This is the story of a noble experiment that has only just begun. If and when it succeeds, it will alter the economics and technology of the grocery business by transforming the manner in which supermarkets acquire and consume energy.
Participating in this experiment are Raley's, a privately owned grocery firm with headquarters in West Sacramento, CA, and with 134 stores in California, Nevada, and New Mexico and Hess Microgen LLC of Carson City, NV, a wholly owned cogeneration subsidiary of Amerada Hess Corporation, a Fortune 200 company. Cogeneration is the use of a single energy source to generate both electrical and thermal power.
Early this year, Raley's and Hess Microgen began testing an onsite cogeneration system that provides much of the energy for a Raley's Superstore in Fairfield, CA. After six months of operation and monitoring, Hess Microgen redesigned and rebuilt the system this fall in an effort to increase its efficiency.
This article describes cogeneration technology, its application to grocery stores, what Hess Microgen and Raley's have learned so far from their test at the Fairfield store, and their expectations for the future of this technology.
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A Response to Crisis
Edward Estberg, senior director of facilities for Raley's, says the 2001 California energy crisis prompted him to explore ways to protect his firm from high energy costs and outages.
"At that time we were getting four or five calls a week from cogeneration vendors," Estberg says. "The major factors we considered on the vendor side were financial stability and experience. Hess Microgen seemed to be the most substantial and had the best product."
Gregg Dixon, vice president of marketing and sales for Hess Microgen, describes Estberg as "an early adopter, a very technology-savvy person who wants to implement new technologies that provide massive improvement, even if it means taking a bit of risk. Ed had seen there was a potential to save money through more efficient use of energy. He said, ‘Let's collaborate on seeing if we can deploy something that really works.'"
The Cogeneration Difference
Dixon notes that only 35% of the energy in the fuel a utility power plant consumes reaches the customer in the form of electricity. The other 65% is lost as heat rising up the smokestack to the atmosphere and through inefficiencies in transmitting and distributing electricity over long distances.
By comparison, he says, onsite cogeneration also transforms 35% of the energy in its fuel into electricity, but it recaptures another 55% as usable heat, losing just 10% due to inefficiency.
"Our systems are reciprocating engines powered by clean-burning natural gas, coupled to a generator that turns as pistons are fired, creating electricity," Dixon explains. "Water pipes passing through the engine and an exhaust-gas heat exchanger capture as much of the heat coming off the engine as possible. This closed piping loop runs outside the system, containing water that flows at 200º Fahrenheit."
The challenge Raley's and Hess Microgen faced was to devise a system that could make effective use of this thermal-energy bonus.
A typical supermarket consumes 95% of its total energy needs in the form of electricity, accounting for a large percentage of operating costs—a crucial issue in an industry where profit margins are normally slim. In turn, refrigeration accounts for a considerable percentage of a grocery store's electricity usage. When refrigeration fails due to power outages, the impact is felt in spoiled products, lost sales, and unrealized profits.
"We kicked around different ideas of how a cogeneration system might operate in a supermarket," Estberg says. "This was a research-and-development project. We were doing things that hadn't been done before."
In a hotel—a more accommodating cogeneration environment—the excess heat of combustion from the engine yields hot water for domestic use in guest rooms, space heating, dishwashers, laundry, swimming-pool heating, and other purposes. Some hotels also direct a portion of this hot water through absorption chillers to produce cold water for the air-conditioning system.
Unlike hotels, grocery stores require relatively little hot water, so Estberg and Dixon recognized early on that effective use of chilled water would be the key to creating a workable cogeneration system for Raley's.
Four Uses for Thermal
They devised four uses for the thermal output of the store's cogeneration system:
1. Air Conditioning. An absorption chiller employs a heat source—hot water from the generator—and a lithium-bromide solution that exploits the evaporation and cooling cycle to remove heat and produce chilled water. Then the chilled water runs through the coils of an air handler where a fan blows across the coils, cooling the air and distributing it via ductwork throughout the store.
