Cogen Hits the Big Time: Cheap Onsite Power Arrives in the Industrial Heartland

March 1, 2004

If you’ve ever traveled though an old railyard hedged by smokestacks or watched the gas flares rippling above a refinery, you know what Tom Casten and his firm Primary Energy LLC are chasing: wasted energy. Thousands of American plants and factories are guilty. Heat and excess gaseous exhaust pour out as byproducts of their processes, the vast majority being vented, lost, squandered, ignored, “and just thrown away,” says Casten.

Mind you, he has nothing against wind turbines, gensets, or solar cells as energy sources; he just wants people to realize that distributed generation (DG) comes in many flavors. Casten himself once was involved with the smaller end of DG, most notably when he founded Cummins Cogeneration Company, a division of Cummins Engine, in 1977. A decade later Casten enlarged his operation by launching Trigen Energy Corporation to develop and operate larger proximate energy systems for industry, commerce, and government. Trigen lined up major industrial customers and then went public on the New York Stock Exchange in 1994. In 2000, Casten sold his shares and refocused on pursuing his quest to capture and recycle energy at unprecedented, new efficiency levels, with a company he formed in 1996 called Private Power. In late 2003, Private Power acquired five generating plants from NiSource Inc. and became known as Primary Energy Holdings LLC.

This mini-power-plant designer has built, owns, and operates cogen facilities at several blast furnaces, serving Ispat Inland Inc. in the Gary /East Chicago, IN, steel belt. These now are yielding plenty of value. Some facts and figures follow:

  • In May 1996, North Lake Energy LLC was launched and now is producing 75 MW for Ispat Inland using blast furnace gas that previously had been flared. 

  • In April 1997, Primary Energy replaced obsolete 25-cycle generation with a 161-MW cogeneration plant (Lakeside Energy LLC) for United States Steel in Gary, providing both steam and power using a condensing-extraction steam turbine generator, with steam produced from blast furnace gas.

  • In September 1997, a GE natural gas-fueled trigenerator was installed to supply 63 MW of power and process steam and hot soft water (equal to 100% of needed thermal and electric power) for the Portside Energy LLC plant serving National Steel Corporation of Portage, IN (mill now owned by US Steel).

  • More recently, Primary commissioned a new 50-MW energy recycling plant called Ironside Energy LLC to convert blast furnace gas into steam and electricity for International Steel Group in East Chicago. The boiler is fired primarily with blast furnace gas from iron making but also is capable of burning natural gas. Capturing and using blast furnace gas rather than flaring it wastefully into the air saves fossil fuels and reduces costs and pollution. There’s a three-fold bottom line to all of this too: The savings to steelmakers from recycling blast furnace gas and coke-oven heat comes out to more than $100 million annually; powerwise, the yieldfrom six heat-recovery projects regionally comes to about 460 MW. And pollution is reduced to the tune of many tons a year.

The Lakeside Energy Plant

Although blast furnace heat has been harnessed routinely to run processes long before Primary Energy harnessed it to do so, what’s new here is the aggressive way Primary goes after every opportunity to recycle energy and finds vast quantities of wasted power formerly being overlooked.

Marking a very big case in point, in October 1998 Primary Energy turned on the switch for an innovative but commercially viable project demonstrating big-time energy recycling and cogeneration called Cokenergy LLC. You probably think of “coke” as a caffeinated beverage, but in Casten’s industrial backyard, it’s better known as a derivative of bituminous coal used to smelt iron. Coke is made by baking coal in the absence of oxygen at about 2,000¡F. Historically most US coke was made using a heavily polluting process, which reused this heat to recover some chemical byproducts. Then, three decades ago, a less-polluting “nonrecovery” method came along. This ceased recovering the chemicals but reverted to wasting this tremendous heat. (The Environmental Protection Agency [EPA] now mandates nonrecovery coke-making.)

Primary Energy saw this wasted heat and in the mid-1990s set to work to recycle it. Cokenergy LLC now is attached to Sun Coke’s new coke ovens, which produce coke for steelmaker Ispat Inland. Waste heat soaring out of the metallurgical coke-making facility is captured by 16 heat-recovery boilers, which yield a total of nearly 100 MW of recycled power – about a quarter of the steel plant’s total demand – and 200,000 lbs. of 200 psi of steam. And the steam provided by the process, 200,000 pph, is equal to 85% of Ispat Inland’s needs. It’s the first heat-capture plant of this kind ever built.

All told, Casten-led operations have inked more than $6 billion in contracts for heat and power projects in the past two decades and have funneled more than $1 billion in investments into 200-plus combined heat and power plants nationwide.

And the energy-recycling quest goes on. Primary Energy now is proposing new projects to all three mills to extract electricity from gas/steam pressure drops. The firm also currently is negotiating to recycle carbon black gas in Louisiana for Columbia Chemical, a division of Phelps Dodge. Other recent inquiries have come from steel mills, aluminum plants, foundries, and chemical plants.

