# Presentation: 545410

## 4th National CHP Roadmap WorkshopChicago, September 22-24, 2003  Key Issues 

***CHP for Housing and ***
***Community Development***
**Bob Groberg, Director, Energy Division, CPD**
**U.S. Department of Housing and Urban Development**
**(202) 708-1201, Ext. 4642  •  robert_groberg@hud.gov **

**Notes:**
“CHP” = COMBINED HEAT AND POWER     
CHP SYSTEMS GENERATE ELECTRICITY AND USEFUL HEAT FROM THE SAME PLANT.
CHP COVERS A RANGE OF TECHNOLOGIES, BUT ALWAYS INCLUDES A PRIME MOVER (AN ENGINE) DRIVING AN ELECTRICAL GENERATOR, PLUS A HEAT RECOVERY SYSTEM. 
CHP INCREASES THE EFFICIENCY OF THE SYSTEM, FROM ABOUT 33% FOR GENERATING ELECTRICITY ALONE, TO OVER 80% FOR USING BOTH THE HEAT AND POWER FROM THE SAME FUEL.
CHP SYSTEMS CAN PROVIDE COOLING  THROUGH THE USE OF ABSORPTION CHILLERS THAT UTILISE HEAT AS THEIR ENERGY SOURCE. THEY ALSO CAN FUNCTION AS A DESSICANT AND DRY THE AIR.

## HUD 2002 Energy Action Plan

- HUD Energy Task Force to support 2001 *National Energy Policy*
- Action Plan approved by Deputy Secretary
- “Promote use of CHP...”
- “Promote use of ENERGY STAR...”

**Notes:**

HOW DID HUD GET INVOLVED WITH COMBINED HEAT AND POWER?
HUD HAS AN ENERGY ACTION PLAN. [SEE www.hud.gov.] IT WAS CREATED BY THE DEPUTY SECRETARY’S ENERGY TASK FORCE TO SUPPORT THE PRESIDENT’S NATIONAL ENERGY POLICY.
TWO OF THE 21 ACTIONS ARE
	-PROMOTE THE USE OF CHP IN HOUSING AND COMMUNITY DEVELOPMENT,  AND
	-PROMOTE THE USE OF ENERGY STAR PRODUCTS, WHICH INCLUDES  CHP SYSTEMS.
OUR STRATEGY BEGAN WITH A SEARCH FOR HUD PROJECTS THAT EMPLOY CHP. 
NOW TEAMING UP WITH THE DEPARTMENT OF ENERGY WITH A WORKING AGREEMENT BEGINNING IN 2003.

## Why CHP for Multifamily?

**Favorable Conditions**
-  Aggregated thermal loads
-  Many all-electric buildings
-  Appropriate scales for several DOE/industry “package systems”
-  Multifamily sector is low risk—according to Moody’s
-  District energy systems can provide heating/cooling to multiple buildings in urban areas
-  Desiccant dehumidifiers reduce the potential for mold and bacteria growth
-  Hydronic heating could use hot water or steam

**Notes:**
THE HOUSING BEST SUITED TO CHP IS APARTMENT BUILDINGS.
HERE ARE SOME OF THE FACTORS THAT SUPPORT USING CHP FOR MULTIFAMILY HOUSING.

## HUD CHP Markets

- Three housing markets
- Public, non-profit, “market”
- Both existing and new construction
- Community Development Opportunities
- Brownfield
- Community Development Block Grant

**Notes:**
THERE ARE THREE MAJOR GROUPS OF HOUSING IN  HUD PROGRAMS. THEY CAN BE CONSIDERED AS “MARKETS”:	
    1. PUBLIC HOUSING OWNED AND OPERATED BY LOCAL
        PUBLIC HOUSING AUTHORITIES;
    2. PRIVATELY-OWNED FHA-INSURED “MARKET” 	PROPERTIES;
     3 . SENIOR HOUSING OWNED BY NONPROFIT GROUPS.
EACH HAS ITS OWN ECONOMICS, CONSTITUENTS AND ASSOCIATIONS, AND HUD RULES AND OFFICES.
HUD COMMUNITY DEVELOPMENT AND BROWNFIELD REDEVELOPMENT PROGRAMS CAN USE COMBINED HEAT AND POWER FOR THEIR NEW CONSTRUCTION.
LET’S LOOK AT SOME EARLY AND CURRENT EXPERIENCE IN THESE “MARKETS.”

