In 2001, before New York grabbed attention with devastating news of terrorism, California dominated the headlines with panic-stricken stories of rolling blackouts and an energy crisis that threatened several western states.

Although blackouts had occurred as early as 1998, they had been limited to the Bay Area and were caused by local supply problems. By June 2000, they had accelerated, and began affecting industrial customers throughout southern California. Historic in significance, the rolling blackouts in 2001 were unprecedented in terms of impact and the scope of the shutdowns. A combination of factors culminated in an immediate crisis with long-ranging effect.

• Deregulation of the electric power industry in California
• Subsequent laws mandating the sale of at least 50% of the utility companies’ generating capacity
• Frozen utility rates and escalating natural gas prices that bankrupted utility companies
• Low electricity costs that discouraged customers from conserving
• Lack of new generating capacity; insignificant construction of new power plants for two decades
• Sustained explosive population growth
• Extreme weather, both winter and summer, causing subsequent higher demands for energy
• Drought conditions in the Pacific Northwest, reducing output from hydroelectric plants
• Market manipulation and plants illegally shut down by Enron traders

Typically, hospitals, police, and fire stations are exempt from the imposed outages, although for brief periods during 2001, some southern California hospitals experienced loss of power. When even life-saving emergency service providers are affected, it’s clear no one is immune from temporary shut-downs and soaring energy costs.

Techni-Cast Corp., a centrifugal foundry based in South Gate, CA, operates 24 hours a day, six days a week, melting approximately 200 types of metals to manufacture products for the electronic, textile, military, and commercial aircraft industries. Shut-downs are costly, but so was operating on-peak during what president Bryn Van Hiel terms the “Edison summer” from June 1 to Oct. 31, 2001. “From noon to 6 p.m. we were charged a ‘demand cost’ of $17.50 per kilowatt per hour, plus a separate cost for time and use charges on-peak. Our maximum demand was 2,500 to 2,700 kilowatt-hours. It was expensive. Edison suggested working during off-peak hours to save money. Since we couldn’t afford peak prices, we would shut down between noon and 6. But because the shut-down takes time, we had to start it prior to noon. We were losing 8 to 9 hours of production time every day.

“We were one of 6,000 customers on the I-6 program,” Van Hiel continues, “That gave Edison the right to call and tell us to turn down the power for a 6-hour period. Edison can make 25 calls per year. During the power crunch in 2001, we had 28. One week, we got a call on Monday. Tuesday they called twice. Wednesday, Thursday, and Friday they called three times. We lost a whole week.

“If you don’t shut down, you pay $17.50 per kilowatt-hour. Other companies and government agencies worked through the shut-downs. When they got a big bill, they were stunned. We understand our contract very well; we paid less than $200 in penalties.”

The rolling blackouts captured Van Hiel’s attention, but it was the Self-Generation Incentive Program that stirred him to action. Launched by the California Public Utilities Commission in 2001 in response to the state’s electricity crisis, SGIP is a statewide energy-efficiency program created by Assembly Bill 970 (modified in 2004 by AB1685) that provides financial incentives to businesses of up to 50% of the costs of buying and installing permanent electric generation systems. Originally designed as a four-year program, it was subsequently extended through 2007. To participate, a company must be connected to the grid, offset some of their site’s electrical load, and serve their onsite load. Sites with interruptible electrical service are not eligible. Administered by Southern California Gas, Southern California Edison, Pacific Gas & Electric, and San Diego Regional Energy Office, the plan offers incentives based on a dollar-per-kilowatt basis for generation projects of up to 1.5 MW.

“Before the blackouts, we weren’t looking at the cost of energy,” Van Hiel reflects. “But one morning the prices almost doubled. The incentive program was created around the same time as the blackouts. We found out we could save money by creating our own electricity and recoup about 30% of the cost of installation of the system.”

The Decision, the System, the Choices
Van Hiel admits he was “ignorant about the alternatives,” but after attending an impressive seminar conducted by Southern California Gas, he began looking at gen sets. Still not convinced, he threw in with about 20 other companies attending the meeting and the California Cast Metals Assoc. to investigate alternative energy sources. Ultimately, he says, “it didn’t help any of us.” The decision rested squarely on Van Hiel’s shoulders.

It took him three months of investigation to come up with an answer. Use of wind energy grows every year and fuel cells are installed with increasing frequency. “They don’t suit our purposes,” says Van Hiel, “and they’re very expensive, with only a 40 to 50% rebate. I stayed away from that.”

Dual-cycle generators run by turbine engines produce a lot of heat and run at 100% output. Although that offered more stability and efficiency, Van Hiel decided it didn’t fit his needs because the load varies. He began to consider load-following generators. Consultations with Southern California Edison experts were discouraging because they advised him it wasn’t cost-effective. Using a spreadsheet, he crunched the numbers, calculating generator capacities, evaluating engine sizes, and weighing the options.