Recycling Mantra: Waste Not, Want Not

As the previously mentioned cases show, energy can be used twice or even three times on a given site by multigeneration, or energy recycling. In a typical model, coal first partially is burned to make coke, and then the exhaust is recycled to produce electricity and distribution steam. The coke and added coal next are burned in blast furnaces to make iron; the normally flared blast furnace gas then is recycled to produce still more electricity and distribution steam. Finally, when medium-pressure distribution steam reaches points of use throughout the mill, new back-pressure turbine generators extract the pressure-drop energy to produce even more electricity. In sum, fuel is burned, power is cogenerated, and energy is expended and reused to make still more power in a repeatable chain.

Wasteful one-shot energy use is clearly anathema to Casten. Unfortunately energy-squandered energy recycling opportunities are more likely the rule, owing to historic plant and process design. Primary Energy’s Executive Vice President for Development Dean Hall points out that industrial managers tend to compartmentalize energy needs and resources rather than look at them holistically and strategically. For example, in auto-making plants, an assembly line needs lots of “clean power,” which typically is produced remotely, with heat, the resulting byproduct, being wasted; then the plant’s paint shop needs “clean heat,” and it burns still more fuel locally for heat only. Such a profligate operation is a prime candidate for localized combined heating and power to do both jobs, using one combustion source, not several.

 Auto plants typically waste even more. Their paint booths burn natural gas to incinerate fumes but then waste the resulting heat, which could be used to cogenerate electricity, and the steam or chilled water, which could be used to supply another plant function requiring rapid cooling.

It might sound convoluted, but this isn’t an extreme example. Regardless of a plant’s layout or processes, rarely are these assorted energy needs and applications viewed systematically, with an eye for potential multigeneration and recycling.

Why is this so? Hall perceives that simply because industrial plants have become entrenched in longstanding practice, they seek to avoid investments “in noncore activities, like producing energy.”

 Casten adds, “Nobody realizes the magnitude of these recycling opportunities.” Too, the power and fuel industries have evolved to serve the segmented model. Utilities, Casten notes, “are throughput-biased,” and they’ve tended to discourage all local or onsite power generation. “The rules don’t reward utilities for increasing efficiency.” Finally, even if a smart plant manager has a flickering notion that heat or gases might be recyclable, he’s in uncharted waters, and nobody wants to be the guinea pig in a costly experiment.

Raising Industry Awareness

Hall and Casten stand ready to assist plants and factories to close the knowledge gap and help potential prospects overcome these barriers. Both frequently address industry groups and corporate directors about energy cogeneration. Casten reports finding considerable ignorance about even some basic DG technology and applications, such as wind turbines and gensets, even among regulators and industry executives. “We have a worthy mission to educate these people,” he says. Toward this goal, in 1998 Casten authored Turning Off the Heat, a book that explains how the US could double its power-generation efficiency, reduce greenhouse gases, and save $100 billion annually. In 2002, he helped found the World Alliance for Decentralized Energy (WADE), which supports a Web site (www.localpower.org) that gives confidence-building case studies.

The Portside Energy plant

When he is speaking with energy-conscious managers, Hall (formerly an executive at Inland Steel in charge of blast furnaces) likes to lead with a provocative statement that instantly hits home. “We built a plant,” he tells them flatly, “that has achieved almost 90% energy efficiency.” Gasps of incredulity follow. Among energy-conscious executives, there’s an almost unwritten conviction that fuel efficiency must max out at somewhere around 30-35%. Losses from stack emissions, heat-transfer system inefficiencies, transmission, and so on set this figure in stone. “You can’t do that. It’s not possible,” comes the reply. Hall then explains how it can be done – not only in theory but also in real-world applications at model US plants. Attaining high efficiency requires recycling and multigeneration, he tells them, and it boils down to simple arithmetic: If three processes each run at 30% efficiency and you somehow can recycle the energy from one of them to the next and so on, boom – you’re up near 90% efficiency. “One must learn to think differently about energy,” Hall observes.

A “multigenerational energy strategy,” he tells them, means that you’re locally generating electric power, steam, water pressure, compressed air, boiler fuel, incineration, furnace ventilators, pressure drop, and so on with maximum recycling. Although few plants can achieve 90% efficiency, Hall says that, in reality, “doubling or more, from 30% up to 70 or 75%,” is readily doable.

One interesting discovery to emerge from Hall’s market research is that flowcharts mapping energy usage across a broad range of industrial processes turn out to be quite similar. On first glance, you might see nothing that relates steel smelting to a paper mill, an oil refinery, or a corn or chicken processing plant. In fact, however, all of them use heat and power in very similar ways, “breaking up organics, applying significant heat, and yielding various byproducts,” Hall notes. Thus, certain basic principles of energy recovery and recycling can be repeated anywhere. Generally speaking, says Hall, for any plant using lots of energy and/or making steam, multigeneration is likely to yield “something “north’ of 70 or 80% energy efficiency.”