## Public Housing Inventory

- 3,200 Public Housing Authorities
- 1.2 million units
- 4,500 properties with 20-49 units
- 7,100 properties with 50+ units

**Notes:**
THE PUBLIC HOUSING “MARKET” CONSISTS OF OVER A
MILLION UNITS OWNED BY 3,200 LOCAL PUBLIC
HOUSING AUTHORITIES. HUD PAYS OVER $1 BILLION A YEAR TOWARD UTILITY EXPENSES, PLUS OTHER OPERATING COSTS.
4,500 PROPERTIES RANGE IN SIZE UP TO 49 UNITS, AND
7,100 HAVE  OVER 50 UNITS.
ONE QUESTION TO CONSIDER IS HOW BIG A PROJECT IS NEEDED 
TO JUSTIFY THE INVESTMENT.
TWO EARLY EXAMPLES OF THE USE OF CHP IN PUBLIC HOUSING IN MICHIGAN AND VERMONT ILLUSTRATE THE ISSUES THAT HAVE TO BE RESOLVED TO CREATE A SUCCESSFUL PROJECT.

## Early Public Housing Experience Michigan (1987)

**60kW engine in 148-unit/7-story senior project**
- Utility opposition to installation
- Staff lacked maintenance experience
- Faced high maintenance contract cost
- Prime mover replacement 3-4 years
- Utility offered only1.1 cents/kWh
- Charged for“administration” and standby power
- System paid off in 5 years, shut down in 7 years

**Notes:**
THIS SENIOR HOUSING PROJECT  NEAR DETROIT HAD TO BUCK STIFF OPPOSITION FROM ITS UTILITY TO PUT THE SYSTEM ON LINE.
THEN THEY FOUND THEY COULD NOT KEEP IT RUNNING WELL WITHOUT AN OUTSIDE CONTRACTOR, AND THAT ADDED COST. 
THE PRIME MOVER (THE ENGINE) HAD TO BE REPLACED EVERY   3-4 YEARS.
THE UTILITY ONLY OFFERED 1.1 CENTS kWHr TO BUY THE EXCESS POWER THAT COST THE PHA ABOUT 5 CENTS TO GENERATE.  IT LEVIED STEEP CHARGES FOR ADMINISTRATION AND STANDBY POWER.
THE BOTTOM WAS, THOUGH THE SYSTEM PAID OFF IN FIVE YEARS, THEY SHUT IT DOWN AFTER SEVEN.

## Early Public Housing Experience Vermont (1987) 

**60kW in 168 unit 10-story senior project**
- All electric but lacked uses for thermal
- Electricity prices reduced; gas prices increased
- Difficulty with maintenance support
- Energy performance contract paid off in 10 years
- Now no savings by running

**Notes:**
IN VERMONT, THIS TEN STORY ALL-ELECTRIC SENIOR PROJECT
HAD TO FIND WAYS TO RELEASE THE HEAT THEY COULD NOT USE.
IN TIME, ELECTRICITY PRICES ACTUALLY DECLINED, BUT GAS COST SIGNIFICANTLY MORE.
THEY HAD DIFFICULTY FINDING STEADY OUTSIDE MAINTENANCE. 
THE GOOD NEWS WAS THAT THEY STILL WERE ABLE TO PAY OFF THEIR ENERGY PERFORMANCE CONTRACT IN TEN YEARS,  BUT THE SAVINGS ARE NOW SO LOW THERE IS LESS INCENTIVE TO KEEP THE SYSTEM RUNNING.

