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• November 30th, 2010:
  More Cogeneration options with cogentpower

  Cogeneration (or trigeneration) has the ability to significantly increase the energy efficiency of a given site and reduce carbon emissions by up to 60%, but despite these benefits the technology has struggled to gain traction within the Australian energy market place due to many challenging market conditions and technological constraints. Specifically the inability to connect to an entire site load split across multiple grid feeders and the inability to export energy and gain the benefit of its lower carbon coefficient at remote sites.

  Cogent Energy, Origin Energy’s distributed generation company has developed a unique and innovative solution, cogentpower to address the export and connection issues that have been limiting the use of cogeneration plants at large sites with multiple grid feeders or multiple remote sites. So now more sites can benefit from the operating efficiencies and lower carbon emissions of cogeneration. By leveraging Cogent’s position as a distributed generation company with an advanced technical understanding of cogeneration plants, cogentpower involves an onsite and custom engineered cogeneration or trigeneration plant that can safely connect to the local distribution network and generate the required electricity to operate that site, whilst at the same time exporting excess electricity to the grid. The surplus electricity which is less carbon intensive is exported to other grid feeders. They can feed the same site or other remote sites, provided they are all connected within the same distribution network boundary.

  cogentpower involves:

  • Customised onsite plant that imports and exports energy.
  • Cogent’s build, own, operate and maintain (BOOM) cogeneration business model which eliminates the technical and financial complexities, and significantly reduces the risks that site owners may experience when trying to implement and operate their own cogeneration plants.
  • Exported energy attributed to the customer’s other grid feeders or remote sites.

• October 30th, 2009:
  Now for the commercial sector

  Cogeneration in Australia has been largely limited to the industrial sector, which can use the heat from production processes for electricity or hot water. But it also has much to offer the commercial sector, saving energy and cutting emissions.

  Industrial cogeneration in areas like sugar milling and mining is a well established source of power generation in Australia. The commercial sector, though, has been slower to take up the technology. Commercial buildings contribute up to 9 per cent of Australia’s greenhouse gas emissions, so using energy more efficiently in office buildings through cogeneration and other measures is a significant way to cut our emissions.

  In the 1990s, a number of Melbourne commercial buildings installed cogeneration plants, which run mainly in peak-demand periods to reduce the buildings’ dependence on the electricity grid and to save costs. Some were originally installed as emergency back-up but the owners found they were reliable enough to provide peak-demand energy.

  Yet, despite the success of most of these installations, cogeneration in Australian commercial buildings has struggled to be seen as a viable form of energy generation and has achieved limited market penetration.

  To help explain this, Europe’s experience with cogeneration makes a useful contrast.

  Unlike Australia, both the commercial and industrial sector in the European Union (EU) has been using cogeneration for many years. Europe’s success has been driven by the use of the cogeneration plant’s heat to warm buildings during the high proportion of cold months in the year. As a result, the European plants run at high efficiency levels and consequent commercial viability. COGEN Europe, the European cogeneration industry body, estimates the penetration of cogeneration in the EU at 14 per cent (6 per cent commercial and 8 per cent industrial). In 2005, the EU Commissioner for Energy mandated a target for cogeneration of 18 per cent of the total EU generator capacity by 2010 and the EU cogeneration industry expects this target to be exceeded.

  By comparison, the penetration of cogeneration in theAustralian energy market is much lower: as at December 2005, Australia had 154 cogeneration plants operating – 80per cent of which are in the sugar industry (bagasse cogeneration). So why is cogeneration in the commercial sector booming in Europe and performing so poorly in Australia?

  In a nutshell, it comes down to cost. Commercial-sector cogeneration in Australia has generally been dismissed as a viable source of energy generation in Australia due to:

  -High capital cost to install;

  -Narrow margin between retail cost of gas and electricity;

  -High cost of operation and maintenance;

  -Inability to achieve high efficiencies: heat energy cannot be used as effectively as in Europe, as most Australian buildings need cooling, not heating, for most of the year.

  When these factors are quantified into a business case, the return on investment for most commercial buildings has not made good sense. However, innovative business models and recent technological developments can overcome the barriers. But now, a business model has been designed and is being implemented to increase the viability of cogeneration in large commercial buildings. Cogent Energy is well advanced with plans to deploy a distributed network of cogeneration plants in commercial buildings across Sydney and Melbourne in the next four years.

