HomeDecentralized EnergyCogeneration CHPHow inlet cooling helps CHP's bottom line value

How inlet cooling helps CHP’s bottom line value

Everest Sciences has been a leader in turbine inlet cooling for close to a decade. Decentralized Energy caught up with CEO Gary Hilberg to talk about how the company’s technology can benefit the cogeneration sector, as well as engage in a wider conversation about the space.

Within the cogeneration field, Everest’s focus has been squarely on inlet cooling for gas-fired turbines. It’s a growing market and Everest commands a particular view.Gary Hilberg of Everest Sciences

“Our focus is primarily on smaller gas turbines, less than 20 MW, maybe 25 MW at the top end.”

“It’s a segment that most of the inlet companies have ignored because they are such small packages and building a package for a 10 MW gas turbine is vastly different from building a package for a 200 MW gas turbine. We do an interface with the inlet area of the gas turbine and do a complete solution, providing filtration and our primary solution, a hybrid system very focused on efficiency.”

The company’s motivation is to ensure equipment doesn’t lose power and flow on hot days, which can eat into production and profits.

“Efficiency is critical to us,” says Hilberg, “And critical to combined heat and power, because obviously, your dollars per kilowatt are so high. That’s one of the reasons you can afford to make your system optimized when your run hours are very high.”

Some of the largest midstream gas and chemical manufacturing companies in the world have implemented the company’s patented cooling solutions and benefit from outsized returns and short paybacks on these investments.
At first the Tulsa-based firm was preoccupied with the traditional CHP offerings found at universities and landfill facilities, before changing approach. The company found that universities, inà‚ particular, often based their decisions on non-economic factors and it took too much effort. They now seek out and are sought out by developers looking for a commercial advantage.

“We converted our primary focus in the gas turbine segment to midstream gas because the gas compressors are much more prevalent. There are 15-20,000 of them in the US so while the CHP is a secondary focus for us we stay engaged with it because it’s an easy market to stay in touch with.”

Hilberg notes that while CHP in Europe is generally small in stature, in the US, it tends to be ‘mega scale’ through big refineries pulp mills and big steam users using vast quantities of cooling. The recent revolution in natural gas stateside is facilitating a confidence in investment in the entire gas generation area, trickling down now to smaller CHP and the effective role it can provide.

“By definition these (large scale operations) are CHP but it gets caught in between because it’s such a big scale and they tend to sell a lot of power external to their station whereas small scale CHP is much more about balancing of internal power and 100 per cent of the thermal load.”

“As with the big industrial gas users there is a systematic belief now that natural gas will be competitively priced for the foreseeable future in North America which gives someone who has a 5 or 10 year payback the confidence to invest in a power generation entity at a small scale displacing thermal load and then getting the power.”

Gas certainly is king at the moment in the US, with coal not currently economical. It means the bulk power price is low so at first glance it looks like small CHP can’t compete, however Hilberg says enough if you dig into the commercial and industrial tariff there is an interesting reason the technology makes sense.

“There has been a decade-long focus on renewables, driven by politics and it has forced the Public Utilities Commission to validate and put on renewable energy mandates, all of which are good for the environment and I have no argument with that.”

“The renewables guy will say we are just as competitive at the wholesale level but if you look at the true cost of those programmes they’ve rolled down into the rate base. So if you look at the split in the US at the industrial commercial level, the tariffs are two piece and most of these tariffs have a capacity charge and that charge is based on the maximum usage in any month.”

“Interestingly, a lot of these utilities have what we call a ratchet, which means if I’m a nominal 10 MW user, if I put on 12 MW in July due to summer cooling load it’s quite possible that the utility will charge me a capacity charge for many months past July so even if I peak at 12 MW in July, in August and sometimes for 12 months after I am still paying our capacity of 12 MW.”

“There some really good economics that play to the CHP plant caused by the market change and the intermittent renewable load we have.”

“What we do with the chiller systems is we allow the customer to make sure their gas turbine always produces the maximum power. If you have a traditional gas turbine and you don’t have gas cooling involved on, it you could lose up to 20 per cent of your power in the summer which means you could be paying that capacity charge for many months beyond that.”

“With the whole peak power thing you still find in North America periods of high heat 30 degrees c plus temperatures all throughout the country, so even if you are sitting in a place like Chicago or NYC or California where you may only get it for a few days a month or a few weeks in the summer you could be penalised for that lack of performance for several months or even the whole year.”Everest Sciences

Everest hasn’t yet dedicated itself to establishing an international presence though it does win regular contracts in Latin America.

“The challenge for us is our technology is not a commodity technology that we know the customer will buy no matter what. We haven’t got to that point yet but we expect to be there in a few years.”

“We work in Mexico and Latin America and we have worked with Pemex, the national oil company there and there is a big CHP mission in Mexico driven mainly by the very high price of power in that country and the import of natural gas making gas much more competitive. Right now, gas is on a commercial basis ahead of electricity. We try to partner with international organisations but it’s not quite our focus yet.”

Hilberg believes soundings from the Trump administration about ambitions for coal won’t threaten the existing energy status quo in the US. He bases this on the nature of government in the country and simple economic reality.

“What most people don’t realise in the US is a lot of our individual power policies are not impacted by the federal government or FERC, but much more so by the Public Utilities Commission. In some cases there are state generators that certainly have to go to FERC for approval but they can do whatever they want and the other thing with our utilities is that they are much more focused on economics.”

“So no matter what the administration thinks it can do about coal, if coal becomes more and more expensive the gap between it and gas becomes higher and higher.”

“Even if you want to make coal look very good you couldn’t get a coal plant or any large multibillion project invested and built in four years. it. Personally, I don’t think we will see any conversion away from gas and certainly gas is where all of the CHP in North America is going to come from.”

Over the coming decade there’s another reason to believe in the potential of CHP to make a valuable contribution to the US energy system. In fact, it’s a worldwide phenomenon, as regulations bite on fossil and renewables continue to proliferate.

“What you are seeing in the US market will be much more distributed energy-oriented on the back of government support of renewables. But they also realise the US consumer is not going to accept an outage. US consumers are demanding and a utility has a mandate to serve. In that case a CHP developer if they negotiate properly should be able to get into any utility now because of the need for flexible generation.”

“If you think about it if I’m a plant that working 12-14 hour days on shifts most likely at night I would be more than willing to give the utility power, even if I’m running a backshift, I’m not going to be running as much load as I would on the day shift. So, there is an interesting dynamic where the ability to generate your own power and give the excess power to the utility could be more prevalent. It’s not a massive issue yet but we are getting there.”

“For regional utilities flexible operation is a huge issue. Responsiveness is a tremendous asset for onsite power generators.”

For now Everest will continue to do what it does best.

“We will fit in the space by being a critical component for gas turbine owners trying to be consistent and flexible during the summer that loses 25 per cent of its power during summer peak. We are going to be that required auxiliary piece of equipment that makes the gas turbine look a solid block of power.”

“We think the OEM will default to having to use chilling and will have to have agreements with companies like Everest to buy systems like this because most developers will not have the skills to integrate any kind of extra complexity.”

“We are already working with several gas turbine OEMs to allow them to deliver a consistently performing gas turbine. We communicate with all suppliers and all modern gas turbines have this problem ” and we proactively deal with end users so they fully understand the value of consistent power because most people don’t. The value proposition associated with our tech is high.”