He decided to purchase and install a V20 natural gas–fired GE Jenbacher 320 engine. Its 1,063 kW provide 85% of the company’s electric load for its furnaces. A byproduct of most generators is heat exhaust. As Van Hiel discovered, in some applications that exhaust can be productively recycled, usually as steam or water. Hospitals often replace their boiler systems with a steam-producing co-gen operation, and many companies siphon the engine jacket water—used to cool the generator—to an absorption chiller system that provides heating, cooling and humidity control. Van Hiel’s use of exhaust heat is unusual; as treated exhaust exits the generator, it is piped into ovens that preheat 55-gallon drums of assorted metals to 800°F before melting.

By capturing the waste heat for pre-heating metal and recycling the engine jacket water, Techni-Cast saves money. In the process, the Jenbacher’s engine generator efficiency rating of 35% increased to 56%. Mike Owings, Miratech project manager, says co-gen systems offer the most efficient use of BTUs and gas, adding, “Bryn is ahead of his time. This is a real success story.”

“We chose a co-gen program where we use all the exhaust gas because it makes good economic sense and because it’s the responsible thing to do,” Van Hiel continues. “It takes about 550 kilowatts per ton to melt metal; we save 60 to 70 kilowatts by preheating the ovens. There’s a nice HVAC benefit, too. We route the cooling jacket water to a water plant on top of the building to supply the administrative offices with heating and cooling.”

Although recycling the exhaust heat does provide financial benefits, there is an additional cost involved. Owings says that in order to meet local emissions regulations, Techni-Cast had to install a catalytic converter to clean up the exhaust. Like most current natural gas engines used to drive generators, the Jenbacher runs lean. While this reduces fuel costs, it jeopardizes emissions compliance. Therefore, Van Hiel had to add a catalytic converter to meet California’s strict emissions control requirements.

Mohsen Nazemi, assistant deputy executive officer of engineering and compliance for the South Coast Air Quality Management District (SCAQMD), claims that his jurisdiction (Orange County, Los Angeles, Riverside, and San Bernardino) has the “worst air quality in the world” despite tough emissions regulations.

SCAQMD regulations require reduction of three air pollutants: nitrogen oxide (NOx), carbon monoxide (CO), and hydrocarbons (HC). While a non-selective catalytic reduction (NSCR) system can ensure compliance for all three pollutants, because the Jenbacher runs lean, excess air in the exhaust stream dictated the use of a selective catalytic reduction (SCR) system to meet NOx emissions requirements. The emissions control system installed at Techni-Cast combines an SCR system with a Miratech NSCR Oxidation Catalyst system.

According to Owings, the system offers the option of using ammonia or aqueous urea with a catalyst to break down NOx into its harmless components—nitrogen, oxygen, and water. Van Hiel chose urea because it’s less hazardous to handle and less expensive.

“The concern about NOx is twofold,” Nazemi explains. “Even when emissions are below the required level and are not violating the standard, NOx can react with other pollutants to form ozone. Because of the topography in this area, nitrous oxide can form small particulate matter that people can inhale. It’s hard to exhale and can cause respiratory damage. A continuous emissions monitoring system monitors NOx every minute by sampling air and sending it to be analyzed.” He notes that units of 3 MW and larger are required to use a continuous emissions monitoring system.

The system automatically monitors “tailpipe” exhaust nitrogen dioxide, carbon monoxide, and oxygen levels, allowing adjustment of reactant injection rates to meet compliance. “It monitors samples of gas and regulates the pump,” Van Hiel summarizes. “It measures exhaust, oxygen, and NOx levels, and inbound gas temperature, then reports the data to the AQMD. We can’t exceed 13 parts per million. If we exceed the limit, we have to shut the generator down. That’s costly because of the shut-down itself and the fines.” Techni-Cast did receive one $5,000 fine in the early days of operation, but Van Hiel says it won’t happen again. Techni-Cast’s cogeneration emissions control system now cuts NOx by more than 90% and reduces other regulated air pollutants to less than 5 ppm.

Sitting atop the Jenbacher, a modified oxidation catalyst–silencer combination unit that permits catalyst element replacement simultaneously reduces noise and emissions. A corrugated metal foil wash-coated with a slurry containing precious metal group catalysts is wrapped tightly around a steel spool post to form a honeycomb pattern that maximizes catalyst contact with exhaust gases while resisting shock, vibration, and fouling by materials in the exhaust system.

But because the Jenbacher’s exhaust heat range of 985°F to 1,100°F exceeds the oxidation catalyst’s maximum allowable temperature of 932°F, Owings says Miratech engineered a heat exchange system on the SCR’s inlet pipe to cool the exhaust to 800°F before it enters the catalyst. “It’s a low-tech solution, but it works.”