  The traditional barriers in standalone building cogeneration projects have been overcome by establishing a large distributed network of multiple cogeneration plants, whereby economies of scale and volume purchasing power mean that plant capital costs, gas costs and the cost of ongoing operations and maintenance makes cogeneration viable for most commercial buildings above a minimum size. The system draws upon two-stage absorption chilling technology that can efficiently produce chilled water from waste heat, and therefore meet the near yearround cooling demand of most Australian buildings.

• October 29th, 2009:
  Article: Retrofit of Sydney Building Includes Cogeneration Plant

  Cogent Energy has designed and installed a cogeneration plant at a 40,000m2 office building in Sydney. The company also designed the electrical and mechanical interfaces between the cogeneration plant and the building’s distribution systems. The building owner is Mirvac.

  The plant has two 1166kW cogeneration engines from MTU’s 4000 series that are connected in parallel to the grid. Each engine is coupled to a 750kW Thermax exhaust absorption chiller. The chillers are integrated into the building’s chilled and condenser water systems. The plant is set up to operate in grid parallel import and island mode and operates automatically during the peak and shoulder demand periods.

  The project was a retrofi t of an existing building which was undergoing major refurbishment to upgrade its environmental credentials according to the NABERS rating. The plant had to be fitted in to an existing plant room in the basement of the building. The engineers demonstrated creative thinking to successfully fi t all the equipment into the plant room next to existing infrastructure. “For example, there is a major storm water pipe going through the basement and our equipment had to be positioned to fi t around this,” said the company’s general manager for NSW Nalin Wickramasinghe.

  Access to the basement was also difficult as the crew had to cut through concrete and plan a major traffi c control exercise to move the plant in. The four major pieces of equipment –two engines and two absorption chillers – weighed close to 50t which presented a logistical challenge in moving them to a commercial location in Sydney. The building’s electrical switchboards which date back to 1990 also had to be significantly upgraded to match the cogeneration plant’s system. The metering for the entire building had to be revamped signifi cantly to ensure that the tenancies are invoiced correctly.

  The commercial structure of the project involves the company using energy supply agreements to sell metered electrical and thermal energy to the building owner and the tenants. The company will own, operateand maintain the plant over a twelve-year contract period.

• October 27th, 2009:
  Article: Cogen Comes To Australian Offices

  Commercial buildings in Australia have not formed an active market for cogeneration technology – until last year, when one company started to use a particular business model (against a background of growing demand for ‘greener’ building operation and rising electricity prices) to change this. Nalin Wickramasinghe writes on progress and the  challenges still to be faced.
  Cogeneration in general, and commercial building cogeneration specifically, has had extremely low penetration in the Australian market. There is approximately 307 MW of installed capacity in the state of New South Wales1, most of which is accounted for by industrial applications, and almost no installed capacity in commercial buildings and offices. There are several reasons for this situation:

  Energy costs

  Historically Australia – eastern states in particular – has had very low electricity prices relative to the rest of the world. An abundance of cheap coal-fired generation sources in the eastern states of Australia have supported the low pricing levels for decades. As a result, switching to an alternative energy source, such as on-site cogeneration, usually means paying a higher rate for electricity.

  Low cost of environmental compliance

  Whilst the Mandatory Renewable Energy Target (MRET – Federal) and New South Wales Greenhouse Abatement (NGAC – State) schemes levy environmental charges on electricity, they still have not raised compliance costs to a level where switching to a cogeneration supply is cost effective. Australia also lagged behind the rest of the world (excluding the USA) in not ratifying the Kyoto Protocol.

  Climate

  Cogeneration has traditionally been well-suited to northern hemisphere climates with long, cold winters and buildings with a high heating demand. In Sydney, most commercial buildings have insignificant heating demands – most have only a minor preheating requirement at the start of the day in midwinter. In general, Sydney commercial buildings require year round cooling. This means the overall efficiency of cogeneration is much lower as heat needs to be dumped. Whilst there has been minor deployment of absorption chillers in the past, issues of reliability and very low coefficients of performance (COP) of around 0.5, have made this an unattractive option.

