Guide to Using Combined Heat
and Power for Enhancing
Reliability and Resiliency in
Buildings
September 2013
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U.S. DEPARTMENT OF
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c»EPA
United States
Environmental Protection
Agency
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Acknowledgments
To assist State and local officials and others involved in the Hurricane Sandy rebuilding process, the U.S.
Department of Energy (DOE), the U.S Department of Housing and Urban Development (HUD), and the
U.S. Environmental Protection Agency (EPA) developed the Guide to Using Combined Heat and Power
for Enhancing Reliability and Resiliency in Buildings. The following staff from these federal agencies
provided input on this Guidance document - Katrina Pielli and Rima Oueid, DOE; Susan Wickwire,
Neeharika Naik-Dhungel, and Charles Imohiosen, EPA; and Michael Freedberg, and Robert Groberg
(ret.), HUD.
This Guide was prepared by Anne Hampson and Jessica Rackley, ICF International, under contract to the
U.S. Environmental Protection Agency and the U.S. Department of Energy.
The images used on the cover of this report are courtesy of the New York State Energy Research and
Development Authority (NYSERDA), the International District Energy Association (IDEA), and Tecogen.
Images are of CHP installations at the following locations - the New York Marriott Downtown (85 West
St.) in New York City, the University of Massachusetts, and Tecogen CHP system installed at a
multifamily residence
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Table of Contents
Introduction 2
1. The Context for CHP in Sandy Rebuilding Efforts 2
2. CHP in State and Local Resiliency Planning 3
3. CHP Basics and Benefits 4
4. CHP System Requirements for Reliability 7
5. Determining if CHP is a Good Fit 8
6. Options for Financing CHP 11
7. Resources for More Information 12
Appendix 14
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Introduction
During and after Hurricane Sandy, combined heat and power (CHP) enabled a number of critical
infrastructure1 and other facilities to continue their operations when the electric grid went down. Time
and again, CHP has proved its value as an alternative source of power and thermal energy (heating and
cooling) during emergencies, and demonstrated how it can be a sound choice in making energy
infrastructure" more resilient in the face of extreme weather events.
To assist State and local officials and others involved in the rebuilding process, the U.S. Department of
Energy (DOE) and the U.S. Environmental Protection Agency (EPA) developed this guidance on CHP with
the U.S. Department of Housing and Urban Development (HUD). Its purpose is to provide practical
information on CHP, including what factors must be considered when configuring a CHP system to
operate independently of the electricity grid, and what steps are involved in a typical CHP project
development process.
This guidance is divided into seven sections that discuss:
1. The policy context for CHP, including in the aftermath of Hurricane Sandy;
2. CHP in State and local resiliency planning efforts;
3. CHP basics and benefits;
4. The opportunities for CHP to contribute to reliability;
5. Factors for determining whether CHP is an appropriate choice for multifamily housing and
critical facilities and steps in the CHP project development process;
6. Options for financing CHP; and
7. Additional resources that provide more detailed information.
1. The Context for CHP in Sandy Rebuilding Efforts
This guidance document on CHP supports the August 2013 Hurricane Sandy Rebuilding Strategy by
providing an overview of CHP and examples of how this technology can help improve the resiliency and
reliability of key infrastructure.
Hurricane Sandy Rebuilding Task Force Report: In response to Executive Order 13632, in August 2013,
the Federal Hurricane Sandy Rebuilding Task Force published a Hurricane Sandy Rebuilding Strategy that
describes how CHP played a successful role in keeping a number of college campuses, multifamily
housing, critical medical facilities, sewage treatment plants and other facilities running during the storm
and its aftermath.1,2 The strategy offers two recommendations to bolster CHP, district energy and other
forms of clean distributed generation, including "ensuring that Sandy recovery energy investments in
critical infrastructure are resilient" (Recommendation 12), and also "encourage Federal and State
cooperation to improve electric grid policies and standards" (Recommendation 14).
1 Critical infrastructure (CI) collectively refers to those assets, systems, and networks that, if incapacitated, would
have a substantial negative impact on national or regional security, economic operations, or public health and
safety. See, Patriot Act of 2001 Section 1016 (e).
" Energy infrastructure means assets such as electric generation plants, boilers, the electric grid, distribution and
substations; however, this term often refers to oil and gas infrastructure as well.
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Support for CHP in the Region: In the effort by States to enhance emergency preparedness and resilient
infrastructure, CHP and its role in these efforts have been recognized. As examples, New York State,
New York City and New Jersey recently initiated programs to promote CHP.
• In early 2013, New York Governor Andrew Cuomo announced that a $20 million investment will
be made towards clean energy projects (including CHP), specifically those aimed at providing
continuous power and heat during grid outages.3 This investment is based on recommendations
made by NYS 2100, one of the three commissions Governor Cuomo created in the aftermath of
Hurricane Sandy to improve the State's emergency preparedness and response to natural
disasters.
• More recently, New York City issued "A Stronger, More Resilient New York," building on the
original 2007 PLANYC, which is a comprehensive plan that contains recommendations for
rebuilding the communities impacted by Sandy and increasing the resilience of infrastructure
and buildings citywide.4The Plan discusses CHP, including the city's plan to improve building and
other codes to enable increased use of CHP for emergency power.
