BELOIT (WIS.) MEMORIAL HOSPITAL first looked at combined heat and power (CHP) six years ago when it started investigating the best way to replace its existing emergency generators, expand its air conditioning capability, modernize its electrical distribution system, eliminate its 440- and 240-kilowatt (kW) diesel-fired engines, and upgrade its electrical bus to conform to the national electric code.
CHP, which used to be commonly known as "cogeneration," made sense because, after adding only a little over $1 million to the overall $5 million project, it promised to pay for itself within six years, greatly reduce costs, and improve the reliability of the hospital's energy supply.
Now the hospital has one of the lowest operating costs per square foot of any health care facility in the upper Midwest. Operating costs for 2002, the last full year for which data are available, were only $1.73 per square foot, making Beloit Memorial the fifth lowest-cost hospital to operate according to a survey of 400 facilities.
After installing two 1,500-kW CHP engines to create a 3-megawatt power plant, adding a new absorption chiller, replacing the switch gear and transfer switches, and dividing the bus into three branches, Beloit Memorial no longer has to rely on the local utility company for an uninterrupted power supply at a consistent price. "We can be self-sufficient in case of a loss of power or fluctuations in price or energy reliability with the deregulation of utilities," says Philip Larson, director of facilities engineering.
The story is similar for Northwest Community Hospital, Arlington Heights, Ill. Back in the mid-1990s, the hospital took a look at CHP when it realized it had to retool its 30-plus-year-old heating and cooling plant. Based on a thorough economic and return-on-investment analysis, the hospital decided in 1997 to purchase three Waukesha engines with a total generating capacity of 3.45 megawatts as part of a new 20,612-square-foot CHP plant that would provide cooling as well as heating and power.
Since then, Northwest Community has saved between $500,000 and $700,000 a year in the cost of electricity in a high-energy-cost part of the country. The CHP system generates 85 percent to 98 percent of its own electricity, running from 9 a.m. to 6 p.m. daily. When it shuts the engines down in the evening, the hospital is able to buy electric power at a cheaper price than it can produce on its own by taking advantage of peak shaving load.
In the summer, Northwest Community buys only 1 to 1.2 megawatts of its total 4.4- to 4.5-megawatt power needs, and in the winter, it supplies just about all of its 3.4- to 3.45-megawatt energy requirements.
"We have some fairly reliable electrical sources of power. We have two utility company feeds coming into the hospital from different electrical grids so we have two levels of protection against power failures. But we also have another level of protection because we can produce 3.4 or 3.45 megawatts of our own power," says Charlie Stevenson, director of plant operations.
With aging, vulnerable electrical grids across the country, hospitals are searching for the best ways to safeguard their power sources. During the Aug. 14 power outage that plunged 50 million people into darkness throughout the Northeast and eastern parts of the Midwest, it was business as usual at the 1.5-million-square-foot Moses Division of Montefiore Medical Center, New York City.
Because of its 14-megawatt CHP plant, the hospital had full air conditioning and kitchen service as well as surgical and diagnostic equipment support. Meanwhile, Montefiore's nearby Einstein Division, which does not have CHP, could supply emergency power for its critical care and intensive care units and operating rooms, but no air conditioning and only minimal lighting.
Since the Moses Division expanded its CHP plant last year, it now meets 92 percent of its power needs, making it the largest energy self-sufficient hospital in New York. "When the blackout hit, we didn't feel the impact. We had no problems," says Charlie Balancia, vice president of facilities engineering.
Many hospitals are prime candidates for CHP. It protects hospitals from disruptions in energy transmission, decreases current energy costs and serves as a hedge against rising or at least volatile future costs associated with deregulation, and it greatly enhances energy efficiency. According to some estimates, CHP provides as much as 80 percent energy efficiency compared to 33 percent efficiency from traditional sources of power.
Yet Beloit Memorial, Northwest Community, and the Moses Division of Montefiore Medical Center are three of only about 200 hospitals nationwide that have adopted CHP. Why is that?