  High capital costs

  Australia is a relatively small market for cogeneration equipment and also a very distant market for equipment manufactured mostly in Europe. This results in a quite high capital cost of cogeneration plant and equipment as well as ongoing replacement components.

  For the above reasons, on-site cogeneration as an alternative energy source has not been cost effective locally.

  WHAT HAS CHANGED?

  Over the past two to three years, there has been a remarkable increase in the acceptance of cogeneration in the Sydney commercial building market. The reasons for this are several – a combination of regulatory and market changes as well as Cogent Energy’s business model.

  Rising electricity prices

  New South Wales base contract prices for electricity have increased approximately 20% over the past two years2. The prolonged drought conditions experienced by the state have significantly contributed to this increase – water shortages have compelled generators to reduce generation output at times. In addition, there is also an impending shortage of generating capacity. In New South Wales the majority of generation capacity is state-owned and uncertainty of the sector’s ownership – potential privatization – has served as a disincentive to investment in new plants.
  Business model

  Cogent Energy uses a business model based on majority financing of the cogeneration plant. As Cogent is also a licensed electricity retailer, the building owner is invoiced monthly for metered energy consumed – both electrical and thermal. The key benefits of this approach are:

  -minimal up-front capital outlay for the building owner
  -Cogent can achieve economies of scale in equipment sourcing
  -aggregated natural gas procurement across all projects.

  COGENT ENERGY BUSINESS MODEL

  Cogent is a licensed electricity retailer and owns, operates and maintains the plant. The capital cost of the plant is majority financed by Cogent’s financier, with the contribution from the client minimal – usually around 10% for a standard installation. Cogent invoices monthly for metered energy consumption, both electrical and thermal. The base building (house services) usage is charged to building owner whilst the tenancy usage is charged to individual tenants.

  Pricing and contracting

  Cogent’s pricing value proposition is ‘competitive energy pricing compared to 50% green-blend energy from the grid.’ In New South Wales coal-fired grid electricity emits approximately 1060 kg/MWh while the comparative figure for an on-site gas-fired cogeneration plant is 550 kg/MWh. A building owner would need to purchase 50% green-blend electricity to achieve the latter figure. In addition, there are further benefits resulting from the displacement of on-site boilers and electric chillers.

  Hence Cogent’s offer is very competitive.

  The supply agreement with the building owner is usually a 12-year term, with pricing fixed for the first year. In subsequent years pricing is reviewed using the Wholesale Electricity Pricing Index as a reference. At the end of the 12-year term the options available to the client include renewing for a further period or buying out the plant at its depreciated value. Separate supply agreements are negotiated with individual tenants.

  Scope of works

  In a typical installation, Cogent designs, configures and maintains plant. The company is responsible for negotiating the natural gas supply contract as well as managing the electricity network connection agreement and approvals with network operators.

  Client’s scope includes the provision of suitable plant room with ventilation and sound attenuation. The client is also responsible for bringing the electrical and thermal distribution systems and natural gas pipeline to the plant.

  Ownership and responsibility for maintenance of assets is delineated by the plant room – Cogent generally owns and maintains what is within the plant room and the client is responsible for everything external. This also provides clarity in a contractual sense.

  PLANT COMPONENTS

  Currently Cogent uses gas reciprocating engines from MTU, with capacity ranging from 386 kWe to 2 MWe. The corresponding (and matching) Thermax exhaust-fired double-effect absorption chiller capacity ranges from 292–1245 kWt. Engine jacket heat recovery from these engines range from 231–1018 kWt. Control systems from MDE are used on all the plants.

  Plants are configured in parallel import mode with the grid, and are currently sized at approximately 60% of the building’s maximum demand. Energy from the grid is used as top-up. Cogent operates the plant during peak periods (typically 15 hours per day, Monday to Friday).

  During the off-peak period the plant switches off and supply is purely from the grid. Currently, this mode of operation is the most cost effective. As there is no commercial benefit from exporting electricity, it is necessary that plants are sized below the building’s peak so that they can operate at constant duty cycle through the day.

  The plants can also be configured to operate in standby (island) mode which provides the building better security of supply during a grid outage.