2. Condensing and Subcooling for the Grocery Store's Merchandise Refrigeration System. A typical grocery store has a compressor room where vaporized refrigerant is compressed. The compression process heats the vapor refrigerant, which flows in gaseous form to a condenser, where it liquefies and cools to 110ºF. After the liquid refrigerant leaves the condenser, a subcooler further chills it, dropping its temperature to 80ºF. Then this liquid refrigerant flows into the store, where it evaporates inside an expansion box, sucking up heat from within the freezer cases to create a cold environment in which frozen foods will stay frozen.
The Hess Microgen installation at the Fairfield Raley's store employs chilled water from the absorption chiller running to a plate heat exchanger to cool the refrigerant before the refrigerant reaches the condenser.
3. Domestic Hot Water. Instead of using a separate boiler that consumes energy while heating water, the Hess Microgen/Raley's system runs water heated by the cogeneration engine through a heat exchanger, where it gives up heat to the store's domestic hot-water piping. This provides "free" hot water for cleaning floors, washing hands, and cooking.
4. Space Heating. Instead of a discrete energy-consuming heat source for space heating, the Hess Microgen/Raley's system employs a separate hot-water coil flowing through the same air handler used for air conditioning to blow warm air through the ductwork. This is the least important of the thermal-byproduct applications because heat coming off the lights and refrigeration equipment suffices to heat the Fairfield Raley's store on all but the coldest days.
Regulatory Issues
Slightly more than a year elapsed from the time Estberg and Dixon began talking until the cogeneration system went on-line. Once Estberg and his superior at Raley's, Terry Tremelling, vice president of corporate administration, decided to go ahead with the project, the process involved system design and engineering, production of the equipment, preparatory construction at the store, installation, startup, and balancing the system. The single aspect that consumed the most time, however, was gaining permits and regulatory approvals.
At issue was interpretation and application of Rule 21, a California Public Utilities Commission standard governing the way in which onsite generators interconnect with the utility grid. "We're not taking the entire store off the Pacific Gas and Electric grid," Dixon says. "We run in parallel with the grid. We try to take the base load—85%. The utility provides the rest, picking up the spikes and valleys.
"The utility needs to make sure that the grid is protected—that we can't damage a utility's asset or harm a utility worker who may be maintaining the distribution system. Hess systems ensure that there is no possibility for damaging the utility's assets or putting any personnel at risk of injury. Still, the protection engineers at the utility have to be shown that our protection systems work within very specific tolerances. We have to educate them."
Another concern is the quality of the power being produced by the onsite system. The generator needs to synchronize with the grid before it comes on-line so it won't damage motors in the store.
"It's like a stream flowing into a river," Dixon says. "You make sure you're merging into that river with no turbulence. Protective devices in our generator read what's coming from the utility, balance the throttle, and get our cycle lined up to their cycle. Then when we're in sync, our system activates the breaker.
"This is not just a matter of having utility-grade relays. The utility's protection engineers want to read the specs and see it work. You have to do this with every protection engineer you run into; they haven't seen it before. We went back and forth with the utility for three or four months to resolve everything.
"If you're a utility, you're used to being a monopoly—a sole provider of energy," he continues. "The utility is going to look at it from the perspective of ‘I have to protect my assets and revenues.' This leads to long periods of time going by before progress is made."
System Components
The cogeneration equipment at the Fairfield Raley's store occupies a walled, roofless enclosure on a steel platform elevated 12 ft. off the ground to allow for storage underneath. The platform, 40 ft. long and 10 ft. wide, is a prefabricated skid onto which all of the cogeneration components were attached at Hess Microgen's factory in Carson City, simplifying installation of the system. At the store, only piping and electrical connections were required.
The components of the initial system included the following:
- Two 200-kW synchronous cogeneration packages. Each contained an engine made especially for Hess Microgen by Daewoo Heavy Industries of South Korea, coupled to a generator. Each of the packages sat within a box 4 ft. wide, 8 ft. long, and 6 ft. tall. Atop each box rested an emissions-control catalyst that looked like a car muffler.