• New Jersey is attempting to improve its energy resilience through the New Jersey Energy Master
Plan.5 As a part of this plan, the New Jersey Economic Development Authority and Board of
Public Utilities, under Governor Chris Christie, issued funding to assist in improving grid
reliability in the State through CHP.6
2. CHP in State and Local Resiliency Planning
CHP can effectively contribute to State and local planning efforts to build resiliency for both critical
infrastructure and other facilities, including multifamily housing. CHP systems allow facilities to remain
functional in the event of a disaster, and for non-critical loads to resume functionality as quickly as
possible (e.g. CHP systems with back start capability and that meet other technical requirements, can
ensure seamless operation during a grid outage). Key facilities across sectors can be protected from
disruptions to the electricity grid through the use of CHP and other forms of distributed energy.
Prioritizing CHP Applications: A first step in considering how to incorporate CHP is to review the
Department of Homeland Security's National Infrastructure and Protection Plan (NIPP), which provides
emergency planners with a variety of assessment tools. This tool has been used in reviewing critical
infrastructure assets and can potentially be used for other facilities including multifamily housing. In
2009, the New York State Energy Research and Development Authority (NYSERDA) conducted an
assessment with the assistance of the NIPP, and found that the most appropriate focus and
prioritization of CHP should be at hospitals and water treatment/sanitary facilities, followed by nursing
homes, prisons, and places of refuge.7,8 NYSERDA, in a current funding solicitation specified a preference
for CHP systems that can run during grid outages to provide electric power to the site's priority loads for
all facilities, and not just critical facilities.9
The Need for Coordination: To ensure continued progress towards addressing grid and infrastructure
resilience through technologies such as CHP, improved coordination between government emergency
planners and the electricity sector must occur. State utility regulators can facilitate that coordination
and help reduce regulatory barriers to CHP so that these systems can be safely and more easily installed
in critical infrastructure applications. Having specific resolutions or policies in place facilitates the
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deployment of CHP and can help promote the development of this resource and ensure its inclusion in
the emergency planning process.
Incorporating CHP in Critical Infrastructure Planning: Some State and local governments have
developed, or are in the process of developing, policies to include CHP and other forms of clean
distributed generation in critical infrastructure planning, to ensure the energy security and reliability of
emergency facilities'" (e.g., hospitals, fire stations, and emergency shelters).™ For example, the damage
caused by hurricanes along the Texas and Louisiana Gulf Coasts in the past several years acted as a
catalyst to propel the adoption of critical infrastructure policies in Texas and Louisiana. These States
have both adopted laws stating that all critical government buildings must evaluate installing CHP in
new buildings or during major retrofits of existing buildings.10
3. CHP Basics and Benefits
CHP, also known as cogeneration, is the simultaneous production of electricity and heat from a single
fuel source, such as natural gas, biomass, biogas, coal, waste heat, or oil.11 Instead of purchasing
electricity from the grid and burning fuel in an
on-site furnace or boiler to produce thermal
energy (for heating, cooling, dehumidification,
or process needs), facilities can use CHP to
provide both energy services - electric power
and thermal energy - in one energy-efficient
step.12 CHP can improve a facility's operation
by increasing both the efficiency and reliability
of its energy supply, therefore providing
economic and environmental benefits.
Benefits of CHP: Figure 1 illustrates the
efficiency benefits of a CHP system compared
to a separate heat and power system. CHP
provides numerous benefits, including the
following:13'14
¦ Reduces energy costs for the user
¦ Reduces risk of electric grid disruptions and enhances energy reliability for the user
¦ Provides stability for the user in the face of uncertain electricity prices
¦ Offers a low-cost approach to new electricity generation capacity
¦ Provides an immediate path to lower greenhouse gas emissions through increased energy
efficiency
¦ Lessens the need for new transmission and distribution (T&D) infrastructure and enhances
power grid security
Figure 1: CHP Efficiency Comparison
Traditional System CHP System
Power Plant
Electricity
Efficiency Efficiency
Source: EPA CHP Partnership
III Critical facilities as defined by FEMA include hospitals, fire stations, police stations, storage of critical records, and
similar facilities.
IV When designing a CHP system for an emergency facility, a critical infrastructure application, it is important that
the system can operate independently from the grid ("islanding") and that it includes black start capability.
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Current Use: CHP currently provides over 82 gigawatts (GW) of generation capacity at more than 4,100
facilities.15 It is best used in applications that have coincident power and thermal loads, i.e. where the
demand for electrical power and heat occur at the same time.
Thirteen percent of existing CHP capacity is in commercial and institutional applications, providing
power, heating and cooling to multifamily housing, hospitals, schools, university campuses, hotels,
nursing homes, and office buildings (Figure 2).
The remaining eight-seven percent of CHP
capacity is primarily in industrial applications
providing power and steam to energy
intensive industries such as chemicals, paper,
refining, food processing, and metals
manufacturing.
Of the 2,300 commercial CHP sites, over half
are at various commercial, institutional and
multifamily properties, as shown in Figure 2.
The largest amount of existing commercial
CHP capacity in the Northeast is at municipal
district energy sites followed by universities,
hospitals, and multifamily buildings.
Figure 2: Commercial Sector CHP Sites
Office Bldgs,
Hotels,.