## Current Successful Public Housing  Utilizing CHP

- Connecticut
- Danbury (*Project Profile*)
- Seymour
- Winsted
- Massachusetts
- North Adams

**Notes:**
IN THE TEN YEARS SINCE THESE EARLY PROJECTS, THE INDUSTRY HAS ADVANCED, AND WE HAVE FOUND A CLUSTER OF CHP PROJECTS IN PUBLIC AND SENIOR HOUSING IN CONNECTICUT AND MASSACHUSETTS.

THE PROJECT IN DANBURY IS THE SUBJECT OF A SEPARATE PROFILE THAT SHOULD BE AVAILABLE  SOON ON THE HUD WEB SITE.

## Wooster Manor Public Housing Danbury, CT (1998)

**60kW gas engine/100 unit, 7-story family building**
- Aegis Energy Service did feasibility study, installation
- Maintains for $10,000/year
- Converted 4 floors all electric to hot water heat
- Electricity costs went from $116,000 to $29,700
- Gas $33,500 for running system 22 hours/day
- System serves 50% space, 100% hot water needs
- Yankee Gas financed 10-year $275,000 loan
- See *Project Profile*

**Notes:**
ITS MAIN FEATURES ARE:
	-7 STORY 100 UNIT BUILDING
	-60 Kw GAS ENGINE  WAS INSTALLED IN 1998.
	-FOUR FLOORS WERE CONVERTED TO HOT
	 WATER HEAT.
	-THE SYSTEM PROVIDES 70 PERCENT OF 
	   TOTAL BUILDING LOAD.
	-A MAINTENANCE CONTRACT PROVIDES GOOD 	  	 SUPPORT.
	-THE GAS COMPANY FINANCED THE SYSTEM AND 	  CONVERSION.
	 -ENERGY COSTS DROPPED BY ALMOST 50 PERCENT.

## Public Housing Economics

- Payback can be longer, e.g. 10-15 years
- Conversion of all-electric to hot water heat
- Capital improvement funds available
- Energy performance contracts: 12 years
- Maintenance contract supports PHA management

**Notes:**
THE ECONOMICS OF CHP FOR PUBLIC HOUSING HAVE THESE FEATURES:
   -LONGER PAYBACK FROM SAVINGS THAN FOR A 
     PRIVATE INVESTOR.
   -CONVERSION MAKES USE OF THE THERMAL VALUE.
   -CAPITAL FUNDS CAN COME FROM HUD GRANTS,  LOAN OR
    A HUD-APPROVED PERFORMANCE CONTRACT.
   -A GOOD MAINTENANCE CONTRACT WILL SUPPORT
	  PHA MANAGEMENT.

## FHA Insured Housing

-  7,113 properties  with 20-49 units
-  15,619 properties with 50+ units
- Identified a dozen projects with CHP in NJ, NY, PA, CT, CA
- Summit Plaza, Jersey City (*Project Profile*)

**Notes:**
THE FHA “MARKET” FOR CHP HAS THESE CHARACTERISTICS:
	-OVER 7,000 PROJECTS UP TO 49 UNITS
	-OVER 15,000 WITH MORE THAN 50 UNITS
WE HAVE FOUND MANY PROJECTS IN THESE STATES, BUT NONE IN THE MIDWEST.
THE EXAMPLE IN OUR PROFILE  IS IN JERSEY CITY.

