March 8, 2004
MiBiz Network
By Tim Gwozdz

MUSKEGON — The rising cost of energy coupled with the fear of blackouts or terrorist action has companies contemplating alternative sources of power generation.

Savvy manufacturers are now considering co-generation plants and private substations to ease the worry.

Newkirk Electric Associates Inc. in Muskegon and its wholly owned engineering subsidiary Theka Associates Inc. have designed, engineered and installed a number of co-generation plants and substations across the Midwest.

Co-generation operations produce energy and heat simultaneously by burning the same fuel. Theka Associates President Steve Erickson said the ideal candidate for a co-generation plant is a manufacturer that uses electricity and thermal energy (typically a steam byproduct of a manufacturing process powered by gas).

Each plant is unique to the individual user’s power needs and process output. For example, a 3.2-megawatt gas co-generation plant designed by Theka for Lorin Industries in Muskegon captures steam from the firm’s aluminum anodizing process and turns it into extra electricity through a special power grid interface and control system.

When it comes to co-generation company size doesn’t matter, but energy usage does.

“The company has to have about a 500kW hour of electrical peak at least and it has to have a balance between electrical and mechanical heat load. In other words, it has to use the electricity at the same rate it’s using steam or other heat,” Erickson said. “You want to get every last BTU out of the gas that you’re burning.”

Generating energy and heat from the same fuel dramatically improves the net efficiency of the fuel being burned. As part of its systems planning process, Theka’s engineering team collaborates with Newkirk staff to create cost analysis projections that could include a feasibility analysis or a break-even analysis. Sometimes an analysis appears to be too good to be true, but “when you do the math” the figures don’t lie said Newkirk President Ted Anton.

“We had one customer that was so unsure of the calculations that they didn’t want to buy the project. We were so sure of it that we bought it and leased it to them. We knew the numbers worked,” said Anton. “There are a lot of creative ways to approach these projects when you have a good application.”

Erickson did admit that fewer companies are looking seriously at co-generation these days because of the high price of natural gas. “As soon as natural gas prices get back to reasonable levels, co-generation projects will pick up again,” he said.

Power co-generation can take many forms. Newkirk was instrumental in setting up power generating facilities that capture methane gas escaping from landfills and transfer it into electricity. Though not a true co-generation process, the landfill system does take the required burning of methane gas and channel it into an energy source.

Biomass is another frontier under exploration. Anton said that he has had discussions with Dr. Imad Mahawili, executive director of the Muskegon SmartZone’s Michigan Alternative and Renewable Energy Center, about the potential of setting up co-generation operations that would capture energy from animal waste produced at area dairy and turkey farms.

Along with co-generation, power substations continue to be an affordable alternative to high energy prices. Like co-generation facilities, substations should only be considered if the company has at least a 500kw hour electrical peak. Substations are extremely cost effective for heavy users of electricity.

“The higher the voltage that you accept power at, the cheaper it is in Michigan the way the rates are structured. So for someone who really understands their electric load a private substation is a really good investment,” said Erickson.
One of the advantages is that substation operators can purchase their power on the open market. “If a customer owns a substation, they’re able to take ‘off-power’ from suppliers other than the local power company,” Anton said.

The flexibility often translates into a lower energy cost. Newkirk officials estimate a substation could save a firm $10,000-$20,000 a month or more.

The deregulation of the power industry is still in flux, Anton told MiBiz, and that could lead to more privately owned power plants.

“The federal government has required the regional transmission companies to break off from the main utility, so now Consumers Energy doesn’t have the transmission of electricity in its scope of supply anymore. There’s one company generating the power, another transmitting it and another company distributing it,” Anton said. “The trend is to have an open supply chain. Theoretically you can buy your power from anyone you want to. I think it’s going to lead to a lot more customer-owned power plants and substations. As companies figure out ways to cut their operating costs, they’re going to look at these kind of options.”

Because of regional power outages and the threat of terrorist attack, Erickson has seen increased demand for high-quality, uninterruptible power, which has more people turning to their own power generation. “They’ve gotten a little nervous with the power glitches in the country. They’re also looking to add generation to provide uninterruptible systems for computers. These days a business has to stop if their computers stop.”

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This article appeared in the March 8, 2004 issue of MiBiz, read by upper management executives in West and Southwest Michigan. Print subscriptions are free to qualified individuals who do business in West and Southwest Michigan. For further information about MiBiz Network, visit www.mibiz.com.