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Habitat Magazine Business of Management 2021

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ARCHIVE ARTICLE

Cogen for the Little Guys

The first time Matthew Holland, the vice president of business development at Reflective Energy Solutions, talked with the owner of a 138-unit apartment building in Brooklyn about investing in cogeneration, the idea went nowhere. It wasn’t that the owner wasn’t interested. It was simply that the only available systems were too large. The building wouldn’t have received the full energy-saving benefit, since it wasn’t big enough to absorb it. The investment made little sense.

But last year, Holland returned to the property group with good news: a smaller cogeneration unit, already widely used in Europe, was now being marketed in the U.S. Even better, rebate incentives available from the New York State Energy Research and Development Authority (NYSERDA) would significantly reduce the cost of purchase and installation.

“That was really the thing that put it over the top,” Holland says. The property group okayed the installation of the micro-cogeneration unit, a 35-kilowatt model being jointly marketed in the U.S. by its European manufacturer, Tedom, and Tecogen, a provider of clean-energy products based in Waltham, Massachusetts.

Now, the building owner is realizing a 30- to 40-percent savings on electric and gas bills, Holland says. At that rate, the system will pay for itself in roughly three years. He estimates that the building will begin receiving a return on the investment in a maximum of three years.

Tecogen’s First

The Brooklyn installation marks the first New York installation by Tecogen of the newly available micro-cogeneration units, a technology that is also known as combined heat and power, or CHP. Tecogen has installed larger cogeneration systems, starting at 60 kilowatts, in all five boroughs, according to Dale Desmarais, the company’s director of business development. Its flagship product, the InVerde, drew particular attention after Hurricane Sandy struck in 2012 because several buildings in lower Manhattan that had the system were able to maintain power and hot water during the widespread blackout.

The 35-kilowatt unit will not provide blackout protection, aside from possibly providing lobby and stairwell lighting when power is down, says Desmarais. But it can reduce a building’s electric and gas bills, while significantly reducing a building’s carbon footprint. It’s best suited to buildings with a range of 80 to 200 units, a market that has been “completely unserved until now,” says Desmarais. “A couple of other companies are attempting to do it now, but we have the highest efficiency of any systems out there.”

Cogen technology is becoming more common in the U.S., but the market here still lags far behind the European market, where it is “more of a standard product,” says Jiˇrí Janša, a regional sales director for Tedom, which is based in the Czech Republic, and a managing director for the joint venture with Tecogen, which is called TTcogen. In Germany alone, Janša notes. some 6,000 cogen units are installed annually for residential and commercial uses.

The technology is useful for apartments, as long as there is central piping of hot water to individual rooms, rather than individual water heaters. The cost for the 35-kilowatt micro-cogen unit is about $70,000, which includes a full digital monitoring package, Desmarais says. With installation, the total cost is around $180,000, depending on the complexities of installation.

NYSERDA Rebate

Desmarais notes that those upfront costs can usually be reduced through NYSERDA’s rebate program, which shaves off $1,800 per kilowatt. In some cases, it can also be matched with incentives available through Con Edison as part of a program to reduce electricity demand in Brooklyn and Queens. Annual energy savings for a system of this size typically range from $35,000 to $60,000, he said. Generally, systems pay for themselves in three to six years.

So how does the technology work, and where do the savings come from? The first thing to understand is that a cogeneration unit isn’t a replacement for your existing power supply. It is a way to reduce how much power you need to draw from outside utilities, which can reduce your bills.

Additional savings come from the technology’s efficiency. As explained on the U.S. Environmental Protection Agency website, this type of on-site electricity generation is far more efficient than traditional power plants, since much of the energy produced by power plants is lost in distribution or as heat released into the atmosphere. CHP captures and reuses thermal energy on-site, resulting in efficiencies of 80 percent or higher, compared with 50 percent for electricity supplied through the grid.

The Tedom product runs on natural gas, propane, or biogas. In the same way that gasoline powers your car, the gas in this case powers an engine that turns a generator, creating electric power. At the same time, as the engine heats up, the system captures that heat and uses it to raise the temperature of the water in a connected tank.

“Because the cogen unit runs on natural gas to create electricity,” explains Holland, “you’re displacing the kilowatt hours you would have bought from the utility, and you’re creating it more cheaply. Secondly, you’re now using that steam created by making the electricity to heat the domestic hot water, rather than using your boiler to do so. That covers at least a significant part of water heating, which adds to the return on investment.”

Cogen systems are sized for each building based on an analysis of hot water usage, he explains. So, while the boiler should remain in place in case more hot water is needed, “if the system is sized properly,” Holland says, “you may not need to use the boiler.” (The boiler will be needed when the system is periodically shut off for servicing.)

The smaller systems can also be easier to install, since they can fit in a standard freight elevator and through a standard doorway, reports Desmarais. They each weigh roughly 2,000 pounds.
A side benefit to cogen is the green aspect. Because traditional power plants are significant contributors to greenhouse gas emissions, reducing reliance on that power source and switching to a cleaner, more efficient system can reduce a building’s carbon footprint by 40 to 50 percent, according to Desmarais.

But it’s the cost savings that are helping the technology to catch on. Says Holland: “Most new construction in Manhattan includes cogen now. Hotels are a good application – the savings can be in the six-figure range.”

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Linking Up
Rebate incentives available from New York State Energy Research & Development: www.nyserda.ny.gov/pon2568

A YouTube video of residents at the Brevoort, a co-op, discussing how the system kept working during a blackout https://youtu.be/-SIbcNG_cQY

U.S. Environmental Protection Agency’s website:  www.epa.gov/chp/what-chp

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