## Summit Plaza ComplexJersey City, NJ (1974)

**Four  600kW #2 fuel reciprocating (diesel) and one gas engine produce 3MW**
- Serve 4 residential towers with 485 units, public school with pool, commercial space
- System provides power, cooling, heating
- Saves 160,000 gallons of fuel oil a year
- Maintained by four daytime staff, off-site monitoring at night

**Notes:**
SUMMIT PLAZA WAS PART OF THE HUD “OPERATION
BREAKTHROUGH”  INDUSTRIALIZED CONSTRUCTION
 TECHNOLOGY DEMONSTRATION PROGRAM. 
   -IT INCLUDED A “TOTAL ENERGY” APPROACH.
   -THE NATIONAL BUREAU OF STANDARDS STUDIED IT IN DEPTH.
   -NBS DETERMINED THAT ABOUT 160,000 GALLONS OF FUEL
    WOULD BE SAVED.
SUMMIT PLAZA’S  MANAGEMENT HAS HAD MORE THAN 25 YEARS OF EXPERIENCE WITH THE OPERATION AND MAINTENANCE OF ITS CHP SYSTEM.

## FHA “Economics”

- Payback of 3-5 years
- Use of depreciation
- May release reserves
- FHA 1st mortgage position

**Notes:**
THE “ECONOMICS” FOR PRIVATELY-OWNED 
FHA-INSURED PROJECTS 
   -NEEDS A SHORTER PAYBACK THAN PUBLIC HOUSING.
   -MAKES USE OF DEPRECIATION IN ACCOUNTING FOR THE COST.
   -FHA MAY RELEASE RESERVES FOR USE IN FINANCING
   -BUT FHA MAINTAINS A FIRST MORTGAGE POSITION WHICH
     MAY COMPLICATE MAKING FINANCING ARRANGEMENTS.

## Nonprofit Housing-Elderly Projects

- 1976-2002 HUD direct loan/capital advance
- 160 projects/year
- 4,014 projects/272,000 units
- Recent average is 40-50 units per project
- Economics somewhere between PH and FHA
- Connecticut CHP examples used tax credit “donations”

**Notes:**
THE THIRD HUD “MARKET” IS NONPROFIT HOUSING.
SINCE 1976 HUD HAS PROVIDED SUPPORT FOR SOME 4,000 PROJECTS FOR SENIORS.
THEY AVERAGE ABOUT 50 UNITS PER PROJECT.
THEIR ECONOMICS FALL SOMEWHERE BETWEEN THAT FOR
PUBLIC AND MARKET HOUSING.
ONE IMPORTANT SOURCE OF SUPPORT FOR FUNDING SENIOR HOUSING IN CONNECTICUT IS A TAX CREDIT THAT COMPANIES CAN USE IF THEY MAKE A CONTRIBUTION TO A NONPROFIT HOUSING ORGANIZATION.

## Project Developer Concerns

- Buffalo developer decided _against _CHP:
- More complicated, e.g. local licensing
- Significant construction risk
- Noise
- Management skills needed
- No back-up; standby electricity needed
- Utility capacity charges eat up savings
- $50,000-$60,000/year

**Notes:**
IN OUR EXPLORATION OF THESE MARKETS  FOR CHP WE CONSULTED A DEVELOPER WHO SERIOUSLY CONSIDERED USING CHP FOR NEW CONSTRUCTION OF A 200 UNIT APARTMENT DEVELOPMENT IN BUFFALO. 
HE DECIDED AGAINST GOING WITH CHP FOR THESE REASONS:
THE BOTTOM LINE FOR HIM WAS THE UTILITY CHARGES OF $50-$60,000 A YEAR.
HE WENT INSTEAD WITH IN-THE-WALL  APPLIANCES .

BUT OTHER DEVELOPERS ARE COPING WITH THESE CONSTRAINTS. HUD WILL EXAMINE THEIR EXPERIENCE IN 
COOPERATION WITH THE DEPARTMENT OF ENERGY’S CHP PROGRAM.

## Obstacles Facing Packager

- Package systems only on market a few years.
- Not enough time to train engineering firms
- Engineers’ first response: “Site is too small for CHP.”
- Wants HUD to mandate study of CHP for new buildings and to recognize peak demand in calculating savings.
- Wants DOE’s Weatherization Program to recognize CHP on its list of measures.

