Assessing combined heat and power

Manufacturers play an immense role in energy consumption across Kentucky, using a little more than 50 percent of all kilowatts burned in the state, said Greg Higdon, president and CEO of the Kentucky Association of Manufacturers.

Thus manufacturers are critical to the state’s performance as it works toward a goal of offsetting at least 18 percent of the projected 2025 energy demand by leveraging efficiencies.

One promising new initiative promotes combined heat and power (CHP) systems in industrial and manufacturing settings to reduce energy costs and carbon emissions at facilities that are some of Kentucky’s highest energy consumers. Round-the-clock operations, especially those with thermal processes, are considered the top candidates for CHP adoption.

Public and private officials in the commonwealth are spreading information about a method that has gotten some traction already in some areas of the nation. It was the topic of several sessions at KAM’s annual energy conference in May.

A CHP system generates electricity and heat from a single fuel source, such as natural gas or biomass. Heat – thermal energy – that otherwise would be lost is captured to power another process such as climate control. Systems, located at or adjoining facilities they power, supplement or replace conventionally separate heat and power.

Combined heat and power systems are as much as 80 percent efficient compared to average fossil-fuel power plant efficiencies of 33 percent, according to the U.S. Environmental Protection Agency. Meanwhile, energy use and cost management is one of manufacturers’ top ongoing concerns.

The commonwealth’s CHP program, launched in March, is built on a partnership of the Kentucky Energy and Environment Cabinet, including the Department for Energy Development and Independence, the Kentucky Pollution Prevention Center at the University of Louisville and the Kentucky Association of Manufacturers. Two U.S. Department of Energy grants totaling $195,000 pay for education efforts and building a state database.

This collective will work on several aspects of implementing combined heat and power in Kentucky, including policy, technical, finance and education and outreach. They are bringing together stakeholders to identify strategies and supporting policies that would maximize the benefits of CHP for Kentucky manufacturers.

There is much to explore and develop, partners said.

They are identifying issues that might prevent manufacturers from using CHP, beginning with financial investment.

“A lot of industries are looking at a situation in which they’ll only invest in it if they recoup the cost within three years,” said Bill Lunsford, a consultant engineer with DEDI. Savings and return on investment vary from facility to facility depending on multiple factors, he said.

“They will evaluate it case by case,” Higdon said of companies. “If it makes business sense, they can get the approval.” Most manufacturers, he added, are interested in lengthening the amount of time that it would take in their business plans before they realize returns on investment.

Energy efficiency must make business sense

Higdon said energy management is one of manufacturing’s top four priorities, along with workforce development, logistics and human resource issues such as taxes and healthcare.

Everyone wants to find ways that make business sense to lower consumption in the face of rising costs, he said.

“The cost of energy will continue to rise not only in Kentucky but nationally,” Higdon said.

The CHP program partners may identify, for example, changes in tax credits or the permitting process that would make CHP implementation more feasible.

The focus is on manufacturing or large commercial operations. Organizations with 24-hour consumption and a need for thermal energy would benefit the most from CHP, said DEDI Director Greg Guess.

Some business leaders might find benefits specific to their situation.

While natural gas is the primary fuel for CHP and is expected to remain so, biomass also can power a CHP system.

Some manufacturers’ waste stream can be used as their fuel source, said Cheryl Eakle, sustainability engineer with the Kentucky Pollution Prevention Center. When feasible, the practice is not only an energy cost-saver but cuts transportation costs and saves landfill space

“Any kind of lumber plant is going to have wood waste,” Eakle said, “and that can be fuel.”

In other cases, chemical plants could with the proper permitting burn waste to fuel CHP.

Domtar paper plant almost powers itself

The Domtar pulp and paper plant in Hawesville, about 25 miles from Owensboro, implemented CHP in 2001 and is involved in the state’s initiative, said Steve Henry, general manager of the facility.