5.6%
Government,
7.5%
Multi-Family,
9.0%
5.6%
District
Energy, 1.2%
Hospitals,
9.2%
Schools,
10.7%
Other,
53.5%
Colleges,
11.5%
Source: ICF CHP Installation Database 2013
CHP in Multifamily Residential Buildings:
Approximately 200 multifamily housing sites
nationwide currently use CHP, representing
nine percent of existing commercial CHP
systems. Twenty-six of these sites are public
housing developments. A table in the
Appendix, at the end of this document,
shows several multifamily facilities as well as assisted living and other critical facilities with CHP systems
that remained operational during Hurricane Sandy.
CHP in Critical Facilities: Critical facilities as defined by FEMA include hospitals, fire stations, police
stations, storage of critical records, and similar facilities; according to FEMA these facilities should be
given special consideration when formulating regulatory alternatives and floodplain management
plans.16 A 2013 DOE report discusses how CHP can enable resilient energy infrastructure for critical
facilities. The report showcases several examples of how CHP systems in New York and across the
country continued to run and provide their host sites with electricity and thermal needs during extreme
weather and emergency events including examples of universities, health care centers, hospitals, data
centers, multi-family housing and local municipal utilities.17
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Brevoort Co-op, Greenwich
Village, New York
During Hurricane Sandy, the
Brevoort Co-op was the only
building on lower Fifth Avenue
able to provide energy and full
service to its residents thanks to
its 400 kilowatt (kW) CHP
system. The building has 277
units, and typically houses 720
residents. However, those
numbers swelled to 1,500 after
the storm as Brevoort residents
took in friends and family
members without power.
Salem Community College,
Carney's Point, New Jersey:
During Hurricane Sandy, the 300
kW CHP system operated
continuously for almost 48
hours. The American Red Cross
opened a disaster relief shelter
in Davidow Hall, one of the main
campus buildings. The CHP
system was the only source of
power for Davidow Hall during
the storm, and operations ran
flawlessly, providing shelter to
85 people.
District Energy, Microgrids, and CHP
Overview: Microgrids typically integrate small-scale distributed energy
resources into low-voltage electricity systems within clearly defined
electrical boundaries that act as a single controllable entity with respect
to the grid. District Energy (DE) systems typically distribute thermal
energy such as, steam, hot water, or chilled water, from a central plant
to a number of facilities connected through a piped distribution
system.18
Where feasible, both DE systems and microgrids can be operated with
CHP, and provide an attractive option for meeting the power and
thermal energy needs of multiple facilities located in close proximity
that can benefit from a centralized supply of energy.
Benefits: Microgrids and DE systems can be designed to connect and
disconnect from the grid to enable it to operate in both grid-connected
or in an island-mode.1 They can save the end-users, such as office and
multifamily buildings, significant space in their buildings since these
users do not now need to operate their own separate boilers or chillers.
They can use a mix of fuels, and most DE systems can operate at a
reliability of "five nines" (99.999 percent).20
Example Projects and Programs: Due to their resiliency and reliability
benefits, many universities and cities are interested in DE systems with
CHP or microgrids that incorporate CHP. DE CHP systems in cities and
university campuses currently represent 5 GW of installed CHP.21. Many
city and local planning departments have recently begun to require the
consideration of CHP in any new mixed-use developments. For
example, the City of San Francisco is moving forward on a large
redevelopment project—termed the Transit Center District Plan. The
Transit Center District Plan identifies CHP and DE as priorities in this
new dense mixed use development. In addition, the Obama
Administration is working closely with New Jersey on a range of new
approaches to improve the resiliency of the grid, with a focus on
microgrids and CHP. New Jersey Governor Chris Christie and Energy
Secretary Ernest Moniz recently announced an agreement to develop a
microgrid that would help ensure continued operation of the NJ Transit
rail system after a major disaster such as Hurricane Sandy.23 In addition,
Connecticut established the nation's first Statewide microgrid pilot
program, and recently awarded a total of $18 million to nine microgrid
projects that will keep critical building powered during grid outages.24
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4. CHP System Requirements for Reliability
Properly sized and configured CHP systems can effectively insulate
facilities from a grid failure. In so doing they provide continuity of
critical services, and free up power restoration efforts to be focused on
other facilities. The design elements necessary so that a CHP system
can be isolated from the grid - i.e. operate in "island" mode - are
system-specific and include additional controls and switchgear,* For
an example of a CHP system running in island mode, see the box on
Greenwich Hospital.2j In order to operate during a utility system
outage, the CHP system must have the following features:
1. Black start capability: Similar to the way a car battery is used to
start the engine of a car, a CHP system needs an electrical signal
from a battery or backup generator located on-site to allow it to
start operating when the grid experiences an outage. If both the
grid and the CHP system are down and not supplying power at the
same time, then the CHP system will need to be outfitted with
"black start capability" to begin operating.
2. CHP electric generator capable of operating independently of the
utility grid; CHP systems use either synchronous or induction
generators. Synchronous generators do not need to be connected
to an external power grid to operate, and are the only option for
"island" mode. However, they need additional safeguards to
ensure the CHP system cannot export power to the "downed" grid,
which could injure utility personnel or repair equipment. Induction
generators require an external source of power to operate. This
external power typically comes from the local grid. High frequency
generators (microturbines) or DC generators (fuel cells) also need
to have inverter technology to ensure they can operate
independently of the grid.
