Squeeze Your Own Juice The Benefits of Residential Co-Generation

During the recent citywide blackout, most everyone found themselves somewhere in the dark, and the city's co-ops and condos were no exception. The 24-hour crisis left nearly everyone in New York's five boroughs (and much of the Northeast) asking this question: Where were you when the lights went out? For most of us, the answer was simple: stuck. But if your building had a co-generation system, the answer might have been, "I was in my air-conditioned living room, drinking iced tea and watching news coverage of the blackout on television." Buildings with partial or full co-generation systems at least had some chance of providing energy to their residents throughout the crisis. And if your building decides to turn to co-generation, perhaps you won't be left in the dark if there's ever a sequel to Blackout 2003.

Why Go Co-Gen?

According to Robert L. Silverstein, president of Chelsea's Penn South co-op complex in Manhattan, "It was the idea of conservation and producing our own energy, and the savings of money for the cooperators by producing our own energy that initially interested us in co-generating."

Rising utility costs and the potential for power loss during peak energy-use times are two very big reasons some buildings have asked themselves if there isn't a better way to provide residents with power. While most co-ops and condos generally depend on at least one of the major energy suppliers in the city, that's not the only option. For buildings that no longer want to rely solely on their local energy service company (ESCO) for juice, co-generation may be the answer.

According to Walter Mankoff, Penn South's board treasurer and co-chair (along with Silverstein) of the co-op's co-generation committee, "We were spending nearly a third of our annual budget on fuel and utilities. As it turned out, we converted, and had been paying Con Ed $1.5 million a year, and buying fuel for another $1.5 million a year. After the conversion, the total bill was $1.5 million. In other words, no increase in the fuel bill, and we were no longer paying $1.5 million to Con Ed. We had all the energy we needed for heating and cooling and so on from our power plant."

What if you could take matters into your own hands - or more specifically, into your own building? A co-generation system does just that, allowing a building to produce some - and possibly all - of its own energy. Not only does it save money, but it's environmentally friendly as well. But before jumping into it however, there are several factors to consider.

A Co-Gen Primer

According to George Yurieff, an account executive at KeySpan Business Solutions (, "Co-generation - or co-gen for short - is a popular buzzword these days. The term is commonly defined as the production of both heat and electricity from one fuel source. CHP (Combined Heat and Power) is a popular acronym."

Using one fuel source - such as propane or natural gas, among others - co-generation provides the simultaneous production of heat and electricity. These systems and their output may function somewhat differently from building to building. For instance, one co-generation system may produce heat from the unused portion of the electricity being produced by the plant.

According to Herbert Hirschfeld, a professional engineer and a project manager who is developing demonstration co-generation programs for multi-family buildings through NYSERDA, co-generation typically provides for production of electrical energy and hot water or steam energy from a single fuel source, usually natural gas.

According to Yurieff, producing electricity and heat from same fuel source is "the most efficient way of utilizing fuel that there is." He explains, "Rather than exhaust going into air, which contributes to global warming, it is reused to heat water."

Says Penn South's Silverstein, "Our plant itself gives us our heat, cooling, hot water, and all the energy we need. About three years ago, we decided that we'd like to be able to burn oil as well as gas and be duel fuel, but the plant needed a little bit of upgrading. So we made an addition to the power plant and can now use either fuel, so when one is more economical than the other, we just switch over at will, depending on the cost and what we need."

The most commonly heard benefits of co-generation include, says Yurieff, "increased efficiency, lower operating costs, environmental friendliness, and some sort of free money - via government financing or giveaways."

Instead of buying all their electricity from a utility such as Con Ed, says Hirschfeld, and separately purchasing fuel in the form of oil, steam, or natural gas to control the building's heat and hot water equipment, a co-generation system could produce electricity and thermal energy for heat at a lower cost. Other benefits, in addition to reducing utility demand, using co-generation can also reduce pollution, protect the environment and decrease the state's need to build new power plants. Using co-generation, most buildings could produce as much as 40 percent of the electricity or hot water annually that they need, he says.

The Big 4

Co-gen impacts buildings in many ways, but most boards considering cogeneration for their building are concerned with four main points:

Increased efficiency: When electric power is generated in a conventional plant, the exhaust heat of the primary mover is not utilized, and the efficiency can be typically calculated at around 30 to 35 percent, says Yurieff. In a co-generation plant, however, you recover the exhaust heat from the process of generating electricity and produce heat with it as well, which includes steam and hot water. The efficiency of that same fuel feeding the prime mover typically increases to 70 to 85 percent - a substantial increase, to say the least.