- A 110-ton absorption chiller 8 ft. long, 5 ft. wide, and 7 ft. tall, with pipes running in and out. The chiller was manufactured for Hess Microgen by Century Corporation of South Korea.
- A cooling tower for the absorption chiller's condenser water. It was a circular structure 8 ft. in diameter and 8 ft. tall.
Emissions, Noise, and Security
The system ran on clean-burning natural gas and met the most stringent emissions standards of any regulatory body, including California's South Coast Air Quality Management District.
"Our cogeneration systems produce emissions at one one-hundredth the level of a typical California power plant, so they are extremely environmentally friendly," Dixon says. "The engines are very efficient in themselves and are coupled with a catalyst that almost eliminates any emissions whatsoever. During source tests in the southern California basin, we've actually cleaned the air—taken nitrogen oxide into our system at higher levels than our exhaust emitted. We also control emissions through continuous fine-tuning."
Fine-tuning isn't possible in a large central power plant. Turning a massive piece of steel with incredible inertia, such a plant can't instantaneously change the ignition timing or the air-fuel mixture if the fuel quality changes. Dixon says Hess Microgen's cogeneration system is small and nimble, with an air/fuel–ratio controller constantly monitoring and adjusting inputs of air and fuel to maximize the beneficial chemistry of the catalyst.
The system added little sound to the ambient environment. Measured at a point on the ground outside its enclosure, its noise rating was just 60–65 db. "We're quieter than a normal air-conditioning system," Dixon remarks.
"These systems are environmentally friendly and efficient and use only a small portion of the fuel a central power plant uses. If cogeneration systems provided 10% of the power in the US, we would meet all of the Kyoto Protocol greenhouse gas requirements the US government has been reluctant to commit to."
Cogeneration also could "dramatically improve national security," Dixon says. "If a central power plant is successfully targeted, you'll lose power to a million homes, but mission-critical elements—such as hospitals and grocery stores that need power to serve the residents of those homes—would still be able to do so if they were equipped with cogeneration systems."
Economic Aspects
The agreement Hess Microgen and Raley's negotiated calls for Hess Microgen to own the cogeneration system, sell power to Raley's, and guarantee Raley's an annual $50,000 savings on its energy bill.
Hess Microgen designed the system, incurred all of its capital and construction costs, and is responsible for maintaining it. Raley's incurred one-time expenses of less than $10,000 to install a heat exchanger in a discharge line and for some minor repiping of the refrigeration system. Otherwise its contribution is limited to "people time" to work with Hess Microgen on the project.
Hess Microgen intends to profit from the "spark spread"—the difference between what the utility charges for electricity and the cost of natural gas to run the cogeneration system. Even allowing for maintenance expenses and less than total efficiency in the use of heated and chilled water, total savings from cogeneration are expected to more than cover the annual $50,000 savings on energy costs that Hess Microgen has guaranteed Raley's.
If the annual savings does exceed $50,000, Hess Microgen and Raley's will share the excess on an agreed prorated basis. Hess Microgen hopes to pay back its capital costs and begin earning a profit within several years—well before the system would need to be rebuilt or replaced. (If Raley's wanted to buy and own the system, it could reap all of the energy cost savings, but the most common cogeneration business model allows the vendor to retain ownership, assume the costs, and share in the risks and rewards.)
In addition to these calculable economic aspects, cogeneration offers a reliability factor to which participants in a project might agree to attribute a dollar value. The massive August 2003 blackout in the Northeast US and parts of Canada illustrated the vulnerability of the power grid and businesses that rely upon it. A properly sized and designed cogeneration system should be able to supply all or most of a grocery store's crucial energy needs—including refrigeration, climate control, enough lights to keep customers buying, and operation of automatic doors and checkout equipment—during an extended blackout.
Hess Microgen says its onsite cogeneration systems are practical for businesses with at least 300 kW of electrical demand and at least 200,000 kWh of electrical consumption per month (2,340,000 kWh/yr.). In addition, they must have combined interior climate-control needs of at least 12,000 therms of heating per month (60,000 therms/yr.) and/or at least 55 tons of chilling.
