A trigeneration plant at Sydney’s Central Park

28 November 2013 — [UPDATED 2 December 2013] The NSW Government has released a guide and tool so businesses can determine whether a cogeneration or trigeneration system is financially and technically viable.

Launching the guide, NSW Environment Minister Robyn Parker said the Energy Saver Cogeneration feasibility guide was the first major project delivered under the Government’s Energy Efficiency Action Plan, which has a goal to save 16,000 gigawatt-hours of energy a year by 2021.

“The guide gives businesses clear information about the benefits and appropriate use of cogeneration and trigeneration and is a demonstration of our commitment to help business to be more energy efficient,” Ms Parker said.

“The guide is a practical document designed to guide business decision-making by answering the questions: where, what and how for on-site cogeneration and trigeneration.

Ms Parker said that a cogeneration system could save a business up to 60 per cent on energy bills during peak times, and cut carbon emissions by up to two-thirds.

“However, whether a system is viable depends on the operating hours, how much heat is required on-site, whether heat and power are used concurrently, and fuel costs.

“Some business sites can make large energy and cost savings with cogeneration and trigeneration – and this guide will help to answer the questions: is this the best technology to use? Is it viable for my business?

In a Q&A published below, however, the Office of Environment and Heritage said their research found that cogeneration/trigeneration was generally “not well suited” to commercial office buildings, as it was important to have a constant, significant heat requirement. The Q&A also said that exporting electricity back to the grid was not generally economically viable, and before cogeneration was instigated, other energy efficiency measures should be tackled.

Aside from helping business managers decide whether the technology is financially viable, the guide has also been designed to help engineers and facilities managers, with a technical step-by-step feasibility guide and further technical information detailing the considerations for selecting and implementing an on-site generation system.

The Government has also created a cogeneration feasibility tool to be used in conjunction with the guide, which allows the input of a site’s energy and tariff data to help make an informed decision about the financial viability of cogeneration.

The tool:

  • helps identify the most appropriate plant size
  • provides different future price scenarios to allow sensitivity analyses
  • provides financial estimates using internal rate of return, net present value and simple payback calculations

The report and tool can be downloaded from the Office of Environment and Heritage website.

[Updated 2 December 2013] Q&A with the NSW Office of Environment and Heritage

Will the possible rise in natural gas prices in coming years lead to a downturn in the interest or commercial viability of cogeneration or trigeneration?

The Cogeneration Feasibility Guide outlines a number of factors that influence the viability of each cogeneration project. These include the thermal requirements of the site, operating hours, the difference in cost between electricity and gas and suitable location for the unit on site. Future changes in energy prices may have an impact on feasibility depending on the energy contracts a business has in place. The cogeneration guide and tool stress the importance of considering all of these factors when investigating the feasibility of an individual project.

What kind of response has OEH received from industry to date to the guide and what size and types of businesses will OEH be aiming to promote it to – small, medium or large enterprises?

The response to the guide from industry has been enthusiastic throughout its development, peer review process and through feedback from OEH’s energy and sustainability programs. Over 200 people expressed interest in receiving a copy of the guide prior to its release.  Since piloting the OEH Cogeneration training course in August 2013 nearly 100 professionals have participated in the course and additional sessions are planned for 2014.

The guide will be promoted to a range of industry sectors in NSW, mostly to medium to large businesses where cogeneration is more likely to be feasible. Facilities that are likely to benefit from cogeneration are those that use large quantities of thermal load (hot water, heat, steam or chilling) and electricity simultaneously. For example: hospitals; food and beverage processors; chemicals and plastics producers; pulp, paper and fibreboard manufacturers; metals processors; textile producers and data centres. With careful consideration, cogeneration may also be viable in hotels and shopping centres; universities and TAFEs; and aquatic centres.

From the research involved in preparing the guide, were there any surprising findings about cogeneration or trigeneration?

A key finding from the preparation of the report is the importance of having a constant, significant thermal requirement at a proposed cogeneration site. Cogeneration projects generally require long operating times and this requirement produces the best return on investment. As a consequence cogeneration is not well suited for most commercial office buildings. It was also found that the correct sizing of a cogeneration unit is critical to its success and that exporting electricity back to the grid is generally not economically viable.

Alternate technologies such as heat pumps or solar thermal can often be more suitable than cogeneration. A full and rigorous investigation considering all the options is important when first investigating cogeneration at a site.

What is the key takeaway message for business from the government’s work on the cogeneration guide? Where to from here?

Cogeneration is part of comprehensive energy management. OEH strongly encourages business to investigate and implement energy efficiency on site first.  Cogeneration at the right locations can deliver significant environmental and economic benefits, including up to 66 per cent greenhouse gas emissions reductions. OEH will continue to support the guide with ongoing training and assistance with feasibility studies. Under the Energy Efficiency Action Plan, further technology and industry sector reports and training courses will be developed in 2014.