now, will use a unique solution that involved installing a single 100 kW unit to power both Buildings 3 and 4. It is expected to be online in time for the summer air conditioning load.

The cogen now in place is supplying enough electricity so that Roosevelt Terrace is only purchasing about 900,000 kW from Con Ed for common areas and in the apartments. When it comes to benefits from hot water, the Phase 1 cogen system actually supplies all four buildings’ hot water load during the summer(when a warmer base-water temperature makes it more efficient to make hot water)and about half of the load during winter months.

“Adding Phase 2 will make enough hot water for all four buildings during the dead of winter,” Ermler says. Phase 2 will also allow the co-op to use the heat thrown off during the production of electricity in another way. Ermler says that after hot water runs through the system into apartment radiators, it normally goes back into the system at about 80 to 90 degrees. By passing it through the cogen unit, that heat thrown off during the process will return that water back to the boiler hot enough so that it is almost “steam ready.” As a result, the whole system is more efficient.

Bottom line: Ermler expects the project to save the co-op about $360,000 a year. Phase 1 has a return on investment of about three years; Phase 2 in about two years. The cost of Phase 1 was $447,000, money that came from reserves. Phase 2 will benefit from a NYSERDA program that will pay for about about 50 percent of the $500,000 total cost.

“The best advice I can give to the layman is to hire a competent engineering firm to do your Local Law 87 work and produce a competent report that identifies where you can save money,” Ermler says. “Almost every project I’ve seen includes cogen because it makes perfect sense. It’s one of the easiest things to do, especially with the incentives out there.”

An Abundance of Rebates

The Combined Heat and Power Acceleration Program from NYSERDA offers a set rebate for particular models of cogeneration equipment, says Dana Levy, program manager for on-site power programs at NYSERDA. “At the moment, we have 141 different approved models and each of them has a dedicated rebate amount,” Levy says. “The incentive is scaled by size. If you put in a larger piece of equipment it will cost more money and there is more of an incentive. However, the incentive is also scaled so that the per-unit rate is greater for smaller projects.”

How does that work? A typical New York City condo/co-op installation might require a 100 kW system, which covers about 250 to 300 units, and gets a standard rebate of $180,000. That typically covers between 40 to 50 percent of the cost. Say your project requires equipment three times larger than that, the rebate doesn’t triple; it covers 35 to 45 percent of the total cost.

“We’re offering more money to smaller systems, because the magnitude of savings can be less with a smaller project,” says Levy. The thinking is that if it’s more attractive for smaller-scale projects, buildings will be more likely to come on board. “We want to encourage them to put in the right-sized system for their needs, and to make it cost-effective to do so.”

Logistically, NYSERDA pays the rebate to the contractor installing the equipment in three lump sums. The condo or co-op is responsible for working out arrangements to pay the balance. But Levy says there are other potential savings in the NYSERDA program. Is your building in one of Con Ed’s “critical target zones” – the areas where the agency has indicated that cogen could reduce the need for grid expansion or reinforcement? If so, take 10 percent of the base incentive, and add that to your total rebate. Is your building enrolled as an official evacuation shelter or “facility of refuge,” with the Red Cross or city Office of Emergency Management? If so, add another 10 percent.

Let’s say you also want to incorporate so-called absorption chillers into your cogen project. (These capture waste heat and convert it into cool waterfor cooling needs, lifting some of the burden from the building’s traditional electric-fired chillers.) Add those and NYSERDA will include an incentive tied to the size of that system, says Levy. That hypothetical 100 kW cogen project would probably use about a 40-ton chiller. At the incentive rate of $750 per ton, that adds another $30,000 in rebate savings.

The Power Converter Is a Money Saver

The traditional way to install Phase 2 at Buildings 3 and 4 at Roosevelt Terrace would have been to put one 75 kW unit in each building. But All Systems Cogeneration came up with a system that uses a so-called power converter, which alters the electrical current in a way that enables one unit to power both buildings. The advantage is that you only have to install one unit, instead of two, resulting in significant upfront cost savings. There’s also the “Goldilocks Effect”: two 75 kW units – or a total 150 kW – is a little too much for both buildings’ loads, while the 75 kW-unit alone would be too little for both. But sharing one 100 kW system is just right.

At Roosevelt Terrace, the power converter costs about $40,000 – significantly less than what it would have cost to put in two cogen units. And, perhaps even more important, it was only the 100 kW system that qualified for the NYSERDA rebate.

NYSERDA’s Levy says projects on a larger scale have used power converters, but it had never been done at this level. “We’re told that the vendor is doing this with another project using a similar configuration,” he says. “This is their second rollout of this very elegant design. We’re very excited to see it demonstrated multiple times, and we expect the marketplace will learn from this, and add it to their toolbox.”

Millions in Incentives Up for Grabs

There is still a sizable pot of cash available for incentives. The current round of incentives has a total budget of $60 million, says Levy. About $20 million has been awarded to about 60 cogen projects in Con Edison’s coverage area that are either done or in various stages of completion. Vendors say that another $20 million worth of projects are in talks and likely to come to fruition, leaving the remaining $20 million up for grabs.

Giampaolo says that if boards are ready to move – and if the stars align – he can get a job up and running within about six months. He says some boards are reluctant to consider cogeneration, but he’s not sure why.

“It is a high-ticket item, but the incentives make it work,” he says. He tries to take interested boards to view systems that are up and running. “They want to know, is it big? Is it loud? When they see that it’s about the size of a pool table, a light goes on. I’m sure there is one close to wherever they are, so going and looking at it answers a million questions.”

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