Three boilers produce steam that is used to generate electricity. One boiler is fueled by biomass – the tree bark and sawdust the plant can’t process. The other two are powered by chemical recovery in which the “liquor” byproduct compounds from wood cooking are recycled and produce “green” steam, Henry said.

“This basically allows us to run a giant recycling process,” he said.

The resulting steam turns turbine generator blades to produce electricity, he said. Further, the waste steam from the turbine generator is used in Domtar’s manufacturing process.

Renewable sources produce 96 percent of the steam, Henry said. Fossil fuels only are used when crews are starting the boilers and during brief periods when the boilers are down.

The system has an 88-megawatt capacity, according to state documents.

“It’s a great environmental impact, and it’s helping us stay competitive,” Henry said. The energy cost savings help the company remain more viable in the increasingly competitive paper market.

Henry did not share dollar figures, but said the plant produces 75 percent of its electricity and purchases the remainder from Kenergy.

“We produce enough green electricity to power 22,600 homes,” he said.

The CHP design used at the Hawesville mill, which received a Combined Heat and Power Energy Star award from the U.S. Environmental Protection Agency and U.S. Department of Energy in 2005, is 86 percent efficient.

Still, while any type of CHP brings efficiency, Henry is concerned about the EPA’s proposed carbon regulations because of the plant’s biomass fuel source.

“The (EPA) plan treats green biomass the same as fossil fuels with regard to contribution to greenhouse gases, even though the EPA acknowledges that biomass can have climate benefits compared to fossil fuels,” he said.

Awareness of CHP issues the first step

CHP designs, costs and benefits vary, and the new program sets out to educate manufacturers while considering their individual circumstances. The Kentucky Pollution Prevention Center will play a key role in helping companies determine if combined heat and power implementation is right for them.

“We come in as a technical resource through assessments and training,” said Lissa McCracken, the center’s director. Center staff will work with manufacturers through screenings and then feasibility studies.

Created in 1994, the center already offers free, confidential, non-regulatory assessments to help Kentucky businesses become more environmentally sustainable and competitive.

“We’ll go to a site and look at their energy use. Sometimes, we make suggestions that don’t cost anything; it’s just behavior changes,” Eakle said.

With the new program, the center will extend its assessments to include CHP consideration.

“There are some bigger institutions that have been weighing CHP as an option,” McCracken said, noting the program’s partnership process could remove some issues.

Another noted challenge concerns utilities, partners said.

On one hand, an appealing feature of CHP for organizations is that it is unaffected by grid outages. Yet, companies usually don’t rely on CHP for 100 percent of the energy demand. A utility company might provide a portion on the energy or at least be on standby, said Guess. The standby charge could be a barrier for companies considering combined head and power.

“A utility has an investment in the equipment that’s providing occasional or limited use. Working out that arrangement is a key to making CHP work in Kentucky,” he said, noting a number of utility companies and cooperatives are involved in the state’s new program.

Additionally, excess CHP-produced electricity could be sold to a utility, partners said.

Nine CHP systems already in place

Throughout Kentucky, nine companies use CHP, Lunsford said. Fuels used include biomass, waste heat and natural gas, and a variety of technologies are used, such as Domtar’s boiler and steam turbine set-up in Hawesville, according to program documents.

The latest company to adopt CHP is Owensboro Grain, which had not yet started using the system, Lunsford said. That system’s capacity is nine megawatts, and it is powered by natural gas, according to program documents. Company officials could not be reached for comment on the new CHP system.

Partners said combined heat and power could make a significant impact on Kentucky’s energy consumption and carbon emissions, and Lunsford said they are now getting a better handle on what the practical implementation of CHP might be.

“There’s significantly more potential,” Lunsford said.

“It could be unlimited,” Higdon said of CHP’s potential. “That being said, it depends on how the program and policies are put together and how the program is marketed.”

Sarah Berkshire is a correspondent for The Lane Report. She can be reached at editorial@lanereport.com.