Custom-Fit Designer Power Plants

Nevertheless, unlike microturbine installations, these mega-energy recycling projects tend to require far more intensive engineering. There’s little repeatability from one undertaking to the next, Hall says, although Primary Energy has gained expertise in quickly sizing up the energy flows and identifying likely opportunities.

Three energy resources tend to be most readily recycled:

  • The first is waste gas, such as that burned off as excess in petroleum, chemical, and assorted other industries. Nationwide, the cumulative power potential of capturing and using flared gas (the emission of which is tracked by EPA) is something more than 22 GW of potential cogen power at greater than 6,000 locations.

  • The second resource, waste heat, emitted from thousands of locales in reusable quantities, is relatively easy to recycle using steam boilers and turbines and Rankine-cycle generators. But other recycling targets are more challenging. Casten finds, for example, that “every cement kiln is dumping a huge quantity of heat into the air É they don’t need all of the heat in the process itself.” A majority of expended-but-reusable heat from such plants as these hits the air at 500-600¡F, making the recycling challenge greater. Capturing it perhaps might require an organic fluid Rankine-cycle generator or a modest fuel supplement.In any case, it’s probably worth the investment.

  • The third resource is pressure drop, ubiquitous at several hundred thousand plants and facilities, Casten notes. “There’s unused pressure drop at every thermal campus in the country.” Whether derived from steam that heats offices or steam that heats classrooms and residences, pressure drop drives myriad factory processes. Distribution steam is medium- to high-pressure. The bulk is used to heat water or air at relatively low temperatures. “It ends up being deflated with pressure-reducing valves, and that pressure drop is simply thrown away.” Most of this could be transformed into cheap power. It’s a huge, untapped reservoir, “somewhere between 10 and 20 gigawatts of electricity that could be made in the US by capturing that pressure drop,” he says. Typical power generation would range from 50 kW to 20 MW. Most large steam-pressure-drop projects have already been tapped, but this still leaves a vast number to be exploited, especially in the 1- to 10-MW size.

What’s the Real Potential?

The Ironside Energy plant

The Cokenergy plant

The examples cited previously in the steel industry barely scratch the surface. Potential industrial-scale energy recycling applications, albeit of less-spectacular yield, number in the thousands. EPA tracks more than 7,000 gas flare sites alone – the majority being probably usable energy. High on the list of candidates are probably chemical factories; oil refineries (lots of wasted fuel and byproducts there); automobile and appliance paint shops or anywhere escaping vapors are incinerated; paper mills; and food, glass, and wood processing plants. Carbon black plants, of which there are 27 in North America, produce exhaust gases (hydrogen and carbon monoxide, similar to those in a blast furnace), which can be captured and burned as cogen fuel. So far only one plant, in Alberta, Canada, is recycling gas – leaving 26 others. In sum, wherever significant process heat is applied, combustion occurs, or pressure drop occurs, there’s a prospect for recycling the energy.

To top it off, all of this as-yet-untapped potential will emerge from the whirring generators “with absolutely no incremental pollution increase and no incremental fossil fuel,” Casten says. Multigenerated power has “the same environmental effect as making that power with solar photovoltaics or wind turbines.”

Funding Hurdles

Back to the question of why this potential has remained untapped, another major barrier is, naturally, the cost – potentially reaching into the millions at large plants. Each proposal requires intensive up-front research, analysis, impact studies, partnering discussions, cost-benefit spreadsheeting, long-range assessments, and due diligence before it can be translated into a contract. Projects first must be vetted to see if the right preconditions even exist. No project will even get to the talking stage unless it promises a rapid and almost guaranteed return on investment.

Another door-slammer has been the relative lack of solid, operational, real-world precedents with recycling energy – until Primary Energy began producing such success stories in the late 1990s.

This raises the issue of investment priorities and the national energy policy. Currently hundreds of US communities are losing industrial jobs as plants and factories cease to be competitive, and production is moving offshore. Casten believes that energy recycling not only would save many of these industries but also would cut the cost of electricity to all consumers by eliminating the expense of investing in new fossil-fuel utility plants.

Hall adds that most utilities aren’t likely to become concerned about wasted power until they detect some adverse impact on themselves. In fact, until then, waste is actually profitable. “They want to keep their monopoly, and they don’t want change,” he observes. Hence there remains a competitive tension. For its part, Primary Energy is “not trying to take the utilities’ load away from them unless we can also produce other benefits – environmental benefits – and the ability to produce power much more cheaply than the utilities can do,” says Hall. “The only way to do that is to be very, very efficient. In the twenty-first century, you can’t afford to use energy only once – and then throw away 70% of its value. So we find ways to recycle and extract all of the value. There is almost a moral element to it.”

Casten concludes, “There are a lot of pieces to the story. If we’ve told it right, someone should be having an epiphany and saying, ‘Wait a minute! Why aren’t we encouraging energy recycling?’ Of course, there are no good answers.”

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