Whitepaper: 05.03.2012

Renewable Energy Options

Renewable Energy Options Present Owners with Meaningful Choices

Renewable energy has a lot of industry buzz these days, but the best choices for alternatives to conventional energy sources are not widely understood. Some forms are cost-effective from an initial investment standpoint with a definite payback benefit stream, but others have yet to provide life-cycle cost savings on a routine basis.

The big question for owners and facility managers is how to sort through the renewable energy choices. Navigating the technical and regulatory gauntlet is often challenging, so many owners sort through their choices by relying on sound professional advice. There are professional firms that will conduct studies to examine macro data trends as well as facility hourly data (peak loads, other loads, grid utility costs, life-cycle costs and the like) in order to recommend the optimal energy alternatives and equipment. Energy prices, local permitting rules, and local requirements can also impact selection of energy alternatives, adding complexity to selecting a power source for a project.

In addition to private sector help, the U.S. Department of Energy has set up eight regional Clean Energy Application Centers (CEACs) that serve three main purposes: 1) perform market assessments, 2) educate and assist with contractor outreach, and 3) provide technical assistance. In fact, the Gulf Coast Regional CEAC in Houston has made its analysis formats available online. Such professional advice and tools can help owners and facility managers understand the options and their corresponding life-cycle cost implications in order to facilitate better decisions.

Proven Benefits of Cogeneration
McCarthy and its design partners are working with a number of clients in a mix of renewable projects to identify and pursue the “right” solutions. One frequent choice with proven benefits is cogeneration. Facilities with the need for high-power reliability and low seasonal load variations could see significant benefits by using cogeneration. This energy production method is especially suited to 24/7 operations that must satisfy both power and steam/hot water/chilled water needs. Facilities like in-patient hospitals, prisons, round-the-clock communications centers and large hotels/casinos are often good candidates for cogeneration.

Cogeneration, or combined heat and power (CHP), is not a new technology. It may sound complex to someone who is unfamiliar with it, but the concept is fairly simple. Most electrical energy is generated by burning a fuel source and employs a turbine or generator, generating electrical energy. This is the case with cars: the alternator/generator operates to run the car’s electrical system and recharge the battery. As most drivers know, the engine compartment gets hot when the motor runs because when the car generates power and electricity, it also generates heat. Usually that heat disappears into the atmosphere and is lost. When the same energy production takes place for a building, CHP “captures” that heat and uses it to generate hot water and steam or chilled water by using absorption chillers. That steam/water has obvious domestic uses for kitchens, showers and laundries among other purposes.

The CHP process not only converts the waste energy typically lost from the power generation process, but it also avoids the need for a separate energy source that would be required to power a boiler or a chiller to deliver water for the facility’s needs. In simple terms, CHP offers a two-for-one solution.

McCarthy's Texas Division is presently at work on the design-build delivery of a 4.7 megawatt (MW) CHP facility for the Veterans Administration in Dallas. In other renewable work, McCarthy recently completed a 17 MWac/22 MWdc photovoltaic facility in Gila Bend, Ariz., and is underway on an 18 MWac/22MWdc solar facility in Chino Valley, Ariz. With the push for net-zero installations and campuses nationwide, owners and their partners must understand the alternatives and choose a solution that takes into consideration a range of factors. With its portfolio of CHP and renewable projects for federal and nonfederal clients, McCarthy sees a growing market for these facilities.

Financing Considerations
Up-front capital and life-cycle project costs are usually among the most important considerations to an owner. Many owners have core businesses that require the inputs of CHP, but building those facilities competes with capital projects that support the core business. Renewable projects often present opportunities for project financing and energy purchase arrangements to move them forward with private money. In fact, this approach can allow up-front central plant capital costs to be redirected to other owner needs; energy gets purchased at agreed rates as an operations and maintenance (O&M) cost. Those rates can be lower than the historic and projected rates, cutting O&M costs and directing funds to other needed facilities.

When the “science” and “financial analysis” of alternatives combine, more complete understanding and selections result. The Gulf Coast CEAC recently completed an analysis of a typical 1 MW photovoltaic (PV) array and a 1 MW CHP solution. It found that the CHP alternative would reduce annual carbon dioxide emissions by three times as much as the PV alternative (3,739 tons versus 1,280 tons) at about half of the capital cost ($2.4 million versus $4.6 million). In addition, with the associated capacity factors, the analysis found that CHP produced more than twice the annual energy savings. Furthermore, the CHP installation would pay for itself over time.

Net-zero campuses and installations seek to produce more energy than they consume, and renewable options are an important component of that effort. In addition, on-site energy production provides enhanced energy security, which is paramount for mission-critical and otherwise classified or sensitive government and private sector operations.

Conclusion
To an owner who is laying out the capital cost up front, looking for annual savings, hoping to reduce carbon footprint, and expecting to recoup the cost, the differences among alternatives are substantial. Depending on other considerations unique to an owner or set of circumstances, another solution might prove optimal. It takes a simple, but clear, analysis of the relevant factors and circumstances. The bottom line is that owners must take notice when their partners bring sustainable, economical and efficient solutions forward. That’s especially true when those solutions allow the owner to direct resources to their core businesses, cut O&M costs, increase sustainability, and achieve higher energy security. It’s why McCarthy is excited about being at the forefront of work with renewable technologies.

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