BGE’s Combined Heat and Power Program | Alliance to Save Energy

BGE’s Combined Heat and Power Program

Buildings

A lot of energy consumption happens indoors, making buildings an important target for energy efficiency. And the energy efficiency toolkit is getting smarter: emerging innovations around building systems and grid-interactive technologies are combining with proven solutions like high-efficiency windows and insulation to make the promise of decarbonization a reality in the buildings sector. But to get there, we need to do more to push energy efficiency into the market.

 

Combined Heat and Power Program

 
Program Summary

Participants:

Nonresidential – including industrial, commercial, governmental, institutional and nonprofit – electric service customers within BGE’s service territory are eligible for the program.  A participant’s Combined Heat and Power (CHP) system:

  • Must operate at a minimum of 65% efficiency on an annual basis;
  • Must be sized to not exceed 100% of the most recent historical annual consumption or peak demand; and
  • May be driven by any suitable generating technology including a reciprocating engine, a gas turbine or a fuel cell.

Customers are incentivized to:

Install a CHP system.

Incentives:

Up to $2.5 million of financial incentives available per project.

Support provided to customers:

Forums for peer-to-peer engagement help reinforce best practices and build confidence in the program.

Impact:

In 2017, the program achieved more than 29.4 GWh of gross energy savings and more than 2 MW of gross peak demand savings.

 

Baltimore Gas and Electric Company’s (BGE’s) Combined Heat and Power (CHP) Program offers incentives, technical support, and peer-to-peer learning experiences to guide customers through both the design and early implementation phases of their CHP projects. Since 2012, ten CHP projects – ranging from 65 kW to 8 MW – have been completed with the support of BGE’s CHP Program, amounting to a total savings of 103.5 GWh to date.  

Customer Benefits

Financial incentives. One of the key challenges in implementing a successful CHP project is managing the high upfront costs: Installation costs for a CHP project range from about $1,200 to $4,300 per kW. To ameliorate the high price point for customers, BGE’s CHP program offers a financial incentive of up to $2.5 million per project ($1,200/kW up to and including 1 MW; $900/kW over 1 MW). These incentives improve the feasibility of projects and expose customers to the possibility of installing CHP systems. Further, customers are eligible for additional benefits through the state from the Maryland Energy Administration, which offers grants of up to $500,000 per CHP project.

The program provides participants with part of the incentive upfront to help kickstart a CHP project, and then provides the rest of the incentive after the participant has followed through on installing and successfully operating the CHP system.

Early technical support to support the scoping and application process. BGE also provides prospective participants with a dedicated CHP consultant who helps them throughout the entire application process at no cost, including through:

  • Conducting market-sector focused group meetings to encourage the customer’s Board to consider CHP
  • Providing energy management and generation expertise by:
    • Conducting an ASHRAE-level 2 walk-through with project developers recommended by the customer;
    • Developing an energy model of the customer’s facilities and conducting an engineering analysis of third-party feasibility studies;
    • Providing feedback on energy and operational savings, life cycle cost benefits, and estimated pricing for project materials and labor.
  • Providing project development support, including information on financing options through:
    • Assisting with determining the potential project’s scope, objectives, priorities, roles and responsibilities, timeline, deliverables, and communication and feedback mechanisms;
    • Providing updated information on additional federal, state, and local CHP incentives or grants to make projects economically more viable;
    • Preparing a complete financial analysis alongside CHP installation options, e.g. the Power Purchase Agreement, ownership option, equipment lease, etc.

Systems efficiency benefits. CHP improves systems efficiency: By generating and coordinating electrical and thermal energy resources onsite, it enables a facility to make local use of the heat from power generation that would otherwise be wasted. While the average efficiency of a fossil-fueled power plant in the U.S. is 33%, CHP systems typically achieve total systems efficiency of 60–80% by recovering waste heat. In addition, BGE works with customers to maximize other energy efficiency opportunities (like BGE’s Smart Energy Savers Program) prior to sizing the generator for the CHP system in order to minimize the capacity of the equipment required and thereby minimize upfront equipment costs. The dedicated CHP consultant helps participants identify opportunities to deploy energy efficiency measures or improve energy management practices across multiple building systems, including lighting, HVAC, and/or building controls. As a result, embedded within a customer’s commitment to embark on the path toward CHP is also a commitment to prioritize energy efficiency in building systems outside of the power generation system.

Systems efficiency addresses not only the interactions of equipment and controls within and among HVAC, lighting, and other building systems, but also interactions among multiple buildings and the integration of buildings and the grid. In addition to resulting in overall energy savings, distributed, multi-building energy systems – including CHP systems – can improve energy reliability and building and infrastructure operating resiliency by enabling continued operation during major (low-probability/high-consequence) events; power reliability under routine conditions; and improved power quality. The U.S. Department of Energy notes that “CHP has proven effective in ensuring uninterrupted electric service through multiple major disasters in hospitals, schools, and places of refuge.”