Van Hiel added a HEPA filter as a final step to reduce the possibility that the exhaust could carry particulates from the metal in the ovens. “It wasn’t mandatory; it was our choice.” As exhaust exits the ovens, it is pre-filtered in a “bag house” where a 1,500-filter dust collection system eliminates particulates acquired in the preheating process. Then it filters through the HEPA section, which Van Hiel says is 99.97% efficient.

“California Air Quality Management called to ask why we’re doing this,” Van Hiel says. “We’ve always been ahead of the curve on pollution. We spend a lot of money to comply with regulations. I wish all our competitors were as diligent.”

The Installation
Van Hiel’s diligence—and spending—began with the paperwork necessary to initiate the project. As Nazemi explains, it’s a two-step process. Any operator seeking to install or modify equipment that emits gas must first obtain a permit to construct. Van Hiel submitted his plans and SCAQMD, which regulates 27,000 facilities working with distributed power generation, inspected the equipment and conducted a source test “to prove it works.” That cost Van Hiel $15,000. Once he passed that test, he had to file for a permit to operate. Required annual testing continues.

“There were a couple surprises,” comments Van Hiel. “Not all the information was clear. We understood about 50% of what we were presented with. The state of California encourages everyone to do what we did, but it seems impossible with all the regulations. It’s a bigger deal than you think it is to comply.”

The installation was also a “big deal.” Van Hiel purchased the “biggest self-contained generator you can get in a box.” Techni-Cast shut down for a “couple days” during the final hook-up of all the “pollution control and connections,” but Van Hiel says there was little other interference with work during installation.

His advice to the two dozen companies that have inquired about his system has been to “align yourself with good contractors who are savvy, responsive, and aware of the building and pollution regulations.” Labeling this installation “a learning experience for us and all the tradespeople involved,” Van Hiel says it went well.

The Benefits
Van Hiel expected to save on fuel costs by installing the generator, and maybe even make a little on the deal. “At first we thought we could get paid to export electricity,” he recalls, “but it’s no longer possible to get paid for that.” Despite that minor disappointment, Van Hiel categorically states that the project “absolutely met our expectations.” The generator supplies 82% of the electricity Techni-Cast requires, and the re-use of exhaust heat has reduced the company’s energy needs.

Bottom line, Van Hiel says, is that Techni-Cast is “making electricity for 11 cents per kilowatt. We were buying it from Edison for 17 cents. That may not sound like a lot, but we use 600,000 kilowatt-hours a month. In the energy world, we’re a small user, but as an Edison customer, we were pretty big. We buy less than 100,000 a month now; we never see them any more.”

Not only is Techni-Cast buying less from Southern California Edison, but by combining its co-gen system with energy recycling measures, the company also qualifies for exemptions from certain fees for a 10-year period, according to state law. In addition, Techni-Cast received an incentive check from Southern California Gas Co. in the amount of $630,000 “for the installation of its $2.1 million high-efficiency cogeneration system, which produces both electricity and usable heat.”

Reiterating that the incentive program swayed his decision, Van Hiel said Techni-Cast’s annual energy costs have been reduced between $400,000 and $600,000. But by generating his own electricity, he also created a reliable source of energy not as easily factored into the saving equation: no more mandatory shut-downs.

Nazemi recognizes the role reliability plays in the utilization of onsite power generation. “This isn’t something most public companies can do,” he says, “but the lure of not being dependent on the grid—the elimination of the fear of losing grid power—is a strong incentive. The majority of companies that install co-gen systems do so for economic reasons, but most find they get a greater benefit in terms of efficiency and reliability.”

When the generator runs all day, Techni-Cast melts metal all day. “That’s the big benefit,” explains Van Hiel. “The run-time utilization on our generator is 91%. That’s the output of the generator divided by its theoretical output, factoring in that we shut down Saturday afternoon until Monday morning. The uptime on our generator is 98%; that takes into account just the hours it’s supposed to run. Two or three months we’ve hit 100%.”

He’s careful to run in parallel with Southern California Edison, scheduling work to avoid the excesses of another “Edison summer.” Techni-Cast makes castings until 1 or 2 p.m., melts metal from 2 to 6 p.m., and then shifts back to castings again at 6. By juggling work during peak hours, Van Hiel eliminates reliance on the utility company. “We’ve had zero demand from Edison,” he brags.

When ramping up or down, Techni-Cast can export surplus electricity into or pull from the Edison line if needed. He estimates that Techni-Cast exports 1,000 kWh a month into the load bank: “It’s not a big deal.” More seriously, if Techni-Cast drops the load while ramping up or down, the extra kilowatts can burn up the generator and cause a brown-out. “A lot of people equate our generator with portable diesel generators,” Van Hiel speculates. “These can’t ramp up and down quickly; that causes other problems.”

