The recent unprecedented snowfall and frigid temperatures wreaked havoc on Texas' energy infrastructure, leaving millions across the state without power and heat for hours, or in many cases, days at a time.
Many of the state's nuclear, gas, coal, wind and solar generating facilities were unable to handle the surge in power demand, and because Texas' energy grid is largely separate from neighboring states, Texas could not address this energy crisis by taking from the surrounding regions.
While Texas works its way back from the energy crisis, there are lessons that individual businesses can take away from this catastrophic event and increase the reliability and resiliency of their electric supply despite severe weather emergencies.
In a recently recorded episode of Alternative Power Plays - Buchanan Ingersoll & Rooney's newest podcast all about the innovative ways in which businesses are getting electricity to their facilities, buildings and other sites - Buchanan energy attorneys Alan Seltzer and John Povilaitis discuss a specialized form of electric supply known as combined heat and power (CHP). CHP systems allow facilities to generate their own safe, reliable and cost-effective electric power without needing to depend exclusively on the electric grid and costly backup generators. They can allow facilities of all types - including hospitals, industrial and manufacturing facilities, universities and colleges, retirement communities, and more - to stay operational, even if the nearby electric grid is down for hours or days.
In this episode, John and Alan discuss the situation in Texas, what went wrong, and how CHP offers facilities a way to protect against some of the uncertainties of relying on the electric grid.
Alan Seltzer: Hello, and welcome to Alternative Power Plays, a podcast from the attorneys at Buchanan Ingersoll & Rooney and our economist colleagues at the Brattle Group.
In Alternative Power Plays, we talk about the new and innovative ways in which businesses are getting electricity to their facilities, buildings, and other sites. I am Alan Seltzer, an energy attorney at Buchanan. I am joined by my friend and colleague at Buchanan, John Povilaitis.
Over the last few weeks, the country's eyes have been focused on the tragic situation unfolding across most of Texas. Unprecedented snowfalls and frigid temperatures have taken a serious toll on a state not well-equipped to handle this type of severe winter weather. These freezing temperatures have caused a surge in energy demand beyond what state supply could meet. And as a result, millions of Texans have been without electric, power, and heat for hours or in many cases, days at a time. Unfortunately, simply producing more electricity has not been an option, as many of the state's nuclear, gas, coal, wind, and solar generating facilities failed to deliver. They have been unavailable to meet the increased need and demand for energy.
Unlike other states, Texas's energy grid is largely separated and isolated from other neighboring states, making it largely impossible for Texas to address this statewide energy crisis with power supplied by the surrounding region. In the days and weeks to come, regulators, politicians, consumers, and the electric industry will be looking into the causes and possible solutions of this problem in Texas and other states experiencing unprecedented extreme weather conditions. While these solutions are being studied and debated, there are ways that businesses can cease the reins themselves and improve the reliability and resiliency of their electric supply in the face of future catastrophic weather emergencies. Today on our initial podcast in this series Alternative Power Plays, we'd like to discuss a specialized form of electric supply known as combined heat and power. It can allow you to stay operational, even if the electric grid in your area is down for hours or days.
As part of our work at Buchanan, John and I help clients navigate the process of considering, installing, and managing combined heat and power systems known as CHP (pronounced chip) or cogeneration. These types of systems can help protect the facility from some of the uncertainties forming on the electric grid much like we have seen in Texas over the past several days. John, since this is our first podcast in our new Alternative Power Plays series, would you take a minute to first explain to our folks what CHP is, what CHP facilities are all about, how they generally operate, and some of their components?
John Povilaitis: The basic idea of a CHP is that it allows the host customer to make their own electricity. Where these facilities can vary from one installation to another, they have certain key components in common. It all starts with a fuel source. In the United States with the abundance of natural gas supply at a relatively good price, most CHPs are fueled by natural gas. The natural gas feeds an engine of some sort. It could be a reciprocating engine, much like the engine that is in your automobile. Or it could be a turbine, which has some similarities to a jet engine. In either case, this engine operates a generator that actually makes the electricity for your site.