Lower operating costs: According to Yurieff, recovering and using heat that is normally exhausted into the atmosphere in the form of hot water and steam in conventional applications, produces much more building heat from the same amount of fuel.

Environmental impact: Modern co-gen plants, especially those that are natural gas-fired, reduce the emission of greenhouse gases and air pollution. The Environmental Protection Agency (EPA) recognizes co-generation as an economical and environmentally friendly alternative to traditional forms of energy.

In addition, the EPA notes on its Web site ( that using co-generation also has a positive impact on other energy users as well. These systems "help reduce congestion on the electric grid by removing or reducing load. In this way, CHP systems effectively assist or support the electric grid, providing enhanced reliability in electricity transmission and distribution." And, say the pros, after an overtaxed, antiquated grid threw up its hands and quit last month, leaving some 50 million people scrambling for flashlights from Delaware to Detroit, the benefit of co-gen is cast into even sharper relief.

Environmentally speaking, according to the EPA,"CHP reduces the amount of fuel burned for a given energy output and reduces the corresponding emissions of pollutants and greenhouse gases." Co-generation also works in effectively reducing the need for and amount of fossil fuels. According to the EPA, "Because CHP requires less fuel for a given energy output, the use of CHP reduces the demand on our limited natural resources - including coal, natural gas, and oil - and improves our nation's energy security."

Incentives: The National Energy Policy added co-generation equipment to the list for tax incentives available through the Energy Tax Act. In addition, says Yurieff, substantial funding for co-generation projects is available in New York State through state funds, currently available through November 2003. The amount of funding given to a particular project depends upon the perceived benefit of the project; the amount of funds available; and how the application for funding is prepared and the project presented.

The Particulars

Yurieff explains that KeySpan has programs that work with "facilities people" in charge of maintaining the co-gen equipment to install their own generators. He emphasizes that buildings planning to install a co-gen system should work with their energy supplier - should they still need to get some of their juice from a utility - to be certain that their generator is compatible with the utility's equipment.

Yurieff reminds board members that "every co-gen system is put together for that particular customer," so the type of system that will work best depends on each building's individual needs. In addition, the cost-effectiveness and savings a building can expect to realize depends on what type of system you choose. Therefore, it's important to remember that your expenses - and savings - won't necessarily be equal to those of the building down the street that also uses co-generation.

For instance, Yurieff notes that there's a big difference between buildings that run their facilities using natural gas and those that decide to use diesel. "Natural gas usually has to be piped in from somewhere else, another utility," he says. "For diesel fuel, you'd have to have a storage facility."

Hirschfeld says that the most feasible or common application of co-generation, particularly in smaller buildings, is for production and heating of domestic hot water. "The main benefit is that you're able to take advantage of the waste - and use the waste heat that is collected as thermal energy."

Installation sizes and costs vary, Hirschfeld says, and help is available from a variety of NYSERDA programs ( Information about co-generation programs can be found at ( In a New York City building, for example, a co-gen system's installation cost per kilowatt typically runs between $1,500 and $2,000, depending on the site specifics and other factors. Without any state aid or incentive, payback from the installation would probably be in about five years, Hirschfeld says.

Con Edison ( also works with its customers interested in switching over to co-generation, or what it calls "distributed generation/energy." According to Fred Ornstein, a program manager at Con Ed, the actual cost of installing a unit is very type-specific. "Take two buildings built at the same time and with the same general construction that would both like to put a distributed generator unit in the basement. One doesn't have the ability to have a stack [unit]; the other has an incinerator chute." The cost of purchasing a unit might be the same, says Ornstein, "But the cost of installing it is highly variable." He adds that buildings can choose between modular units made at the manufacturer's facility, or one that is constructed onsite at the co-op or condo building itself.

In the Long Term

In most cases, buildings with co-generation are still taking power from the local grid. Says Ornstein, you'll have to decide what would benefit your building best: a partial requirement that still uses the grid for some power, or a full requirement, in which all electricity comes from co-generation. "Buildings do have the option of islanding from utility, cutting the cord," he says. Those who choose to completely cogenerate can put in two or three units for what is called "redundancy." Those are the buildings that stood out like shining beacons against the blacked-out city skyline back in August.

According to Mankoff of Penn South, "We originally explored the possibility of remaining on the grid with Con Ed and getting backup power from them, but the cost was so prohibitive [for us], it would've been like paying two bills a month. At that point, we cut the wires and were completely removed from the grid. We have ample redundancy to handle a reasonable outage, and fairly dependable power when the rest of the city is dark."

As Ornstein explains, a building could have 500 kw of electricity produced by one unit. But if the unit fails, you'll be without power. But, with redundancy, you might have three 200kw units. In that case, if one goes down, you'd still have 400kw of power.

