Real Estate Journal — Owners, Developers & Managers — Ask The Experts— October 27 - November 9, 2017 — 11B


M id A tlantic

A sk T he E xperts By George Crawford, Green Partners CHP – Power with a Financial Edge


ecent hurricanes have put the spotlight on electrical power inter-

which operate with an in-house CHP as their primary power source, realize significant cost savings as compared to costs for power purchased from their lo- cal utility. Accumulated savings from this differential can gener- ate sufficient funds to cover the financing costs of a CHP instal- lation - usually in less than five years. With this model, literally any facility considering a back- up generator should investigate the more favorable economics of an in-house CHP. How exactly does this CHP model work and do the econom- ics really pass the smell test ? When electric utilities gen-

CHP installations have been successful. Post installation fol- low ups have all demonstrated that the financed projects have met or exceeded their savings targets. And virtually all of these projects have met or are meeting their five year or less investment payback return goals as well. From an operational perspec- tive, Benjamin Locke an Indus- try Expert and Co-CEO of Teco- gen, advises that regardless of brand or model, the success of any CHP installation, includ- ing Harvard University’s CHP installation which has been continued on page 12B

erate electric, there are two factors at play. Because they are remote, they are unable to utilize the heat byproduct from the generating process, which represents a significant loss of potential value. They also lose a percentage of the power gener- ated over the long distribution lines. With a CHP installation, not only is electric generated with no distribution loss, but more importantly the valuable heat byproduct from the CHP can be fully utilized - including hot water production as well as heating and cooling the host facility itself. It is the ability to utilize the heat byproduct that

gives CHP installations the economic advantage over electric purchased from utilities. As to the economic “smell test”, we asked Michael Weis- berg, Principal of M-Core Credit Corporation, whose company specializes in energy savings related financing, to comment on his experience regarding the many CHP installations that M-Core has financed. These projects range from the low six figures for a 75kw CHP unit for a 75 unit residential facility up to the low seven figures for a custom 960 kw CHP for a 1,689 unit 4 tower complex. Michael advises that In every case, the

ruptions. Real life tragedy can come from t h e s e o u t - ages - some truly horrific. At the same t ime , there a r e o t h e r instances of

George Crawford

outages that have less severe results, but can also be problem- atic. Every outage is unwelcome, hurricane related or not. Con- tinuous power for hospitals and other critical care facilities is essential – not to mention emer- gency services, communications and health and safety support facilities. Once you move away from this critical core group, facilities with continuous power becomes hit or miss – but for those facilities in the “miss” cat- egory, this article may be a game changer in terms of introducing continuous power as a viable and economic alternative. In instances where continuous power is an absolute require- ment, the traditional solution - a back-up generator. While this solution works, it is not cost effective. In fact, genera- tors can be a hugely expensive solution involving a mountain of added costs – starting with the installation, followed by ongoing maintenance costs. With no as- sociated cost savings, the more you do to maintain a back-up generator, the more you add to the cost – which only works against the entire effort. There is, however, an econom- ic solution, which is the focus of this article. The “economic solution” is the result of newer technologies that make it pos- sible to reconfigure your primary electric supply source. This solu- tion – in effect flips your primary power source from back to front. With this model, your in-house CHP becomes the primary power source and your utility becomes back-up. In this configuration, your electric utility takes on the role of the back-up generator. While this configuration is not “conventional”, it is in fact being successfully used by hundreds of buildings, including many hospi- tals and other critical facilities. The CHP reliability factor has been well established as many hospitals and other critical fa- cilities have been operating suc- cessfully in this mode for many years. The advantage here is the favorable economics. Facilities

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954 Lexington Avenue * Suite 320 * NewYork, NY 10021 For More Information Visit www.GreenPartnersNY.com or Contact George Crawford, Principal at gcrawford@greenpartnersny.com

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