CHP FEASIBILITY FACTORS
Probably the biggest impediment to CHP is the need for a significant outlay of upfront capital with a projected four- to 10-year payback to fund the production of power--a hard sell for a capital project that is not part of a hospital's core business. "Would hospitals more likely wrap their money around a new investment in instrumentation or facility upgrades or on producing electricity?" asks John Cuttica, coordinator of energy and environmental programs and director of the Midwest CHP Applications Center at the University of Illinois, Chicago.
CHP systems typically have to be custom-engineered and custom-designed for each installation, which adds to the "hassle factor" for facilities managers. "These are all stick-built applications that are designed by specific architects and engineers; so it requires a lot of initiative on the hospital's part to pursue this," says Jan Berry, R&D program manager, Oak Ridge (Tenn.) National Laboratory. "So the Department of Energy is reducing this hassle factor with packaged CHP systems that can more easily realize energy savings from matching energy needs and technology." (See sidebar.)
Then there is the uncertainty of energy deregulation. The electrical industry may deregulate in many states, and as a consequence, rates for electricity may fall markedly. Rates already have dropped as much as 5 percent in areas that have announced plans to deregulate, but these price reductions may be part of the original deal to deregulate that was negotiated with the local utility commission.
But today's energy price picture may be entirely different once deregulation takes hold. Like the gas industry before it, the electric power industry may well see price increases or at least spikes when it is fully deregulated. So for at least the time being, hospitals are hedging their bets on investing in energy technology. "With concerns about deregulation and the uncertainty about energy prices, hospitals are sitting back and doing nothing," says Cuttica.
Local energy market conditions also have a bearing on the feasibility of CHP for a hospital. If a hospital can buy electrical power from its local utility for pennies a kilowatt-hour, CHP may not be an economically sound option. What's more, rates for electricity and gas as well as weather conditions come into play. In an area that has low electricity rates and extremely high gas rates, a CHP system may not be cost effective, says Berry. Then again, if an area is plagued by power outages, CHP may be worth the cost. Because CHP systems run all the time, a hospital can provide power, cooling and heating independent of the grid, she adds.
CHP technologies come in a variety of configurations, which gives hospitals a range of options. On the small side are CHP systems less than 1,000 kW; larger systems usually run to 5,000 kW or 5 megawatts. Large campus-type hospital settings with several outbuildings may opt for a 5-megawatt gas turbine engine and add an absorption chiller that provides 2,500 tons of chilled water to provide a large fraction of the base load for all cooling and electricity needs. A small facility may choose a microturbine with an absorption chiller, Berry explains.
Hospitals that need a CHP system in the less-than-five-megawatt range most likely would want a reciprocating engine because these types of engines follow a load better, says John Kelly, director of the Distributed Energy Resources Center, Gas Technology Institute, Des Plaines, Ill. In areas like Chicago that have two sets of electricity prices--day and night--and systems that operate only during peak periods, reciprocating engines are better suited to starting and stopping each day, he adds.
On top of basic CHP systems, there are other currently available complementary technologies, such as desiccants that reduce humidity in heating and cooling systems for hospitals. And there are more technologies to come.
Ahead, at least in the next decade, are fuel cell CHP systems that use hydrogen as the source of electricity and chemically generate waste heat which can be used for CHP, says Edward Mardiat, director of CHP development for Burns & McDonnell, Kansas City, Mo. Although fuel cells are clean, putting out minimal emissions, they are still expensive. It would cost approximately $4,800 per kilowatt compared to $800 per kilowatt for other forms of engine or turbine CHP generators, Mardiat says.
On the immediate horizon are CHP packages that take technology on the generating and thermal sides of the energy equation and combine them in such a way that one plus one equals three, says Mardiat. Mardiat's firm is working on a project that takes the 950-degree exhaust emanating from a 4.5-megawatt industrial combustion turbine to indirectly fire an absorption chiller.
