Coordinating Billing Rates to Maximize Onsite Energy Generation and Combined Heat and Power Systems


  • Bryan R. Lisk P.E. and C. Michael Bullard, P.E.

Figure 1 – CHP System Benefit with Continuous CHP System Operation

Figure 2 – CHP System Benefit with 3 Days of CHP System Downtime

Reducing energy costs is becoming a major priority for water and wastewater treatment facility owners. The recent economic downturn, rising energy costs, and increasingly stringent treatment regulations are among the many factors driving the need to reduce water and wastewater treatment energy usage and costs.

Utilizing onsite power generation systems such as biogas fueled combined heat and power (CHP) systems and onsite generators to reduce energy costs by offsetting purchased electric power and manage demand are increasingly being used to reduce energy costs in the water/wastewater industry. While these systems can reduce a facilities energy usage, the full economic benefit is often not realized due to how the system is operated in coordination with the electric utility rate schedule. The objective of this paper is to describe how the operation of on-site power generation systems must be coordinated with the electric utility billing rates to achieve the maximum benefit.

The electric utility billing structure and utility service configuration has a very significant impact on the economic benefit generated when using onsite power generation and CHP systems manage demand and offset purchased power. Utility demand charges, energy charges, and demand ratcheting are among the many utility billing attributes that must be fully understood to maximize the benefit when using onsite power generation and CHP systems to reduce energy costs.

For example, Figure 1 shows a single billing period demand profile for a WWTP using a base-loaded 1000kW CHP system to offset purchased electric power. With a utility demand rate of $10.00/KW and an energy charge of 3.00¢/KWH, this plant can reduce its electric energy bill by approximately $31,000 for this billing period by continuously offsetting 1000KW of demand with the CHP system.

Figure 2 shows the same demand profile with the CHP system down for 3 days during the peak demand period. For this scenario, the electric energy bill cost benefit was reduced to $18,000. For this example, even though the CHP system was down for only 3 days out of the billing period, the overall benefit was reduced by 42% since the downtime occurred during the time the plant was operating at its peak demand. This example illustrates one of the many factors that should be coordinated in order to maximize the benefit from using onsite power generation and CHP systems to reduce energy costs.

Specifically, the following will be presented to describe how different electric utility rate schedules and configurations impacts the economic benefit for various onsite power generation and CHP systems:

- A description of common electric utility rate schedules (i.e. Time of Use, Demand Ratchets, Net Metering) and configurations (i.e. Primary Service, Secondary Service).

- Ways electric utility rate structures can maximize and/or minimize the benefit from biogas fueled CHP systems and other onsite power generation systems.

- Maximizing the benefit from biogas fueled CHP systems and other onsite power generation systems through utility billing structure and service configuration modifications.

- Pros and cons of offsetting purchased power and selling power to the utility.

- How generating Renewable Energy Credits can create additional value.

- Typical programs available from electric utilities that can benefit plant owners.

- Present the results of multiple case studies where applying these principles for biogas fueled CHP systems and onsite generators resulted in value creating opportunities.

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Horizons Fall 2017 (pdf)

Horizons showcases significant water, wastewater, reuse, and stormwater projects and innovations that help our clients to achieve their goals, and can help you achieve yours. Articles are written by top engineers and process group leaders, demonstrating and explaining the beneficial application of a variety of technologies and tools.

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