3. Ample carrying capacity: The size of the CHP system must be
matched to the critical loads in the facility. During the design
phase of the project, a decision will need to be made on whether
to a) size the system for optimal energy and economic efficiency,
and designate critical loads that will be supplied during a grid
outage; or b) size the system for all of the site electrical
requirements and arrange to export power to the grid or operate
at partial load on typical days.
4. Parallel utility interconnection and switchgear control: When a
CHP system disconnects from the utility grid in an outage,
appropriate switchgear and controls are required to transition to
serve critical loads without overloading the generator capacity.
These critical loads must be isolated from the rest of the facility's
non-critical loads, which must be shut down during a system
outage through the installed switchgear and control logic.
Greenwich Hospital,
Greenwich, Connecticut:
The area surrounding
Greenwich Hospital lost
power due to Hurricane
Sandy for seven days. The
transition from using grid
power to operating solely
on the 2.5 MW CHP system
went smoothly. The entire
process took about 5
minutes for the system to
shut down and restart in
island mode, while power
was supplied to the hospital
by backup generators. The
CHP system allowed the
hospital to continue normal
operations throughout the
storm and admit additional
patients that could not be
seen at other facilities.
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The switching capability can be designed for manual transfer (providing emergency power within several
minutes), automatic transfer (providing emergency power in a few cycles to a few seconds), or a static
transfer system (which provides seamless transfer from the grid to the CHP system in a stand-alone
mode). The ability to seamlessly transfer from being grid interconnected to operating in an
uninterrupted or island mode can add another 5% to 10% to the system capital costs, or more
depending on the size and complexity of the system.27
5. Determining if CHP is a Good Fit
Buildings or facilities that are considering whether CHP makes sense for them should examine the
following items:
Financial Considerations:
¦ The up-front capital investment required to install CHP or replace an existing boiler (may
also include the additional features that enable islanding and black start capability).
¦ Anticipated operations and maintenance (O&M) costs.
¦ The monetary savings that result from not paying for grid-provided electricity and
separate thermal energy.
¦ The monetary and other benefits that result from maintaining critical operations during
grid disruptions (e.g., data servers, research and development activities, caring for
hospital patients, wastewater treatment).
¦ Meeting organizational financial targets (e.g., rate-of-return, return-on-investment).
¦ Availability of State, local, utility or Federal financial incentives for CHP.
Environmental and Compliance Considerations:
¦ Compliance with air quality requirements (through permitting).
¦ Compliance with local ordinances (e.g., building codes, fire regulations).
¦ Achievement of organizational sustainability/climate change goals.
¦ State policies and requirements governing utility actions that impact CHP system
operation (e.g., interconnection standards, standby charges).
CHP Project Development: There are a variety of items that are important to successful development of
CHP projects, including engaging with a knowledgeable developer who has dealt with installation
challenges and has extensive experience in assessing the various factors that should be taken into
account, as well as engaging early on with the local utility.
The development of a CHP project generally follows five phases:
¦ Site qualification;
¦ Level 1 feasibility analysis; Level 2 investment grade analysis;
¦ Financing,
¦ Permitting, and procurement; and
¦ Developing an operation and maintenance plan.
Please consult EPA's CHP Partnership Project Development Handbook28 for details on these phases as
well as tips for managing the development process. The DOE Technical Assistance Partnerships (TAPs)29
can also provide technical assistance throughout the project development process, including project
screenings, feasibility analyses, and third-party review.
Available Assessment Tools: EPA, DOE and HUD have developed tools and resources and offer technical
assistance to aid in the CHP decision-making process.
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• EPA's CHP Partnership program offers a Spark Spread Estimator that calculates the difference
between the delivered electricity price and the total cost to generate power with a prospective
CHP system, providing an initial indication of its potential economic feasibility. The Partnership
also offers a Project Development Handbook that provides information and tools for developing
a CHP project.30
• DOE's Advanced Manufacturing Office provides CHP screenings, feasibility analysis, and third-
party review of request for proposals and CHP project development proposals, through its
regional CHP Technical Assistance Partnerships (CHP TAPs).31
• HUD also provides a CHP Screening Tool developed for multifamily housing.32
The Economics of CHP: Table 1 presents an economic comparison of a sample CHP system to the
installation of new natural gas boilers. The CHP system consists of a combustion turbine that produces
electrical power and a heat recovery steam generator. The assessment is based on a CHP system that is
sized appropriately to meet the steam needs of a medium-to-large-sized institutional facility/
Table 1: Comparative Economics between CHP and Natural Gas Boilers33
New Natural Gas
New Natural Gas
Comparison
Boilers
CHP
Peak Boiler Capacity, MMBtu/hr input
120
120
Peak Steam Capacity, MMBtu/hr
96
96
Avg Steam Demand, MMBtu/hr
76.8
76.8
Boiler Efficiency
80%
NA
CHP Capacity, MW
NA
14
CHP Electric Efficiency
NA
31%
CHP Total Efficiency
NA
74%
Annual Steam Use, MMBtu
614,400
614,400
0
Annual Steam Use, MMIbs
558.6
558.6
0
Annual Power Generation, kWh
NA
106,400,000
106,400,000
Fuel Use, MMBtu/year
768,000
1,317,786
549,786
Annual Fuel Cost
$4,608,000
$7,906,719
$3,298,719
Annual O&M Cost
$729,600
$1,687,200
$957,600
Annual Electric Savings
0
($6,703,200)
($6,703,200)
Net Annual Operating Costs
$5,337,600
$2,890,269
($2,447,331)
Steam Costs, $/MMBtu
$9.56
$5.18
($4.38)
Capital Costs
$4,200,000
$21,000,000
$16,800,000
~
10 Year Net Cash Flow (output)
$65,389,602
$54,138,850
($11,250,752)
Incremental CHP Payback
6.9 years
10 Year IRR - CHP vs. Gas Boiler
10%
10 Year NPV - CHP vs. Gas Boiler
$2,411,765
Source: ICF International
Notes: Based on 8,000 hours of operation, 7 cents per kWh electricity price, and $6/MMBtu natural gas price. CHP system cost of $l,500/kWh,
O&M costs of $0.009/kWh and 31 percent electrical efficiency. CHP availability of 95 percent and portion of electric price avoided by on-site
generation of 90 percent are assumed values. Natural gas boiler estimated cost of $35/MBtu input was provided by Worley Parsons. Net cash
v A medium-to-large-sized institutional facility is typically a facility that could use a 10 to 20 MW CHP system with
an average steam demand of at least 50 MMBtu/hr.