"The efficiency of the turbine is only 33 percent and less than 50 percent for the absorption chiller. But with the combination, we get efficiency of over 80 percent. So, in the near term, we will be combining existing technologies in a manner that improves efficiency, reduces cost, and reduces emissions," says Mardiat.
ADVANTAGES FOR HOSPITALS
Hospitals are particularly well suited for CHP. Hospitals have a fairly constant thermal and electrical load as 24/7, 365-day operations. Basic CHP technology is a good fit, therefore, says Berry.
CHP also can generate significant cost savings for hospitals. A CHP system can operate in the range of 4 cents a kilowatt-hour. In regions of the country such as New York, where hospitals pay 16 cents per kilowatt-hour, CHP trims operating costs, says Kelly.
And for cash-strapped hospitals, CHP systems are becoming increasingly economical as their prices continue to drop. The costs of reciprocating engines have declined 30 percent to 40 percent in the last three years, and hospitals can expect to see further cuts on the order of 30 percent to 40 percent in the first cost of the equipment in the next three years, Kelly predicts. "Any hospitals that looked away from CHP in the past may want to look at it again because technologies are really improving from a cost standpoint," Kelly says.
CHP is not a cost-effective strategy for the type of building that has a big need for electricity but a low requirement for heat. But a hospital has needs for electricity and heat that are coincident and, therefore, it can enjoy cost savings by recapturing electricity and using waste heat, says Cuttica.
CHP also is an unattractive alternative for an industry that demands a two- or even a one-year payback. But hospitals can often tolerate longer payback periods, Cuttica adds.
Even in markets with low-cost power, hospitals may benefit from CHP because of savings in thermal energy. Mardiat explains that if a hospital uses 100 percent of the waste heat from a CHP generator to produce free thermal energy, it reduces not only the number of chillers or boilers it needs, but also the electrical load to power those chillers and boilers. Hospitals that don't have CHP must buy all of their power from the grid and use electricity to make chilled water or natural gas to make hot water or steam. But hospitals with CHP produce more thermal energy than they need. "If you start with the thermal energy and come up with electricity as a byproduct, then the cost of power is not the driver economically," he says.
Hospitals' use of thermal and electrical energy per square foot is more compressed than in just about any other commercial building. Hospitals must meet high demands for hot water, steam, air conditioning and electrical power. "When a hospital can collect and use electrical energy and waste heat, it makes its energy system more efficient and drives down costs," says Joe Sinclair, president of Ballard Engineering, Rockford, Ill.
Beyond dollars and cents, CHP enhances the quality of power. On a typical day during the peak power period, there may be interruptions in voltages and even fluctuations in frequencies, which wreak havoc on clinical equipment. "Most hospitals are automating, and they can't afford to have interruptions in the power that runs automated equipment, but the grid cannot promise that. Voltage sags, and frequencies get knocked off pretty much throughout the summer and in the winter on peak days," says Kelly.
But CHP can assure smooth, continuous operation of clinical devices. One hospital had between 60 and 70 disruptions of power a year that caused downtime of the laboratory equipment and testing facilities. When it put in a CHP system, the disruptions were eliminated. Before Kelly's Gas Technology Institute installed CHP, voltage frequently fell below 465 volts in the summer, interfering with the equipment uptime. After installing CHP, the institute has been able to sit right at 480 volts. "We're rock solid in terms of our power," he says.
A NO-BRAINER
To supporters like Beloit Memorial's Larson, CHP is a no-brainer in terms of cost savings and efficiency.
"We make our domestic hot water, 434 tons of absorption air conditioning, and peripheral heat with CHP engines," he says. "So we use just about every ounce of waste heat that comes off the engines in one process or another throughout our facility."
Karen Sandrick is a Chicago-based freelance writer and frequent contributor to HFM.
This article first appeared in the November 2003 issue of HFM.
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