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Natural Gas Turbine/Generator Sets

05/20/2008 7:26 PM

I have a buddy, working in the heating and ventilating industry. He is looking at purchasing a natural gas powered turbine/generator set, for use in homes.

I don't have a lot of details however the basic premise is that Contractor "A" (my buddy) buys, installs and services the unit into the home of homeowner "B". Homeowner "B" gets free hydro, heating and ventilating and pays only for gas. Contractor "B" sells the excess hydro to the local utility company "C", who are obliged by law to buy the hydro and pay top dollar (due to supply shortages).

The unit weighs some 1200lbs, and generates 30 kw of power. The unit also generates 12000btu/kwh in heat, which can be used as a more efficient alternative/replacement to boiler type heating system typically found in apartments.

Does anyone out there have any experience or knowledge of these units? Sounds to me like a great idea as I have often wondered why this has not been done before now.

What smart questions should my buddy ask the seller of the equipment, and what might the good answers be. I think the unit costs around $30k

Many thanks

James...

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#1

Re: natural gas powered turbine/generators for homes

05/21/2008 12:00 PM

Sure it has been done before. You are asking if this is a "great idea." Because of all the technical aspects to it your question probably seems like an engineering issue. In reality, it is a business or management issue. The issue is how long will it take for the use of this system to pay for the purchase,installation and maintenance of the system, and after that provide what positive cask flow. This is known as Return on Investment (ROI.)

Another way to put it:

While this form does not provide as much insight into the situation and lacks the flexibility of the first definition, it is useful in pointing out that ROI must be positive In order to have a chance of representing a good idea. The more positive it is, the better. This formula is less useful for your situation because maintenance and fuel cost are not fixed, but continue with time. (Or perhaps more useful to consider it as a cost per unit of energy produced.)

Value of both cost and gain from investment in your situation depend on your situation.

Costs include:

  1. Purchase of all equipment and materials
  2. Installation
  3. Disposal (salvage) of the old system(s) (might be positive)
  4. Maintenance material and labor (or contract) (on-going)
  5. Fuel (on-going)

Gain from Investment is the difference between what you are paying now to accomplish the targeted tasks, and what is paid under the new environment less any income generated. The hope is to maximize this difference by optimizing the installation. (This is the fun part of ROI. Its flexibility means the figure can be manipulated to support a particular end, if that is ones goal. Therefor it is important to know the inputs used, in order to understand the significance of the end result.)

Present cost is whatever is being paid to provide electricity and heat that would be provided under the new system. (This includes fuel/power and maintenance/repair of the existing systems, which are all on-going costs. It might also include repayment of related outstanding loans.)

The process is to find the difference of on-going costs per unit time or unit power. It if negative then stop and start over with a better option. If positive, then continue here. Quantify the positive money stream (dollars per unit time). Compare that to determine how long it will take to pay off the initial costs. (If it is not enough to cover cost of payments on a loan for the installation then reconsider.)

Once initial costs are paid off then the difference is profit.

It is important to remember that the cost of energy is dynamic (changes from time to time) and that fact effects cash and cash flow in both directions for both environments.

This may seem complicated, but it is not really so bad when you break it down.

Questions?

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#2

Re: Natural Gas Turbine/Generator Sets

05/22/2008 3:36 AM

Calpine makes this their business.And utilise Many maintainence personnel in the process.

Turbine operation/maint. is a fairly unique field.Couple that to stationary operation and the details multiply.

*Does 'A' know how to operate/maintain a turbine?

*What style of noise protection is planned.These are VERY LOUD!Loud enough to cause neighbors to shoot first,ask questions later.

*Whom will be installing the 3phase service trunk into the residential location?Local utility?Contractor?Oh and what about the switchgear,flashguards etc.?

*How will the homeowner ever get permits/insurance to operate a power generating facility in their backyard?

Interesting project.

AB1

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#3
In reply to #2

Re: Natural Gas Turbine/Generator Sets

05/22/2008 4:03 AM

The cost of investment is very high compare to the cost saving you make.

Definitely for domestic purposes, you will have to make a very accurate calculation to see what you are going to gain out of that or at least not loose. (Time to break even could be 15 to 20 years !!)

In some countries the equipment purchase triggers an income tax reduction. This is an incentive from the government as it creates energy savings and thus it is environmentaly friendly.

In commercial and industrial application, the break even point will be around 5 to 10 years depending on their energy consumption.