As a byproduct of this process, heat is thrown off, and a CHP facility works its magic by grabbing what would otherwise just be waste heat that disappears up into the sky and it converts it to either steam or chilled water using devices known as chillers that can provide additional energy produced onsite for the customer. Now, all of these facilities involve some kind of backup. The backup may be the grid itself. But what we are talking about today is what happens when the grid is not available, in the case of a natural disaster. Some types of facilities do plan on other types of backup. Alan, can you tell us about backup, what that consists of, and how it is used?
Alan Seltzer: Absolutely, John. You know, many types of facilities, especially hospitals, other large manufacturing facilities, and often, large colleges and universities are required to have a backup type of generation to support the possibility that there might be a sustained or substantial outage that effects the supply of electricity to their building, hospital, campus, and so forth. Those are often mandated by rules and regulations. Certainly, in the healthcare industry, we have seen this a lot where hospitals are required to have some sort of backup to support the lifesaving healthcare operations that they are doing because the results would be catastrophic if a power outage or disruption to the supply would cause major disruption in patient care and procedures.
The difficulty, John, is that often times the type of backup that facilities have for their main grid supply and electricity is often fossil fuels like oil, gas, diesel fuels, and things like that. Especially with diesel fuel and oil, those are liquids that need to be stored. And they can present potential health and environmental hazards. More importantly, they need to be trucked in and delivered to the site when needed. As we just experienced in Texas with the horrible adverse winter weather conditions that that state had been woefully unprepared for, travel on the roadways and bringing fuel oil or diesel oil or other types of liquid fuel into a site is very, very problematic. In this case, the backup source itself could be itself threatened and unavailable.
John, do you want to talk a little bit more about exactly what role CHPs may play in the context of backup and improving resiliency and reliability in the face of the kind of catastrophic weather we saw in Texas?
John Povilaitis: If you have the benefit of a CHP facility on your site, even if the grid is down, you can still produce your electricity. When your energy is supplied by the grid, you are basically at the end of a very long extension cord, but it starts with some kind of unit - coal, nuclear, natural gas, or fire. That goes to a transmission system. The transmission system delivers to a distribution system. That distribution system gets the electricity to the customer's site. There could be a problem anywhere along that delivery trail that would lead to an outage and a customer being without electricity. CHPs provide the benefit of you being able to make your own electricity, and in the midst of a natural disaster, you can be an island of territory that has a continuing electricity supply and allows your operations to proceed as normal. And Alan, your comment about backup generation reminds me of something that we have encountered in these situations, which is very unfortunate. Some folks believe they are adequately protected because they are relying on the grid and they have generator backup. We have run into situations where those generators are located underground. If your natural disaster is perchance a flood, your generators may not be able to operate. So, that brings to mind one of the key issues with CHP technology, which is the timing of when you consider deploying one. That could be either when you are constructing something new or when you are revamping your existing facilities and can more or less start from scratch. If you have a generator issue, installing a CHP system is a good opportunity to do the right kind of update that provides enormous resiliency and reliability.
Alan Seltzer: John, jumping off of that, I think it is important for our listeners to understand that you and I at Buchanan, along with our colleagues at the Brattle Group, have had the opportunity to provide our CHP services to a variety of businesses and industries including hospitals, colleges and universities, manufacturing facilities, and others that have large on-site electric needs that really need the protection of a resilient and reliable electric supply in a cost-effective and predictable manner. We will talk about this in future podcasts, but there are great benefits associated with CHP, and reliability and resiliency, which has been the focus today, are only one of many benefits we will be talking about in the future.
John Povilaitis: So today, we have hit on a handful of reasons that facility mangers may want to consider CHP. In later episodes of Alternative Power Plays, we will talk more about some of the benefits of CHP, what to consider before jumping into the process and how to avoid pitfalls - and there are pitfalls. We also will talk to some leaders in this industry who have either installed CHP systems or have introduced them at their facilities.
To hear future episode, make sure to subscribe to Alternative Power Plays on Apple Podcasts, Google Podcasts, Spotify, or wherever you prefer to listen. For any facility or business considering CHP or more closely examining their energy needs, head to https://www.bipc.com/chp and https://www.brattle.com/ to learn more about how Buchanan and the Brattle Group can help you navigate the legal and economic steps involved.
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