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flow is based on a sum of 10-year operating costs, escalated at 3 percent annually, including capital cost as a Year 1 cost. All efficiency values
and natural gas prices are expressed as higher heating values.
In this example, a CHP system is installed at a cost of $21 million compared to the cost of a standard gas
boiler costing $4.2 million.34 However, the overall economics show that the incremental cost more than
pays for itself in terms of electricity savings resulting from the CHP system. As shown in Table 1, both
the new boiler and the CHP system would serve the same steam demand (76.8 million BTU/hr) and
provide the same thermal output during the year (614,400 million BTUs annually). However, the CHP
system also provides power generation (106.4 million KWh annually).
Since the CHP system provides both heat and electricity from natural gas, the CHP system consumes
significantly more natural gas than the boiler alone (1.31 million vs. 768,000 million BTUs/year). As a
result, fuel costs for CHP in this example are almost double that of the boiler ($7.9 million vs. $4.6
million); there is also an additional $957,000 in operating and maintenance (O&M) costs. These
additional fuel and O&M costs are more than offset by the electricity savings of $6.7 million, which
yields a net savings of over $2.4 million/year. If all operating costs are attributed to the steam
production, including the annual electric savings, steam costs decrease from $9.56/MMBtu to
$5.18/MMBtu with the CHP system.
The cost of installing a CHP system in this example is, significantly higher than the cost of installing a gas
boiler. However, as a result of the significant savings from the CHP system's electricity production, the
incremental investment of $16.8 million for the CHP system provides an annual net savings of $2.4
million. In addition, the additional investment offers an internal rate of return of 10 percent and a
payback period of less than 7 years, and an internal rate of return (IRR) of 10 percent.
Comparing CHP to Back-up Generators: Many facilities utilize back-up diesel generators to provide
power during grid outages. These provide power and keep critical systems operational. Another option
for facilities installing a diesel backup generator to provide outage protection, is to design that capability
into a CHP system/1 In this type of configuration, the CHP system would be sized to meet both the base
load thermal and electricity needs of the facility. Supplemental power from the grid would serve the
facility's peak power needs on a normal basis and would provide the entire facility's power when the
CHP system is down for planned or unplanned maintenance. However, the CHP system would also need
to be sized large enough to maintain critical facility loads in the event of an extended grid outage/"
To assess the comparative benefits of CHP systems over backup generators, facilities need to carefully
evaluate their year-round energy needs, as well as their backup power needs, and determine whether
these needs can be met economically and strategically with either a CHP system or a backup generator.
Table 2 provides a comparison between CHP and backup generators on several important metrics.
Vl Some health care facilities cannot forgo a backup generator. During the CHP development process, ensure all
legal requirements relative to backup generators are considered.
v" The ability to seamlessly transfer from being grid interconnected to operating in an uninterrupted or island
mode can add another 5% to 10% to the system capital costs, or more depending on the size and complexity of the
system.
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Table 2: Comparison between CHP and Backup Generators
CHP
Backup Generators
System Performance
• Designed and maintained to run
• Only used during
continuously
emergencies
• High performance reliability
Fuel Supply
• Natural gas infrastructure typically not
impacted by severe weather
• Limited by on-site storage
Transition from Grid
• May be configured for "flicker-free"
• Lag time may impact
Power
transfer from grid connection to "island
critical system
mode"
performance
Energy Outputs
• Electricity
• Thermal (heating, cooling, hot/chilled
water)
• Electricity
Emissions
• Typically natural gas fueled
• Achieve greater system efficiencies (80%)
• Lower emissions
• Commonly burn diesel fuel
6. Options for Financing CHP
For companies or communities deciding whether or not to invest in CHP, there are a number of private,
public, and public-private financing options available to help spread risk and overcome capital
constraints.