**Notes:**
IN OUR SEARCH FOR EXAMPLES OF CHP, WE HEARD FROM A COMPANY THAT INSTALLS CHP PACKAGES.
IT IDENTIFIED TWO TYPES OF OBSTACLES.
THE FIRST WAS THAT ENGINEERS ARE NOT TRAINED TO RECOGNIZE THE NEW CHP SYSTEMS WITH COMPONENTS PACKAGED FOR SMALLER BUILDINGS.

THE SECOND HAS TO DO WITH HOW HUD AND DOE PROGRAMS RECOGNIZE THE POTENTIAL FOR CHP. 

## Community Development Agendas

- HUD-DOE 1980-90 history of district heating/cooling feasibility/design projects
- Buffalo DHC with public housing construction potential
- Boston Maverick Gardens Public Housing
- HOPE VI: CHP confirmed for 119 units.

**Notes:**
THE COMMUNITY DEVELOPMENT OPPORTUNITIES WERE DEMONSTRATED IN THE 1980’S DISTRICT HEATING/COOLING PROGRAM..
DOE AND HUD GRANTS FOR DESIGN OF DISTRICT ENERGY SYSTEMS UNDERSCORED THE IMPORTANCE OF USING THE THERMAL ENERGY FROM CHP (COGENERATION) TO CLINCH 
THE ECONOMICS OF COMMUNITY ENERGY SYSTEMS.

TODAY, BUFFALO IS EXPANDING ITS DISTRICT HEATING AND COOLING (DHC) SYSTEM; THERE ARE OPPORTUNITIES FOR CONNECTING  CHP TO PUBLIC HOUSING.

THE BOSTON MAVERICK GARDENS PROJECT, WITH HELP FROM DOE’S REBUILD AMERICA PROGRAM AND A GRANT FROM THE MASSACHUSETTS ENERGY TRUST, HAS CONFIRMED THAT NEW CONSTRUCTION WILL INCLUDE COMBINED HEAT AND POWER.

## Brownfields Agenda

- HUD Brownfields Economic Development Program
- Looking for CHP examples
- Malden, Medford, Everett, MA
- Des Moines, IA
- East Palo Alto, CA
- 2003 Brownfields Conference Workshop
- “Energizing Brownfields”

## 2003 DOE-HUD CHP Working Agreement

- Case studies of HUD CHP projects
- Case reports of brownfield, CDBG redevelopment
- CHP market analysis in HUD properties

- Update “Cogeneration Manual”
- Establish peer networks
- Work with CHP Application Centers

**Notes:**
DOE AND HUD HAVE DEVELOPED A WORK AGENDA 
TO PROMOTE CHP IN HOUSING AND COMMUNITY DEVELOPMENT.
THESE ARE THE SIX COMPONENTS.	

IN ADDITION TO THE CASE STUDIES, WE WANT TO TAKE A CLOSER LOOK AT THE MARKET FACTORS.

THE “COGENERATION MANUAL” WAS DEVELOPED FOR NEW YORK CITY IN THE LATE 1980’S.  WE WANT TO UPDATE IT AND EDIT IT SO THAT IT SPEAKS TO EACH OF THE HUD MARKET AREAS.

PEER NETWORKS WILL ENABLE MANAGERS OF PUBLIC HOUSING TO TALK WITH OTHER PUBLIC HOUSING AGENCIES ABOUT THE DETAILS OF THEIR CHP FINANCING, INSTALLATIONS AND MAINTENANCE.

DOE’S FIVE NEW REGIONAL CHP APPLICATION CENTERS PLUS THE EXPERIENCED CHICAGO CENTER WILL ALSO BE LINKED TO HUD PROGRAMS AND FIELD STAFFS.