The Ongoing Reality
Receiving the National Electrical Contractors Association’s Electrical Excellence Award in 2002 for its effective use of electricity was welcome recognition of Techni-Cast’s efforts, but for Van Hiel, keeping the doors open by keeping costs down is what counts. “The generator allows us to operate more efficiently,” he declares, “and that keeps us employed.” He believes that’s part of his obligation to the 100 employees at the company his father founded in 1950.

Van Hiel looks for ways to cut costs all the time. Years ago he tried to lower Techni-Cast’s kilowatt demand from 2,500 to 1,800 in order to conserve energy, especially during high-demand time. He also renovated the air system, collecting a rebate from the energy commission that paid for 90% of the cost. “That was an immediate recapture of investment.”

The Jenbacher was—and continues to be—a big investment, first in money, but now in time and labor. “It takes a lot of attention and care,” confesses Van Hiel. “It’s a maintenance nightmare; it’s very temperamental. All gas engines are temperamental; they have a lot of moving parts, they’re affected by the weathe How it’s going to feel today is a mystery.” Fortunately, he adds, although the generator has been “sick,” it has never failed.

Its “life” is guaranteed at 60,000 hours. With Techni-Cast averaging 6,000 hours/year, the Jenbacher should last 10 years with proper maintenance. Van Hiel says, “Every 2,000 hours we have to do maintenance. At 10,000 hours, we have to do more complicated maintenance. That runs about $100,000. A simple oil change uses 100 gallons and costs about $900. It takes 20 spark plugs, at $20 each.

“At 60,000 hours we have to rebuild the engine, replace it with a short block and re-install it. The sophisticated hybrid engine that drives the generator is state-of-the-art, computer-run. It’s the best available; it measures 200 functions. But it has 10,000 moving parts.”

To comply with the incentive program, Van Hiel was forced to purchase the parts and service program for the generator for three years; however, he decided that Techni-Cast would perform its own maintenance. “A pure maintenance contract wouldn’t work. They couldn’t respond as quickly as our onsite people. They wouldn’t respond in the middle of the night. They might be delayed because they’re responding to other customers. That kills our uptime. This was a big investment; we have to keep our uptime up.”

GE supplied tutors to train Techni-Cast employees on maintenance issues. Van Hiel admits that they still call for assistance on occasion and that his staff isn’t permitted to “monkey” with certain components. He estimates that one to two hours every day is spent collecting and monitoring data or “doing something on the generator. It’s an ongoing learning process,” he says. “Every type of electric installation has its own problems. We need to be concerned with efficiency.” He maintains a large parts inventory and claims that most problems can be fixed within 30 minutes.

Looking Ahead
Owings says the “relatively maintenance-free” catalytic converter has provided cost-efficient “near-flawless operation.” The single largest expense after the $100,000 purchase price, he says, is the reactant—the urea solution—that costs about $1.25/gallon. The system uses 10 gallons a day, keeping the overall operating costs to a minimum. Still, he says, “These aren’t cheap. The economics associated with producing your own electricity aren’t good because of the cost of gas.” Van Hiel acknowledges that natural gas prices are up, and are likely to continue climbing, but says his system still saves money. “Electricity is still going up,” he counters.

With electricity shortages predicted for the summer of 2006, Nazemi says companies that generate their own electricity will be able to control their costs more effectively. But he cautions that California’s tough emissions regulations are getting tighter all the time. “The plan is to adopt more stringent requirements for new units,” he says. “New units will be subject to the most stringent regulations. The same standard will be applied to them as to the central power unit.” He explains that currently smaller generators are allowed to emit more emissions per unit of power—and Owings observes that standby diesel engines are currently exempt from all emissions regulations, although he indicates that exemption is going away.

Existing units won’t escape the tightening noose of emissions regulations. The controversial RECLAIM program requires industries and businesses to meet targets for annual emissions reductions of NOx and SOx (sulfur oxide), softening the blow by offering financial incentives and a complicated substitution plan that Nazemi says is flexible and cost-efficient.

“We’re working closely with state and federal agencies that have control over power generation,” Nazemi continues. “It’s a balancing act. We don’t want to prohibit companies from building power systems, but there’s been a shift in the amount of emissions to generate the same amount of power. The best local control unit puts out six to seven times more emissions than the central unit. It has an impact on overall air quality.” Inevitably, as agencies address emissions concerns, it will have an impact on companies as they address energy concerns.

Based in Indianapolis, IN, LORI LOVELY writes on transportation and technical subjects.

DE - November/December 2005