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Green Building

The value of combined heat/

power systems: Green energy

By Barry J. Sanders
W
ith the price of oil hovering around
$100 per barrel (and some analysts
suggesting that we are only a few
months away from $200 per barrel),
most hotel properties are seeking
strategies to lower energy costs. Now is an excellent
time to review the background, benefits and options
with combined heat and power systems.
Available since the time of Thomas Edison, CHP
systems become popular when the United States
faces an energy crisis. With energy prices now set­
ting new records, CHP systems are an effective tool
for hospitality venues to lower energy costs. CHP sys-
A CHP system supplies electricity, heat and hot water.
Hospitality Construction

March/April 2008
tems are more efficient and more environmentally
friendly than the electric utility plus an on-site boiler.
While reducing operating costs, CHP systems also
demonstrate the hotel ownerships commitment to
the environment since CHP reduces greenhouse
gases and can provide LEED points.
What is CHP?
Combined heat and power or CHP, also called
cogeneration or distributed generation, is the simul­
taneous production of two types of energy heat
and electricity from one fuel source, often natural
gas. The ability to create two forms of energy from a
single source offers tremen­
dous efficiency and thus
both cost savings and envi­
ronmental benefits.
The key components of a
CHP system are an internal
combustion, reciprocating
engine driving an electric
generator. The clean, natu­
ral gas-fired engine spins a
generator to produce elec­
tricity. The natural byprod­
uct of the working engine is
heat. The heat is captured
and applied in hotel proper­
ty applications to supply
space heating, heating
domestic hot water, laundry
hot water or to provide heat
for swimming pools and
spas. The CHP process is
very similar to an automo­
bile, where the engine pro­
vides the power to rotate
the wheels, and the byprod­
uct heat is used to keep the
passengers warm in the
cabin during the winter
months. CHP systems use fuel very efficiently. A CHP sys-
tem provides electricity and heat at a combined effi-
ciency of more than 80 percent. This is a significant
improvement over the combination of the 33 per-
cent efficient electric utility and a conventional heat-
ing boiler with a 70 percent seasonal efficiency.
Why is there such a big difference in fuel efficien-
cy between the electric utility and a CHP system?
The electric utility and CHP each produce electricity
and heat from one source of fuel. However, the heat
produced at the electric utility is not used; it goes
into the cooling water or up the smokestack along
with greenhouse gases and other pollutants. Most
(two-thirds) of the fuels energy is wasted. On the
other hand, while generating electricity, a properly
sized CHP system recovers all of the heat it produces
and deploys it on site.
In addition, when purchasing power from the elec-
tric utility, a separate source of heat (usually a boil-
er) is required. Despite using an efficient boiler, the
total fuel required to produce conventional electricity
and boiler heat is greater than the amount of fuel
required to produce simultaneous energy with a CHP
system. This demonstrates why CHP-produced energy
is more cost effective than the combined energies
from the electric utility and local boilers.
CHP systems also provide significant global bene-
fits. CHP systems reduce the demand on the nations
utility grid, increase energy efficiency, reduce air pol-
lution and greenhouse gas emissions and protect the
property against power outages, while significantly
lowering utility costs of building operation.
Own vs. outsource
Installing a combined heat and power system
requires capital and experience. Most installation
costs range from $3,000 to $3,500 per kW installed.
Depending upon location, property type and local
energy rates, simple payback can range from four to
six years. Once the equipment is in place, the prop-
erty owner is responsible for operating the system.
The owner also must maintain the systems, requiring
either internal man-hours or a third-party service
contract. For hotels with a stretched budget compet-
ing for capital improvements, finding the cash for a
turnkey cogeneration project presents a challenge.
The latest trend is for hotels to elect an on-site
utility or outsource model and to allow experts to
manage the installation and operation of the CHP
system installed at their property site. With an on-
site utility model for CHP, a service company owns,
installs, operates and maintains a CHP system at no
cost to the hotel. The hotel only pays for the energy
it uses from the CHP system. Because CHP is so effi-
cient, the cost of the energy it produces is priced
lower than the local utility rates. All installation and
operating costs are the responsibility of the service
company. Again, the hotel only pays for the energy,
which is typically priced at 10 percent below the cur-
rent energy price. A 300-room hotel may be able to
save as much as $2 million over the term of an
agreement.
For a hotel, this is a great opportunity to save a
significant amount of money at no cost and no risk.
The hotel has no capital expenditure, no mainte-
nance costs and no fuel costs. The hotels responsi-
bility is limited to paying only for the discounted
energy it actually uses from the CHP system.
The on-site utility model for CHP allows hotels to
enjoy the fiscal and global benefits of CHP effi-
ciency, lower operating costs, significantly reduced
energy costs and decreased carbon footprint
while avoiding the drawbacks of ownership initial
capital expenditure, operating and maintenance
costs and manpower requirements.
Environmental benefits
Combined heat and power systems offer consider-
able environmental benefits because less fuel is
combusted when compared with purchased electrici-
ty from the utility and on-site-generated heat from a
boiler. Because CHP systems require less fuel and
burn more efficiently, they reduce greenhouse gas
emissions, such as carbon dioxide, as well as criteria
air pollutants like nitrogen oxides and sulfur dioxide.
A 300-room hotel utilizing a 300 kW CHP system
can offset approximately 18,000 tons of CO
2
over
the term of an agreement. This is equivalent to the
amount of carbon absorbed by 400 acres of forest
or saved by removing 250 cars from the road each
year for 15 years. The CHP Green Benefit also gives
hotels a more competitive edge as greater numbers
of consumers actively seek to do business with
green organizations.
When considering other clean energy options,
such as solar, keep in mind that solar power systems
require the electric utility to supply back-up power
Hospitality Construction

March/April 2008
Green Building

The energy from a combined heat and power sys­
tem has half the carbon footprint than the energy
produced by conventional means (electric utility
plus boiler). on cloudy days and at night, plus they need a boil-
er to produce heat and hot water. As a result, a
CHP system is actually better for the environment
(lower greenhouse gas emission) than a solar power
system, and CHP provides a significantly better ROI.
The annual CO
2
emissions reduction of a CHP
system for a 300-room hotel is 1,466 tons versus
440 tons for a solar power system with the electric
utility and a boiler. Thats 250 percent greater CO
2
emissions reduction for a CHP system. Additionally,
a 300-room hotel can expect around $2 million in
total cost savings over a 15-year period with a CHP
system; whereas with a solar power system, the
same hotel will still not see a return on its invest-
ment after 15 years of operation. Finally, under the
LEED accreditation point system under the category
Energy and Atmosphere, CHP systems can receive up
to 10 LEED points.
Is my hotel a good candidate?
Now that you know what CHP is and what its bene-
fits are, the following qualifying criteria can help you
easily determine whether or not your hotel is a good
candidate for a CHP system.

Your hotel has more than 100 rooms.

Natural gas is available on site.

Ther