## Contacts for  2003 DOE-HUD CHP Working Agreement

**DOE**
- Merrill Smith
- (202) 586-3646
- _merrill.smith@ee.doe.gov_

**HUD**
- Bob Groberg
- (202) 708 0614, x 4642
- _robert_groberg@hud.gov_

**Notes:**
HUD WILL BE WORKING WITH THE WHOLE DOE DISTRIBUTED ENERGY TEAM, INCLUDING RON FISKUM (PROGRAM MANAGER FOR BUILDINGS CHP) AND DEBBIE HAUGHT (MICROTURBINES) AND PHIL FAIRCHILD (ORNL). 
THE EFFORT WILL BE COORDINATED THROUGH MERRILL SMITH, THE PROGRAM MANAGER FOR CHP.

## HUD Sources of Information

**www.hud.gov **(search for “energy”)
- Energy Action Plan
- District heating/cooling program reports, projects, conferences, special studies
- NYSERDA Multifamily 2003 Presentation
*Project Profiles* of successful CHP installations in Danbury, Summit Plaza

## RESOURCESDOE Distributed Energy Resources (DER) Program 

**Roadmap to double the nation's CHP capacity: 46 GW to 92GW by 2010**
**Regional Application Centers (RACs)**
-  Provide application assistance, technology information, and education to architects and engineering companies, energy services companies, and building owners in eight states
**Midwest CHP Application Center CHP Guidebook**

-  Education and outreach
-  State baseline assessments
-  Case studies

-  Identification of high impact projects
-  Project screening
-  Support with SWAT Team Assistance.

**CHP Integration Test Center at the University of Maryland**
-  Lessons on packaged system valuable for commercial-scale multifamily CHP projects

**(202) 586-3646 **
**Merrill.Smith@ee.doe.gov**** **

_**http://www.eere.energy.gov/der**_
**Merrill Smith, DER Program Manager**

## RESOURCESEPA CHP Partnership 

**(202) 564-9442**
**troche.luis@epa.gov**

**http://www.epa.gov/chp/ **
**Luis Troche, CHP Team Lead**** **

-  The CHP Partnership is a voluntary program that seeks to reduce the environmental impact of power generation by fostering the use of CHP
-  New emphasis on CHP as pollution prevention
-  Ultimate goal is reduction of greenhouse gases
-  Issues include New Source Review, permitting, output based standards
-  Currently identifying opportunities for EPA CHP Partnership to act as catalyst to move industrial and district energy projects forward

## RESOURCESU.S. Combined Heat and Power (USCHPA) 

**(301) 628-2029**
**Dhinrichs@drintl.com**** **

_**http://www.uschpa.org**_
**Doug Hinrichs, Outreach and Market Development Committee Chair**

-  Mission is to create a regulatory, institutional and market environment that fosters the use of clean, efficient CHP as a major source of electric power and thermal energy in the U.S.
-  Involved with FERC, interconnect, and other policy issues
-  Sends out Policy Alerts to members
-  Manufacturers, developers, utilities are members

## RESOURCESInternational District Energy Association (IDEA) 

**(508) 366-9339**
**Rob.idea@districtenergy.org**

_**http://www.districtenergy.org**_
**Rob Thornton, President**

-  District energy systems produce steam, hot water or chilled water at a central plant and then pipe that energy out to buildings for space heating, domestic hot water heating and air conditioning
-  District energy model could be useful to multifamily projects with non-adjoining buildings
-  IDEA represents over 900 members
-  IDEA formerly had joint conferences with HUD

## RESOURCESNYSERDA 

**(518) 862-1090, x 3377**
**Dll@nyserda.org**** **

_**http://www.nyserda.org**_
**Dana Levy**

-  Awarding $24 million to install 45 combined heat and power systems throughout the state that will result in 35 MW of new electric generation
-  Committing additional $4 million for 11 projects to further develop DG technologies used in CHP applications
-  NYSERDA-supported* *Cogeneration Manual (1989)
- Q and A
- Worksheets
- Lists of available equipment