Private Sector: Private financing options for CHP systems range from power purchase agreements35 and
other third-party financing options, to lease financing36 and debt financing.37
Public Sector: Public financing options include revolving loan funds,38 grant or rebate programs, State
tax incentives, loan guarantees, State bonds, renewable/thermal energy credit (RECs) markets, and
property assessed clean energy (PACE) financing/1" Some examples of Federal and State financing
programs that are either focused on Hurricane Sandy relief efforts or focused on energy efficiency
projects such as CHP are cited below.39
• FEMA. The Federal Emergency Management Agency (FEMA) has two programs available under
which CHP systems could potentially qualify - the FEMA Public Assistance Program,40 and the
FEMA Hazard Mitigation Program.41
• New York State. In New York State, the Community Reconstruction Zone (CRZ) Program was
recently launched to help communities develop comprehensive local rebuilding plans funded by
the State and federal government.42 CHP could be part of the strategy for this CRZ effort. New
York recently established the CHP Acceleration Program administered by NYSERDA.43
• New Jersey. In New Jersey, the Economic Development Authority (EDA) provides grants for the
installation of CHP or fuel cells.44
Vl" Commercial property assessed clean energy (PACE) programs allow building owners to receive full financing for
eligible energy saving measures (which can include CHP), repaid as a property tax assessment for up to 20 years.
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• Connecticut. In Connecticut, the Clean Energy Finance and Investment Authority currently has
$5 million in financing available for grants, loans, loan enhancements, and power purchase
incentives for CHP projects.45
7. Resources for More Information
There are a number of resources available to help determine if CHP is a good option for Sandy rebuilding
efforts. The EPA CHP Partnership, U.S. Department of Energy, and the U.S. Department of Housing and
Urban Development provide a number of CHP screening tools which provide information on CHP
technology options, estimated costs of installing CHP, financing opportunities, along with projected
benefits from such installations.
General CHP Information
¦ Department of Energy, CHP Deployment Program,
http://wwwl.eere.energv.gov/manufacturing/distributedenergy/
¦ EPA CHP Partnership, http://www.epa.gov/chp/index.html
¦ SEE Action - Guide to the Successful Implementation of State Combined Heat and Power
Policies, http://wwwl.eere.energy.gov/seeaction/pdfs/see action chp policies guide.pdf
¦ DOE and EPA, Combined Heat and Power: A Clean Energy Solution,
http://wwwl.eere.energy.gov/manufacturing/distributedenergy/pdfs/chp clean energy solution.pdf
CHP for Reliability/Resiliency
¦ CHP: Enabling Resilient Energy Infrastructure for Critical Facilities,
http://wwwl.eere.energy.gov/manufacturing/distributedenergy/pdfs/chp critical facilities.pdf
¦ Environmental and Energy Study Institute, Energy Efficient Infrastructure for More Resilient
Local Economies: The Role of District Energy, CHP, and Microgrids,
http://www.eesi.org/050813idea
¦ NYSERDA, The Contribution of CHP to Infrastructure Resiliency in New York State,
http://www.energetics.com/resourcecenter/products/studies/Pages/CHP-Contribution-lnfrastructure-
NY.aspx
Project Development Process
¦ CHP Project Development Handbook, http://www.epa.gov/chp/proiect-development/index.html
¦ HUD CHP Screening Tools,46
http://portal.hud.gov/hudportal/HUD?src=/program offices/comm planning/librarv/energy
¦ DOE Clean Energy Application Centers / CHP Technical Assistance Partnerships,
http://wwwl.eere.energy.gov/manufacturing/distributedenergy
Availability of Incentives
¦ EPA CHP Partnership CHPP incentive database http://www.epa.gov/chp/policies/database.html
¦ Database of State Incentives for Renewables and Efficiency http://www.dsireusa.org/
¦ Federal Finance Facilities Available for Energy Efficiency Upgrades and Clean Energy
Deployment, A Guide for State, Local & Tribal Leaders and their Partners
http://energv.gov/sites/prod/files/2013/08/f2/Federal%20Finance%20Facilities%20Available%20for%20
Energv%20Efficiencv%20Upgrades%20and%20Clean%20Energy%20Deplovment.pdf
Other
12
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¦ HUD Hurricane Sandy Rebuilding Task Force
http://portal.hud.gov/hudportal/HUD?src=/sandvrebuilding
13
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Appendix
Table: Snapshot of 11 Facilities with CHP and their Operation during Hurricane Sandy
Name of
Type
Size
CHP
Location
Operational during Sandy
Facility
Capacity
Multifamily Buildings
Co-op City
Multifamily
15,372
units
40,000 kW
Bronx, NY
The CHP plant at Co-op City provided the 60,000-plus
residents with power and heating throughout the storm
and its aftermath.
Seaside
Apartments
Multifamily
275 units
100 kW
State n Island,
NY
Yes
Heritage House
Assisted Living
56 units
75 kW
Falmouth, MA
The CHP system was operational during Sandy, providing
standby capabilities to the facility.
Schwab house
Multifamily
654 units
300 kW
New York, NY
Yes
Toren
Condominiums
Multifamily
240 units
500 kW
Brooklyn, NY
Yes
Critical Facilities
- Healthcare
St Joachims
and Ann
Nursing &
Rehab
Nursing
200 beds
300 kW
Brooklyn, NY
The Center stayed open and continued to provide 24-hour
care to more than 200 residents.
South Oaks
Hospital
Hospital
245 beds
1,250 kW
Amityville, NY
South Oaks was able to provide critical services for two
weeks relying solely on its CHP system.
