The Increasing Focus on Reliability and Resiliency of Power in Industrial Facilities
The vast majority of modern society requires reliable energy. For industrial facilities, either a temporary loss of power or unexpected energy costs can harm the ability to maintain operations. Kurt Koenig and Brian Bird explain challenges industrial facilities face and options to affordably satisfy the facilities' power needs.
Q: What challenges are industrial facilities facing regarding power needs?
Kurt: Infrastructure is aging, so industrial facility owners have to determine how to renew their systems in a way that’s cost effective, environmentally responsible and able to address increasing regulations and threats to the grid from storms, fires or cyber issues. To increase resiliency, many are considering a mix of resources, including combined heat and power solutions, natural gas, renewables like wind and solar, or biogas alternatives. Reliability is critical for industrial facilities as their processes require consistent power and energy resources to make their products. A blackout isn’t acceptable, so owners are actively navigating energy efficiency, reliability and sustainability.
Q: How is HDR helping industrial owners evaluate power alternatives to find the most reliability and resiliency?
Brian: We’re involved across the whole industrial power market, so we’re familiar with the challenges to industrial facilities, utilities and energy developers. We’re helping industrial owners consider and weigh their options on development projects and long-term resource planning. Our team offers a unique set of tools that integrate financial, environmental, economic and engineering disciplines to help make informed decisions leading to reliable and resilient solutions.
Our process evolved from a Sustainable Return on Investment evaluation to a Sustainable Value Analysis. Decisions aren’t simply a matter of SROI — different economic tools are needed depending on the context.
SVA uses proven sustainability valuation methods that can be applied depending on a facility’s specific situation. We work with industrial facility owners to understand the value they place on things like sustainable initiatives, including the direct, indirect and non-cash costs and benefits. The results provide decision support to help communicate the full value of the project.
Our clients use SVA to establish a business case for making sustainable choices, identifying initiatives that will accomplish project goals, optimizing total project value and positioning a project for approval or funding. It all comes down to making informed decisions about where and when funds should be invested.
Q: What is distributed generation, and how can it help meet resiliency, carbon reduction and cost control goals for industrial facilities?
Kurt: Distributed generation, defined by the U.S. Environmental Protection Agency as a variety of technologies that generate electricity at or near where it will be used, is becoming more common as a solution to provide resiliency and reliability. It can offset the carbon footprint of an industrial facility because distributed generation often uses renewable energy resources like solar, wind, battery storage, or renewable natural gas and hydrogen.
When it comes to energy, industrial facility owners want predictable costs. A measure of cost certainty can be attained if an industrial facility generates some or all of its own power.
Generating power onsite can avoid power outages caused by lack of availability from the grid or extreme weather events and other outages. It provides consistent, quality power, reduces dependence on the larger power grid and avoids line-loss waste because there’s no long-distance transmission.
Introducing battery storage as part of the distributed generation solution also can aid resiliency and provide cost savings. And combined heat and power solutions bring more efficiencies and reduced fuel costs.
Q. What benefits does combined heat and power offer?
Brian: CHP offers electric power and thermal energy, which is often crucial to an industrial facility’s processes. CHP systems can operate at efficiencies 20-30% better than traditional power and energy delivery, which translates into significant annual cost savings. Another economic benefit to using CHP is the federal investment tax credit. The ITC originally allowed a 10% tax credit for property owners who start-up CHP systems, and extensions of the ITC dropped it to 8% and eventually to 6% in 2021. However, the Biden administration’s fiscal year 2022 budget includes a proposal to increase the ITC to 30% for construction of CHP and other renewables projects from January 1, 2022 through the end of 2026 with a phase down over five years.
CHP can also act as the backbone for a microgrid that allows a facility to serve its critical loads in parallel with the utility or when isolated due to storms, cybersecurity events or other power outage drivers. These systems can be combined with local renewable assets and energy storage to further refine site resilience in a sustainable way.
CHP systems can also improve air quality, decrease water use and reduce truck traffic in some areas that would otherwise deliver fuel to produce hot water and steam needed in industrial processes. And a CHP system using gas turbines or engines and heat recovery steam generators could replace coal-fired boilers, reducing a facility’s carbon footprint and meeting regulations.
Q. What about the growth in energy as a service model?
Brian: Compared to five years ago, many more industrial facility owners are interested in energy as a service model. Energy developers and local utilities invest in the new power and energy systems needed, and they continue to own them while industrial facilities sign energy services agreements for the power they need. Industrial owners can sign a contract typically for a 10-50-year term and translate the need for large capital investments into operating costs. This model also shifts the responsibility for operating and maintaining energy and power infrastructure to those who focus on it as their core business.
Q. What do you see for the future of industrial power systems?
Kurt: As the energy industry transitions, so will industrial power systems because industrial facilities are some of the largest consumers of energy. Industrial facilities will continue to find ways to manage their power and energy costs while seeking reliability and resiliency with their own power resources. In the short term, natural gas will continue to dominate, but in the future renewable sources and alternative fuels will be a larger part of the mix.
About Our Authors
Throughout his 20 years in the power industry, Kurt Koenig has served large utility clients, municipal utilities and small private generation clients. He’s led efforts at industrial facilities as well as educational institutions and healthcare facilities focused on combining energy efficiency, environmental stewardship and resiliency through the deployment of local generation and microgrids.
Brian Bird is a professional engineer with more than 40 years of mechanical engineering experience for industrial clients. He is actively involved in the design of district heating and cooling systems as well as power plant and combined heat and power system feasibility, planning and design. He's also experienced with renewable generation projects and is responsible for the integrity of industrial power and energy projects.