"Your savings are entirely dependent on your usage profile, energy needs, and the cost of local utility power," Hess Microgen's Web site says. "Pending an energy audit, 15% savings is often a good starting point."
A Need for Change
In the Fairfield cogeneration system's first incarnation, Raley's reaped its rewards, but Hess Microgen did not. The system was too big, a flaw that occurred because both companies had been flying blindly during the initial design phase. They lacked a crucial variable—a daily or monthly profile of energy usage by time of day.
"It was a new store," Dixon explains, "and we didn't have a lot of data on it. We didn't know its electrical or thermal load, so we made assumptions based on other stores in the area."
Those other stores were less energy-efficient than the Fairfield store. "We didn't realize how well our current energy management practices reduced the load during nights and winters," Estberg says. "We were flabbergasted at how much our load drops off, from 460 kilowatts of electrical demand on July 4 at 5 p.m. to less than 180 kilowatts on January 30 at 1 a.m. The new system design will adjust for the idiosyncrasies of that store."
Key changes include the following:
- Replacing the two 200-kW cogeneration packages with two 140-kW packages
- Replacing the single absorption chiller with two separate chillers—one for each cogeneration package
- Reconfiguring the refrigeration system to make it more efficient: Instead of cooling the refrigerant before it reaches the condenser, the chilled water will subcool the condensed liquid refrigerant
- Assigning one cogeneration package and absorption chiller specifically to subcooling, which operates continuously, and the other to air conditioning, which cycles on and off as needed.
"An absorption chiller operates less efficiently at partial load, and that's what was happening when a single chiller had to operate all the time to provide subcooling," Dixon says. "With two chillers, each runs at peak efficiency when it is being used, but the space chiller won't always be used."
Hess Microgen's Future Plans
From Hess Microgen's perspective, the experiment at the Fairfield Raley's is the first step in a long march. "We want to be in every grocery store in the country," Dixon says. "We think about 15,000 grocery stores in the US are large enough to be good applications. Right now it's practical only in certain regions, based on utility rates and economies of scale, but if market forces change—if energy prices spike—so will the economic benefits.
"The more stores that have cogeneration, the less expensive it gets to implement. We see our future pegged to customers like Raley's with many facilities that you can stamp out over and over. The system itself is not proprietary; it can't even be patented, but how we do it cannot be replicated.
"It's our business model, the technologies we plug together to work, our agreements with suppliers, and the proprietary knowledge we've developed from investing in research and development—our knowledge of how cogeneration should work, and how grocers consume energy," Dixon concludes.
Raley's Looks Ahead
As testing began on the second incarnation of the Fairfield Raley's cogeneration system, Hess Microgen was busy starting up another system in the Raley's-owned Bel Air Market in Elk Grove, CA. The two stores differ in some important ways.
The Fairfield Raley's Superstore encloses 63,000 ft.2 and sells more nonfood merchandise than the 46,000-ft.2 Bel Air Market. Both, however, have about the same refrigeration load, so the Raley's Superstore consumes less energy per square foot than the Bel Air Market does. The Bel Air Market cogeneration system will have a new economic and mechanical model, Estberg says.
"We're thinking about a third one after the other two are up and running. Then we'll do an analysis. Probably we would put cogeneration systems in stores that have very high utility bills or unreliable power. It's not likely that we'll install cogeneration systems in all of our stores, but it may become a standard part of the construction for remodeling or a new store."
Meanwhile, Estberg is looking ahead to the advent of commercially viable fuel cells and to price reductions for photovoltaic panels. "We intend to have our first photovoltaic in operation on a store in less than a year," he says. "We'll use it when the sun is out to offset our base load. It's most effective in the summer when the sun is shining, the weather is hot, and our utility rates are highest.
"I envision that in 10 or 12 years we'll have a store with a grid connection, a cogeneration system or a fuel cell, and a photovoltaic—and then we'll pick and choose when to use each of those sources of power."