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As businesses nationwide and around the world search for innovative ways to reduce costs and minimize their carbon footprint, advanced technology known as Combined Heat and Power (CHP) is drawing the attention of developers, property managers and other high-level decision-makers in the real estate industry.
CHP, also called cogeneration, leads to game-changing financial savings and reduced carbon emissions by generating electricity and thermal energy simultaneously, replacing or supplementing the electricity provided from the electric grid and the fuel burned in an on-site boiler or furnace.
Fueled by natural gas, the system generates electricity and thermal energy onsite.
The thermal energy is captured through heat exchangers and then can be used for space heating, domestic hot water, air conditioning and/or industrial processes.
“You are able to generate electricity on site and simultaneously use the thermal energy that the generator provides, creating a higher energy efficient system,” said Julian Varo, Senior Sales Engineer at Washington Gas.
Washington Gas, a utility company that delivers natural gas to more than 1.2 million customers throughout Washington, D.C., and the surrounding region, provides access to CHP systems and helps businesses install and utilize them.
“Buildings or businesses that have central heating, hot water systems and air conditioning receive the most benefit,” said Varo.
Applicable markets can include anything from apartment buildings and office complexes to hospitals, and industrial facilities, such as power plants and wastewater treatment centers.
As properties with CHP systems receive much of their energy directly on site, rather than from the electricity grid, they effectively have access to greater amounts of energy.
Customers who rely only on the grid typically receive between 30% and 35% useful energy, with the majority of the energy lost due to transmission generation and line loss.
Natural gas customers, including those who utilize CHP, receive between 93% and 95% useful energy.
Higher useful energy translates to lower operating costs and reduced GHG emissions for customers.
“Because a CHP system has such an abundance of energy, customers are able to save a lot on their operating costs because the system is generating a large portion of the electricity that it would normally receive from the grid,” Varo said. “With a single fuel source on site the buildings are reducing their carbon footprint and it’s are helping to achieve net-zero energy.”
According to the United States Department of Energy, the definition of a net-zero energy building is one that “produces enough renewable energy to meet its own annual energy consumption requirements, thereby reducing the use of nonrenewable energy in the building sector.”
Having a net-zero energy business is attractive to the United States Green Building Council, the agency that operates the widely-used LEED certification program.
The program, which awards buildings based on energy efficiency and other “green” performance measures, takes CHP into account, giving buildings up to 18 LEED points for installing a CHP system.
A basic LEED certification is awarded if a building earns between 40 and 49 points.
“LEED Silver and Gold certifications are awarded for buildings achieving 50-59 and 60-79 points respectively. The highest LEED certification is LEED Platinum, awarded to buildings that attain 80 or more points,” according to the commercial real estate website 42Floors.
Another key benefit of not relying solely on the electricity grid is the ability to avoid impactful, sometimes devastating power outages caused by severe storms.
In particular, a study prepared by ICF International identified at least 11 businesses with CHP systems that were able to keep their electricity on during Hurricane Sandy in 2012. Facilities, such as the ones referenced in the study, are able to utilize CHP systems to maintain full operation during natural disasters.
Within the service territories of those businesses, millions experienced a power outage described as an interruption from their electrical power network supply.
“Because they are on a CHP system, they were able to remain 100% operational during the outage,” Varo said. “It definitely helps with outages because the system will take on the brunt of the critical electric loads.”
There are local efforts to encourage developers, business owners and property managers to install CHP systems, including a program in Maryland that offers building owners grants of up to $600,000 for in-state CHP installations.
According to the Maryland Energy Administration (MEA), the program “invests in the adoption of qualified CHP technologies across Maryland’s commercial, industrial, institutional, critical infrastructure, and agricultural sectors to improve the state’s energy landscape and bring lasting operational and economic benefits to the businesses and public and private organizations that serve Marylanders every day.”
Nationwide, there are federal tax incentives, including a 10% tax credit for the cost of a CHP system.
CHP equipment is eligible for 100% bonus depreciation in the first year it is placed into service, as noted by IRC Section 48.
“CHP technology not only places you in the best position to achieve net-zero buildings, but it also places us as a country and in our region closer to the finish line of achieving carbon neutrality,” said Varo. “That’s where we all want to be from the perspective of our environment and cost savings for all people.”
To learn more about CHP and receive a free energy consultation, contact Washington Gas today.