According to the needs of the site, the emphasis of O&M might include maintaining efficiency, maximizing operational hours, minimizing operational costs, minimizing emissions of CO2, disposing of waste in a productive manner, or ensuring reliable and rapid start-up, among other options. The site might need flexibility of supply of heat, electricity or both to match varying demand, and it might need the options to sell electricity to and buy it from the national grid. The cost–benefit analysis can vary according to circumstances.
An engineer works on the advanced control system of a CHP unit
For example, pulp and paper plants do not want unexpected outages because an interruption to the production process causes major disruption and expense. As a result, they require reliability of supply above all else. Hospitals, on the other hand, have different pressures. While they need very reliable supply, they also often have investments tied in over long periods. One concern that hospital authorities face is the need to have reliable and known costs for operating the supply. Outsourcing O&M removes the risk of varying costs and leaves it with a company which specializes in this technology.
In addition to hospitals, there are many other types of operations for which subcontracting out O&M activities makes good sense. In particular, aside from financial considerations, there is the question of the growing skills shortage in many countries. It is becoming increasingly hard to recruit sufficiently qualified engineers. Furthermore, there is an increasing trend towards using small numbers of staff who are flexible in their operation and maintenance of such plants. This requires great experience, flexibility and initiative on the part of the plant staff, demands which require them to be knowledgeable, experienced and well trained. Recruiting and retaining such staff is difficult for non-specialist organizations. Specialist firms can usually deploy staff more effectively, transferring them from one site to another as operational needs vary. Specialists can also maintain a central reserve of operators who can travel to any specific site as required.
In addition to being able to optimize the use of skilled staff, O&M specialists can often monitor plants remotely, sometimes several from one central location. this allows the specialist firm to optimize its use of monitoring staff.
New York finds formula for DG success
It is often argued that the local regulatory environment is crucial to the success – or otherwise – of CHP and other on-site generation technologies. In the US, the New York State Energy Research and Development Authority’s Energy $mart programme has proved this to be right, reports Elisa Wood.
At what point can a state say it has achieved success in developing the distributed generation market? How about when every new office tower in its largest city includes on-site power?
Such is the case in New York City, the world’s 11th largest city, where all office towers now at the planning stage include CHP systems, according to the United States Combined Heat and Power Association (USCHPA). This phenomenon occurred after the state uncovered vast potential for CHP and set up an incentive programme to spur the market.
Distributed Energy Financial Group, a consulting firm based in Washington, DC, recently listed the top 10 areas in the US that offer the most opportunity for distributed energy. New York made the list twice, once as part of the larger New York–New Jersey–Pennsylvania market and again as a state in itself.
This is no surprise to the New York State Energy Research and Development Authority (NYSERDA), which in 2002 analysed how much CHP exists in the state’s US$42 billion energy market and how to encourage more installations. The state agency found that New York had about 5000 MW of CHP at 210 sites, most of them large merchant plants at industrial facilities. Knowing that the future of CHP is likely to be in smaller systems, the agency proceeded to investigate the technology’s potential at sites such as hospitals, commercial office buildings and farms. NYSERDA uncovered 26,000 sites that could support a total of 8500 MW, a significant portion of New York’s 30,000 MW peak demand.
All office towers now in planning in New York City will include CHP systems
However, while these sites were compatible with CHP from a technical perspective, installation did not necessarily make economic sense. In fact NYSERDA concluded that if market conditions and regulatory burdens remained the same, it was likely only 750 MW – less than 10% of the potential – would be installed over the next decade. At the same time, the study concluded that if the state stimulated the market with incentives and removed regulatory roadblocks, it could triple CHP growth to 2200 MW.