Incentives tied to success of operations. Even after a CHP system is successfully installed and upfront costs are paid, follow-through is key to ensuring the projected savings are realized.  To ensure that customers install the planned CHP systems, BGE ties more than half of the incentive funds to implementation. The total incentive is assessed at the beginning of the project depending on the installed capacity, and 40% of the incentive is provided to the customer during the design and commissioning processes. Payment of the remaining 60% of the incentive is contingent upon confirmation that metered data demonstrates 12 consecutive months of actual kWh generation using the installed CHP system (which can take place within a two-year window), and the payment amount is based on the amount of actual kWh generation. Tying the incentive to successful operation is a key driver for success.

Long-term operational support.  To address potential challenges presented by the customers’ lack of familiarity with a new CHP system, BGE also requires participants to engage in a five-year service contract with the equipment manufacturer to support maintenance to the generator. Facility managers who are not trained in CHP operations – and who previously may have subscribed to the “Green Button Theory” that pushing the ‘start’ button is the only requirement for running a CHP plant – can become frustrated by the complexities of CHP. These operators may turn off the new CHP plant, falling back on sourcing their power solely from the grid. BGE faced this challenge with a participant who turned off their CHP system toward the beginning of the program. This experience led BGE to reevaluate how it can further increase the likelihood of success for its CHP Program participants. As a result, to help prevent abandonment of a new CHP system and further bolster successful operations, BGE added the five-year service contract as another program requirement. The guaranteed service support demonstrates BGE’s understanding that it takes time and technical support for a facility manager to effectively operate a new CHP system and to recognize its benefits.

Customer benefits align with utility benefits. Particularly for a project of considerable size like a CHP system, the risks associated with not meeting a goal are high and require investment in financial and technical support – including providing guidance on equipment sizing, heat utilization, feasibility, and independent third-party review – to maximize the probability of successful execution and operations. While the participant is relying on their new CHP system to meet its projected energy and cost savings, BGE also depends on the projected savings over time to help support its energy and grid reliability goals – for the current EmPOWER Maryland program cycle from 2018 through 2020, BGE’s CHP program is expected to contribute 72 GWh of savings. BGE uses a third-party evaluator to ensure the savings are achieved as expected.

Peer-to-Peer Engagement

Another key to the success of the CHP Program is peer-to-peer engagement. Since the beginning of the program, the experiences of existing participants have often proven to be the most compelling information shared with prospective participants.

Networking among participants allows them to discuss lessons learned. In addition, prospective customers are encouraged to join the program through direct engagement with current participants who share their success stories – including experiences of operational resilience and energy cost savings.

When the CHP Program was launched in 2012, prospective participants were largely skeptical both because of the high upfront cost and lack of awareness of resilience benefits. It was not until Hurricane Sandy hit in October 2012 that prospective participants in Maryland started seriously considering the resilience benefits of joining the CHP Program. The first BGE customer to join the CHP Program was located close to New Jersey, and witnessed the major impacts from the hurricane on a similar facility in that state. Once the first customer joined, BGE organized opportunities for that first participant to speak with prospective participants to share their experience with their CHP system and describe the benefits firsthand. Since 2012, BGE has supported ten completed CHP projects through the CHP Program, and all participants have cited resilience as a key driver – even more than the cost and energy savings – for their participation.

"This is an energy efficiency program, but from a customer’s perspective, they’re prioritizing reliability and resilience."

- Jim Libertini, Product Manager, Baltimore Gas and Electric Company

BGE continues to facilitate meetings that include existing participants, prospective participants, and program implementers to both share lessons learned and foster confidence in the CHP Program. BGE leverages peer-to-peer engagement as an effective messaging tool considering that a shared experience from a peer often holds significant weight. The meetings may involve a tour of a participating facility of comparable size to that of the prospective participants, followed by a roundtable discussion. The meetings may also take the form of an informal networking event. Regardless of the forum, the engagement opportunities provide multiple benefits, including:

  • Allowing prospective participants to learn from the experience of both program implementers and existing participants.
  • Enabling program implementers to walk customers through the program’s process and the available support for managing the hurdles (e.g., permitting processes, interconnection agreements) that come with a large and complex project.
  • Providing a platform for existing participants to engage with one another to discuss their experiences, ask for relevant advice, and share best practices.
Looking Forward

While the number of participants in the CHP Program is small, they collectively make up a significant portion of BG&E’s power demand. Still, there is opportunity for growing the number of participants in BGE’s CHP Program and every new participant presents an opportunity for large savings. BGE will continue to leverage its networking events with prospective participants to raise awareness and facilitate connections with existing participants to help address concerns by prospective customers.

Firsthand experience shared by customers will continue to be a key driver for increasing program participation.

In addition, BGE focuses its outreach on customers who are good candidates for CHP systems. Good fits for CHP systems include facilities that have a critical reliance on power 24/7, regardless of an outage (e.g., hospitals, prisons, or universities), as well as facilities that require continuous heating (e.g., facilities with high capacity laundry services).

Contact

Jim Libertini, Product Manager, Baltimore Gas and Electric Company

Jim.Libertini@bge.com | 443.829.6351

 

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