Christian
Health Care
Center
Hospital
300 beds
260 kW
Wyckoff, NJ
The CHCC CHP system ran independently of the grid for 97
hours, meeting all of its residents' power, heat, and hot
water needs.
Critical Facilities
- Colleges & Universities
The College of
New Jersey
College
39 major
buildings
5,200 kW
Ewing, NJ
The campus CHP system stayed in island mode for about a
week because of severe utility infrastructure problems,
providing more than 40% of the campus' electricity needs.
Princeton
University
University
180 on-
campus
buildings
15,000 kW
Princeton, NJ
The CHP system provided the university with power,
heating, and cooling throughout the storm and its
aftermath. The CHP plant was vital to maintaining
important university facilities such as research labs,
experiments, and data that could have been compromised
by a loss of power.
Critical Facilities
- Public Infrastructure
Bergen County
Utilities
Wastewater
Plant
Water
Treatment
Serves
47
commun
ities
2,800 kW
Little Ferry,
NJ
The CHP system operated seamlessly for 24 hours without
support from the local utility, and was praised by the
adjacent power plant for being able to provide treated
cooling water throughout the storm event.
14
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References
1 Executive Order -- Establishing the Hurricane Sandy Rebuilding Task Force. December 7, 2012.
http://www.whitehouse.gov/the-press-office/2012/12/Q7/executive-order-establishing-hurricane-sandv-
rebuilding-task-force.
2 HUD, Hurricane Sandy Rebuilding Task Force. Hurricane Sandy Rebuilding Strategy. August 2013.
http://portal.hud.gov/hudportal/HUD?src=/sandvrebuilding.
3 Governor's Press Office. Governor Cuomo Announces $20 Million for Combined Heat and Power Systems to
Generate Reliable, On-Site Power. February 14, 2013. http://www.governor.nv.gov/press/02142Q13-20million-
for-combined-heat-and-power.
4 NYC, Special Initiative for Rebuilding and Resiliency. PLANYC, A Stronger, More Resilient New York. June 11, 2013.
http://www.nvc.gov/html/sirr/html/report/report.shtml.
5 State of New Jersey, Energy Master Plan, http://ni.gov/emp/ .
6 New Jersey Economic Development Authority. Christie Administration launches new CHP/Fuel Cell Program to
improve grid reliability, increase energy efficiency and reduce energy cost. January 16, 2013.
http://www.nieda.com/web/Aspx pg/Templates/Press Rls.aspx?topid=721&Doc ld=1921&ParentDoclD=163
7 http://www.dhs.gov/xlibrary/assets/NIPP_Plan.pdf
8 The Contribution of CHP to Infrastructure Resiliency in New York State, Final Report, April 2009, New York State
Energy Research and Development Authority.
http://www.energetics.com/resourcecenter/products/studies/Pages/CHP-Contribution-lnfrastructure-NY.aspx.
9 NYSERDA PON 2568 CHP Acceleration Program, http://www.nvserda.nv.gov/PON2568.
10 http://files.harc.edu/sites/gulfcoastchp/newsletters/Newsletter 20120626.pdf
11 EPA. Combined Heat and Power Partnership. Basic Information, http://www.epa.gov/chp/basic/index.html.
12 DOE. "Combined Heat and Power: A Clean Energy Solution." August 2012.
http://wwwl.eere.energy.gov/manufacturing/distributedenergy/pdfs/chp clean energy solution.pdf.
13 Ibid.
14 Ibid.
15 CHP Installation Database developed by ICF International for Oak Ridge National Laboratory and the U.S. DOE;
Data current as of the end of 2012. Available at: http://www.eea-inc.com/chpdata/index.html. This represents
over 8 percent of total U.S. power generation capacity.
16 FEMA. Critical Facility. Definition/Description, http://www.fema.gov/national-flood-insurance-program-
2/critical-facilitv.
17 DOE, CHP: Enabling Resilient Energy Infrastructure for Critical Facilities,
http://wwwl.eere.energy.gov/manufacturing/distributedenergy/pdfs/chp critical facilities.pdf.
18 The International District Energy Association (IDEA) has an illustration of a District Energy system that can be
accessed at: http://www.districtenergy.org/what-is-district-energy.
19 The International District Energy Association (IDEA) has an illustration of a microgrid system that can be accessed
at: http://www.districtenergy.org/assets/pdfs/03AnnualConference/Monday-A/A5.2SANCHEZIvette-Sanchez-
IDEA.pdf.
20 International District Energy Association. What is District Energy? http://www.districtenergy.org/what-is-district-
energy.
21 CHP & District Energy System Profiles. Prepared by IDEA for the Department of Energy Clean Energy Regional
Application Centers. May 25, 2011.
22 State and Local Energy Efficiency Action Network. Guide to the Successful Implementation of State Combined
Heat and Power Policies. March 2013.
http://wwwl.eere.energy.gov/seeaction/pdfs/see action chp policies guide.pdf.
23 DOE Energy Department Partners with State of New Jersey to Study Ways to Improve the Reliability of New
Jersey's Transit System in Aftermath of Superstorm Sandy. August 26, 2013. http://energy.gov/articles/energy-
department-partners-state-new-iersev-studv-wavs-improve-reliabilitv-new-iersev-s.