You have to take into account the cost of maintenance and make prospective research on what could be the price of electricity and fuel (gas or diesel) in 10 years.

For sure for brand new houses, this can be something to consider, although there other technologies to consider : heater pump, geothermal exchange, solar pannel, stirling engine, wind mills or a mix of all of these.

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#4

Re: Natural Gas Turbine/Generator Sets

05/22/2008 6:35 AM

Natural gas prices continue to climb. One reason is that hedging is not as benifical as it was in the past. More small Natural gas powered electricity generators are popping up now. Permits are easier to obtain. These are run heavier in the summer to power everyones AC.

when purchasing gas there are several pricing schedules. Residental, commercial, industrial and others where you pay 20 million and have a high pressure main run 10 miles to you front door.

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#5

Re: Natural Gas Turbine/Generator Sets

05/22/2008 8:38 AM

Your friend may wish to investigate CHP (Combined Heat and Power) systems for the home. Honda is selling a small unit in the Northeast which is about the size of a dishwasher, produces heat, electricity and hot water. The system can operate an absorption chiller or A/C system and can be connected to the grid to provide excess power needs or "sell" power to the utility company. There are other suppliers for smaller systems all the way up to ones used for hospitals, college campuses, and other large complexes -- using turbines. The cost of the Honda system is comparable to a heatpump/furnace combination.

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#6

Re: Natural Gas Turbine/Generator Sets

05/22/2008 9:03 AM

"Contractor "B" sells the excess hydro to the local utility company "C", who are obliged by law to buy the hydro and pay top dollar (due to supply shortages)."

Depending on what utility the customer is connected with, the "top dollar" may be a pipe dream. In most locations, purchased power is priced on a time-of-use schedule. The utility will pay more during peak load times, but less during off-peak. Off-peak power goes for less than the cost of generation, because it's cheaper to leave the big base-load units running overnight than it is to shut them down and restart them again a few hours later.

Power prices on the open market fluctuate on an hourly basis. As I type this (~9:00 AM EDT), the wholesale price at the Cinergy hub is $0.055/KWH. It costs about $0.145/KWH to generate with a natural gas turbine generator, so we would not run them at this price. In August last year the price during peak hours was $0.35-$0.40/KWH, so it made economic sense to run everything we had.

I would strongly recommend your buddy thoroughly research the economics, including the time-adjusted power price, before investing in this project. We have had several customers on my system try to do this in the last 7-8 years. A few commercial customers have made it work, but no residential project has succeeded to date. Most people lost a bundle for 2 main flaws: they were basing their business plan on peak prices instead of a time-based weighted average price, and/or they installed the generator before they talked to the utility about interconnection requirements. Syncrhonizing controls, grounding, and protection equipment ate up all of their working capital, leaving them no money for O&M expenses.

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#7

Re: Natural Gas Turbine/Generator Sets

05/22/2008 9:14 AM

Small turbines are nowhere near as efficient as large ones, and even the most efficient turbine systems gulp fuel at an absolutely ginormous rate. Turbines utilize expensive alloys in their hot section (nickel/cobalt alloys and titanium) and must be maintained often. All of which significantly raise the cost of ownership/operation. A rotor burst, even on a small turbine, is a singularly spectacular event, one you would do well never to be present to witness. Operating such a turbine is not for the untrained/uninitiated.

While I have not put pencil to paper to calculate the ROI, I cannot believe it will be anywhere near positive.

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#8

Re: Natural Gas Turbine/Generator Sets

05/22/2008 9:40 AM

I am not familiar with the "turbines" you reference in your thread, but I am familiar with engine generators to a certain extent. I do know that you can purchase an 8KW natural gas driven engine generator for less than $4,000 US that will be sufficient to handle the needs of most homes (other than huge mansions) quite well. These small units will operate for about $1.10US/hour if operated on a continuous basis. They would be furnished with an automatic transfer switch that would be configured to switch to the commercial power suuply in the event of the failure of the engine generator. This switch could also be furnished with a timer to operate the engine during the daytime hours and allow the commercial power to be used overnight when the usage is low.

This system isn't going to produce power in sufficient quantity to sell back to the utility, but it would provide power that is produced by the customer without the need for the utility charges that are associated with the delivery of electricity to the home. The only maintenance would be normal maintenance that any small engine would require. That would include oil changes, spark plugs, etc. The engine would be about the size of a larger lawn tractor, and probably manufactured by a familiar manufacturer like Briggs & Stratton, Wisconsin, Honda, Kohler to name a few.

