Cogeneration Project Boom Brightens Day for San Diego Firms
Thursday could have been dubbed “cogeneration day” in San Diego:
New York-based Cogenic Energy Systems announced that it would add four 100-kilowatt cogeneration units at Holiday Inn’s Harbor View and Embarcadero hotels.
University Energy, a subsidiary of San Diego-based University Industries, agreed to design, build and operate an 8.9-megawatt cogeneration plant for Rohr Industries in Chula Vista.
San Diego-based Energy Factors signed a letter of intent to build a $3-million, 4.5-megawatt cogeneration plant at The Upjohn Co.’s North Haven, Conn., factory.
The three cogeneration systems, with a combined price tag of $14.5 million, will generate 14 megawatts of electric power and steam.
Although one cogeneration company executive acknowledged that the announcements were timed to coincide with the opening day of a San Diego energy exposition, he added that the flurry of project announcements underscored San Diego’s role in the growing cogeneration industry.
Companies turn to on-site cogeneration units with the expectation that their overall energy costs will be reduced. The units burn natural gas, fuel oil, and, in some instances, coal, generating lower-cost electricity and heat that is used to create steam or hot water. Those traditional byproducts are used to drive machinery, heat and cool buildings, or create chilled water.
Hotels, hospitals and prisons can pipe the hot water through water taps.
Moreover, excess cogenerated electricity can be sold back to electric utilities.
The move toward cogeneration is fueled by “companies that are otherwise financially sound . . . including some high-tech companies in San Diego, that want to invest their money in their product, not in an electric bill,” said John Zanot, president of University Energy. “It’s a booming industry and it’s going to stay that way.”
Interest in cogeneration is swelling because it gives companies a way to “control future costs, build in efficiencies and ensure (energy) availability,” said Energy Factors President Ralph J. Grutsch.
“The most important factor is the existing over- or under-capacity at a given utility,” said Christopher Foster, a consultant who prepared a cogeneration forecast for Frost & Sullivan, a New York-based market research firm. Utilities that built “large power plants to get ready for increases in demand that, in many cases, haven’t occurred” are “sitting with a coal or nuclear power plant and not enough demand to utilize it at high capacity,” Foster said.
San Diego Gas & Electric, Pacific Gas & Electric and Southern California Edison are “generally more receptive to cogeneration than most other utilities,” Foster said. “New York’s Consolidated Edison, which is against cogeneration, makes it very difficult to negotiate deals because they have an overcapacity.”
However, Zanot said, the federal Public Utilities Regulatory Power Act of 1978 boosted the cogeneration market by prohibiting utilities from refusing to buy excess cogenerated electricity. The act also prevented utilities from suspending service to companies that used cogeneration--as practice used by some utilities in the past as leverage to discourage cogeneration.
By the end of 1985, Frost & Sullivan reported, cogeneration plants nationwide will be producing 17,225 megawatts of electric power. An additional 20,000 megawatts will be added by the year 2000, the Frost & Sullivan report said. Equipment and service sales will total $25 billion during that period.
“Past (growth) estimates need to be reduced because of soft fuel prices, conservation efforts and the falling price of oil,” Foster said, adding that, although an industry association predicts that cogeneration will provide 15% of the nation’s electricity by the year 2000, “our figures put it closer to 5%.”
Some of that power will come from the relatively small “package” units such as those being installed at the Embarcadero and Harbor View Holiday Inns. Those systems, which provide both electricity and hot water for the hotels, are operated under a “shared savings” arrangement whereby Holiday Inns and Cogenic Energy Systems share the expected energy-cost savings.
The system, which could begin operation in the next three months, will save about $400,000 in annual energy costs, according to Cogenic Vice President Jim Tooher, who said the 5-year-old company has installed 50 cogeneration units around the country, “many of which are in San Diego because of the high electric rates.”
The bulk of cogenerated power, however, will come from industrial applications such as Rohr’s cogeneration plant or the plant that Energy Factors expects to design for the Upjohn Co.
Rohr’s plant will produce 75% of the electricity, steam and chilled water needed by the aerospace company’s Chula Vista manufacturing operation. The company will only buy SDG&E; power during its peak usage times.
Cogeneration will save Rohr $36.4 million during the first 10 years of the unit’s operation, according to Robert H. Goldsmith, Rohr’s senior vice president-operations. Gas and electricity costs at Rohr’s Chula Vista plant were nearly $8 million last year, he added.
Recently, Energy Factors signed an agreement to build a $45-million plant that will provide 49 megawatts of electrical power, 10 million ton-hours of refrigerated ammonia and more than 30,000 pounds per hour of steam for the Oxnard Frozen Foods Cooperative in Oxnard, Ca. During the past two months, Energy Factors has announced projects totaling more than $80 million.
In an interesting twist, Pyropower Corp., a San Diego-based subsidiary of a Helsinki, Finland-based industrial company, is building cogeneration plants that burn low-cost coal and waste materials. The process uses a “fluidized bed” that captures the air pollution generally associated with coal and waste fuels.