To remain connected, he says, co-generation systems have to satisfy local utility interconnection specifications. Your local utility can run tests to make sure your system meets these requirements, but basically, says Ornstein, a co-generation system should "coexist easily with the grid."

Is Co-generation for You?

Ornstein offers these pointers to help board members decide whether their building should make the switch: First, determine whether or not it is economically feasible. Hire an engineer, talk to your local supplier, or if you're lucky enough to have an expert residing or working in your building, consult him or her. Ornstein emphasizes the importance of conducting an "economic study to determine costs of all fuels into building." You'll also want to consider and determine for what purpose you want to use co-generation.

Your next step is to begin getting price quotes for equipment and installation. You'll also want to talk to your local utility to meet tariff specifications (the rate under which the utility bills you) and interconnections. They'll put your building on another rate when it goes to partial co-generation.

The basic message, says Ornstein, is that you need professional guidance to make sure everything is done correctly. You'll need to get the proper permits and be aware of the emissions limits He advises board members to "do research on the concept [of co-generation] itself, to see if it is applicable to the building."

A Co-generation Success Story

So, does being totally independent of your local ESCO seem impossible? Think again. It's not even an entirely new idea. One co-op has been completely reliant on co-generation for decades. North Shore Towers, in Queens County, has used its co-generation system to produce electricity since its construction in 1973. The byproduct of electricity generates the building's heat and air conditioning. According to North Shore Towers board president Jim Quinn, "The co-op is not even connected to the grid. It's a very unique situation." After 30 years of co-generation, it's no surprise that Quinn admits, "We're very happy with it."

Chief engineer Sal Castro manages North Shore's co-generation system. "Total residential co-generation is pretty rare," says Castro, who has been with North Shore for 27 years. "It saves us about three-quarters of a million dollars a year in energy charges compared to utility rates." North Shore uses co-generation to provide energy for its three buildings, private roadways, parking lots, and common areas. Castro saays the co-op uses 26 million kilowatt hours a year. Only one-third (about 8 million kilowatt-hours) are used in the apartments - the rest is used in the common areas. Because the co-op would otherwise have to purchase all those kilowatt-hours from the local utilities, they've realized savings by generating the power themselves.

Castro notes that having a co-generation system isn't all worry-free. It's very labor intensive. "You have to maintain a crew onsite that knows how to overhaul [the system]. You have to staff it around the clock. We have nine people on staff, and that includes around the clock." North Shore's system is constructed of engines, "not gas turbines, which sometimes last longer, but are quite expensive," says Castro. He also cautions board members that their chosen equip meet must meet stringent emission requirements. And co-generation systems aren't foolproof: Though North Shore's system has proven reliable, Castro admits there have been power outages at the co-op. Its track record has been pretty good, however: "[Power outages have] happened about five times in past 30 years. They last about 20 minutes," says Castro.

And how did this unique co-op fare during the Blackout of 2003? While most of the rest of the city was in the dark, Quinn and Castro say - with pardonable pride - that the lights were on and it was business as usual at North Shore Towers.

The night was bright at Penn South as well. "As I told our cooperators afterward, we were the shining jewel in a city of darkness," recalls Silverstein. "Many of our residents got calls from people that they knew who worked in the area and couldn't get home, asking if they could sleep on their couch. People needed to go out and buy food, and they were able to do that at our commercial properties that use our electricity. They were the only places that remained open in the area - they actually sold out of all their goods that day."

Another building, Amalgamated Warbasse, a 2,585-unit Mitchell-Lama housing complex in Brooklyn, also was well lit during the crisis. Amalgamated was built in the 1960s, with a co-generation plant that included three dual-fuel-fired boilers, five turbine heat recovery steam generators, and five refrigeration machines to produce electricity, steam for heating and cooling and domestic hot water. Over the past few decades, the plant completed several upgrades to improve the economics of its energy-generating capacity. Estimated annual cost savings run approximately a cool million a year, and that's enough to keep the generators humming for a long while.

Stephanie Mannino is a freelance writer based in New Jersey.

Related Articles

Reducing Energy Costs - and Waste

What Are Some Steps Boards Can Take?

Save Your Energy

A Look at the Resilient Power Hub

Submetering for Savings

What Should Co-op & Condo Boards Know?



  • Co-Op City has built a state-of -the=art cogen plant. We are just waiting to go into testing stage, pending approval from the City of New York.We are looking forward to the revenue and savings from it.
  • Amalgamated warbasse is the last set of buildings in Coney Island and Brighton Beach to get power. We still have no power which proves this system is bullshit during a real outage.