24 Governor Daniel P. Malloy. Gov. Malloy Announce Nation's First Statewide Microgrid Pilot. July 24, 2013.
http://www.governor.ct.gov/mallov/cwp/view.asp?A=4010&Q=528770.
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25 Table A-2, Combined Heat and Power: Enabling Resilient Energy Infrastructure for Critical Facilities, March 2013.
ICF International. Prepared for Oak Ridge National Laboratory
26 Combined Heat and Power: Enabling Resilient Energy Infrastructure for Critical Facilities, March 2013. ICF
International. Prepared for Oak Ridge National Laboratory.
https://wwwl.eere.energv.gov/manufacturing/distributedenergy/pdfs/chp critical facilities.pdf
27 Personal communication with NYSERDA based on a review of all CHP facilities funded by NYSERDA since 2007
and that were designed to operate during a grid outage. August 9, 2013
28 EPA CHP Partnership, CHP Project Development Handbook.
http://www.epa.gov/chp/documents/chp handbook.pdf
29 DOE. http://wwwl.eere.energy.gov/manufacturing/distributedenergy/ceacs.html.
30 Available at http://www.epa.gov/chp.
31 DOE Technical Assistance Partnerships, http://wwwl.eere.energy.gov/manufacturing/distributedenergy.
Through September 30, 2013, the CHP Technical Assistance Partnerships (CHP TAPs) are known as Clean Energy
Application Centers (CEACs).
32 Oak Ridge Engineering Science and Technology Division. http://eber.ed.ornl.gov/HUD CHP Guide version 2.1/.
This Level 1 Tool calculates the capital costs, savings and payback for a CHP system prior to determining the cost of
adding islanding capacity.
33 EPA CHP Partnership. Fact Sheet: CHP as a Boiler Replacement Opportunity.
http://www.epa.gov/chp/documents/boiler opportunitv.pdf.
34 Personal communication with NYSERDA based on a review of all CHP facilities funded by NYSERDA since 2007
and that were designed to operate during a grid outage. August 9, 2013.
35 An arrangement whereby a third-party developer owns, operates, and maintains the CHP system, and a host
customer agrees to purchase the system's electric and thermal outputs. This financial arrangement allows the host
customer to receive stable, and sometimes lower cost electricity, while the CHP provider acquires valuable
financial benefits such as tax credits and income generated from the sale of electricity to the host customer. DOE
information on renewable PPA's and sample documents can be accessed at:
https://wwwl.eere.energy.gov/femp/financing/power purchase agreements.html.
36 Leasing can be an attractive financing option for smaller CHP projects. The operating savings resulting from the
installation of CHP—the bottom-line impacts on facility energy costs—are used to offset the monthly lease
payments, creating a positive cash flow for the company. Lease financing encompasses several strategies in which
a facility owner can lease all or part of a project's assets from the asset owner(s).
37 Debt financing means borrowing money on credit with a promise to pay the amount borrowed, plus interest.
Debt financing programs, such as low-interest loan programs, are designed to improve the availability and
affordability of capital for CHP development. For small businesses, the Small Business Administration (SBA) can
guarantee bank loans up to $750,000 for energy efficiency projects. The SBA guarantee could improve a
borrower's ability to secure a loan.
38 A loan program that provides low-cost financing to eligible entities within state/tribal lands for specific projects.
39 New York, New Jersey, and Connecticut have other CHP incentive programs in addition to those highlighted in
this section. Please see the EPA's dCHPP (CHP Policies and incentives database) for more information on available
incentives, http://www.epa.gov/chp/policies/index.html.
40 FEMA. Public Assistance: Local, State, Tribal, and Non-profit, http://www.fema.gov/public-assistance-local-state-
tribal-and-non-profit.
41 FEMA. Hazard Mitigation Grant Program, http://www.fema.gov/hazard-mitigation-grant-program.
42 Governor's Press Office. Governor Cuomo Announces Community Reconstruction Zones Funded by Federal
Supplemental Disaster Aid to Guide Local Rebuilding Process. April 26, 2013.
http://www.governor.nv.gov/press/04262013cuomo-reconstruction-federal-disaster-aid.
43 NYSERDA, http://www.nvserda.nv.gov/Funding-Opportunities/
Current-Funding-Opportunities/PON-2568-CHP-Acceleration-Program.aspx.
44 New Jersey's Clean Energy Program, Combined Heat & Power (CHP) and Fuel Cells-Large Scale Projects,
http://www.nicleanenergv.com/commercial-industrial/programs/combined-heat-power/large-scale-
proiects/combined-heat-power-chp-and-.
16
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45 Energize Connecticut, Combined Heat & Power Pilot Program,
http://www.energizect.com/businesses/programs/Combined-Heat-Power.
46 HUD CHP Guides introduce multifamily building owners to CHP and to feasibility screening tools for evaluating
CHP at multifamily buildings,
http://portal.hud.gov/hudportal/HUD?src=/program offices/comm planning/librarv/energy.
17
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For More Information:
Visit the U.S. DOE Advanced Manufacturing Office Website at www.eere.energy.gov/manufacturing.
Visit the U.S. Housing and Urban Development Office Website at http://portal.hud.gov/hudportal/HUD?src=/sandvrebuilding
Visit the U.S. EPA Combined Heat and Power Partnership at http://www.epa.gov/chp/.
September 2013
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