  As gas engines can only cope with much smaller load steps in comparison to a diesel generator, correct set up of load shedding steps on the building’s main switchboard (usually through motorized circuit breakers), is critical in ensuring the standby function works effectively.
  REMOTE MONITORING AND CONTROL

  The cogeneration plant is fully monitored and maintained by Cogent Energy, which remotely monitors the plant for monthly billing and in-depth performance analysis. The remote monitoring facility is able to monitor numerous parameters of the engine such as temperatures, pressures, voltages, etc. This data can be used for live performance monitoring and historical analysis, as well as predictive fault prevention. It is also possible to remotely start and stop the engine and tweak parameters to Each site is modelled within the system and configured according to the plant installed and the level of monitoring required increase the performance of the unit.

  The Cogent Energy Backoffice system is intended to allow management, engineering and operations staff access to monitor all plants installed on-site. The system consists of a central server and software. Each site is modelled within the system and configured according to the plant installed and the level of monitoring required. Staff access the Backoffice system on their laptops and alarm ‘flags’ can be received on PDAs.

  Through the Backoffice system a range of dynamic screens displaying plant status, single-line diagrams, process and instrumentation (P&I) diagrams, etc. can be accessed, allowing the ability to drill down to check plant operating data and characteristics. Core functionality in the system also includes gathering and collating consumption data to support reporting for NABERS and Green Star ratings. As the major motivation for commercial building owners in choosing cogeneration is achieving high environmental ratings, this is a significant feature of the
  Backoffice system.

  CURRENT PROJECTS

  Since formation in late 2006, Cogent Energy has made significant progress in developing a distributed network of cogeneration plants. The company now employs 15 professional staff and has its head office located in Melbourne. The company currently focuses on the eastern states of Australia, in particular Sydney and Melbourne. To date, it has quoted a potential capacity of almost 100 MW across Sydney, Melbourne, Adelaide and Brisbane. The commercial building market in Sydney was the most responsive and Cogent has installed its first four plants there.

  CHALLENGES AND RISKS

  Whilst Cogent’s business model and approach have yielded very good progress in developing a network of cogeneration plants, there are many challenges yet to be overcome and risks that need to be managed.

  Grid/network connection

  Currently the local electricity network operators have no specific commercial terms applicable to cogeneration plant’s operator in terms of demand/capacity charges. Their assessment is based on a site-by-site approach and this misses the overall benefit that a network of distributed plants brings. Electricity grid operators need to take a big-picture view of a cogeneration operation and appreciate the synergies available – the management of grid hot spots and overall peak demand reduction.

  Gas networks

  The monopoly ownersof gas networks often don’t takea commercial view of connecting greenfield cogeneration sites, and they tend to pass on total network expansion and augmentation costs, making projects unfeasible at times. With greenfield site developments on the outskirts of the city, there can be a substantial augmentation cost to connect gas. The gas network owner may often not factor in the future value of network expansion, thereby allocating all of the costs to the cogeneration project.

  Environmental protection

  Currently there is a lack of clarity and consistency in relation to NOx emissions standards, and the authorities take a rigid view of cogeneration plants – which tends to frame projects purely in terms of NOx emission levels with no weighting attached to the carbon dioxide emissions reductions. The requirement for selective catalytic reduction could potentially render a project commercially unfeasible.

  Plant sizing

  There is risk of over sizing a plant based on projected energy loads, particularly with a new development. This is compounded by the parallel import/no-export mode of operation. If a plant is oversized then there is a risk it may not run efficiently. Currently there is no commercial value in exporting, as cogenerated energy does not fetch a premium once exported off site.

  Supply of tenancies

  Again, there is risk of over sizing a plant if some of the tenants decide not to take supply from it. Tenants have legal entitlement to choice of energy supplier and if there is inadequate take up of cogenerated supply by tenants, it could lead to a scenario where plant is oversized.

  SUMMARY

  There has been a great opportunity presented by the move to reduce commercial building carbon emissions in Australia – and Cogent Energy has seized this. The company has made progress with over 5 MW committed in Sydney in the past two years. Many other opportunities are also currently being developed. There are still many challenges to be overcome.

  Nalin Wickramasinghe is Manager for New South Wales with Cogent Energy.