This is not something that is for everyone, but it is an alternative. And it is certainly cheaper than the $30,000 or so that you are projecting. The engine will most probably be a 3500 RPM motor. This means that it will be a little on the noisy side, too, But not extremely loud. The system is furnished in a sound insulated sheet metal housing that is about the size and appearance of a large air conditioning unit. Not an unattractive addition to a home.

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#9

Re: Natural Gas Turbine/Generator Sets

05/22/2008 10:04 AM

To James:

I entertained this idea awhile back. I eventually concluded that it was SIMPLER to simply pay for the electricity from the utility. Plus, in my area, Chicago, we have relatively stable pricing in natural gas for heat. And since you are using the heat that you are generating by burning the gas, you don't have any heat loss over distance problems.

Therefore, the savings would only be seen in the electricity bill. And,

the savings would only be during the peak hours, and,

the savings would only be during the peak months June, July, Aug, Sept.

Therefore, it didn't make sense - WITH THE PRESENT SYSTEM.

However, THE SYSTEM wastes a lot!

Imagine this:

Each community of say, 100 homes, sets up a neighborhood association / mini-governmental body designed around the same formula as a fire department or a school board. (There is a whole subject of discussion on this.)

Use the group to purchase one natural gas OR diesel generator set.

Distribute the electricity to these 100 homes.

Take them off of the utility company grid.

NOW you would see savings, because the utility companies sustain losses of power in their distribution systems, which the small community grid would not have.

Of course, this system would require the approval of the larger political community, the city, town, county which pass the laws which allow or disallow this type of activity.

Presently, this is NOT AT ALL LIKELY to occur. The laws that have been put in place to give electrical utilities a monopoly to produce and distribute electricity were put in place for a good reason. It took a lot of capital to build the system, and they have a right (to a certain point) to recoup their investment.

IDEA # 2:

Electricity gobbling devices will become more and more efficient.

For instance, it would not be too wild to imagine that soon you will able to plug your Toyota Prius into your house, and use it to generate all the heat and electricity that your house needs.

And / Or: Houses being built now CAN BE energy consumption neutral. Soon, all houses built WILL BE energy consumption neutral.

IF THESE EVENTS OCCUR, then the price / cost of generating electricity might go down, negating the projected savings that would come from buying your own gas-turbine-electricity-generator set.

ANSWER ? SUGGESTION ? IDEA ? # 3:

Within the next twenty years, the young people of today will seize control of this democracy. They will build an even better system of self-governing citizens. This will lead to even greater educational opportunities for more citizens, which will lead to an even better citizens. Better informed = more knowledgable = better decision making information and skills.

THAT IS WHEN more changes will come about, making more sense, for more people.

END COMMENT: Three cheers for THINKING, for PROPOSING, for ASKING QUESTIONS, for SEEKING SOLUTIONS!!!!!!! AND FOR ALL OF THE RESPONSES!

Tom

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#10

Re: Natural Gas Turbine/Generator Sets

05/22/2008 11:54 AM

Why go to all that bother and expence, when a commercially good unit can be purchase at less that a third of the price. It is a condencing boiler connected to a stirling engine, the stirling engine is powered by the exaust from the gas boiler! The stirling engine is a lot more efficient than a small turbine, and it is nearly silent while running

Spencer.

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#11
In reply to #10

Re: Natural Gas Turbine/Generator Sets

05/22/2008 1:52 PM

SCAPOLIE

I like your idea, Do you have a manufacturer for the Sterling engine as you propose?

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#12

Re: Natural Gas Turbine/Generator Sets

05/22/2008 3:23 PM

http://www.apep.uci.edu/DER/AQMD/

Here's a link for micro-turbines. Make electricity, heat and cooling while grid connected for net grid results.

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#13

Re: Natural Gas Turbine/Generator Sets

05/23/2008 9:24 AM

All the post below may have already handled the economics of the proposed venture.

I have been in gas turbine power generation , maintenance specifically (albeit in the MW range) for 30 years.

Gas turbine maintenance can be very expensive.

For small and micro-turbines , the best maintenance approach would be to have some sort of engine exchange facility with the manufacturers.

In this way, you can have the engine replaced during any programmed shutdown period of a couple hours ( for small engines).

The cost of that maintenance is what you need to know and factor into your calculations.

Another issue you need to consider is corrective maintenance , if something breaks.

I would expect that this engine would have a relatively low cost PLC with a built-in HMI for ease of operation, with a networked web-browser so you can "see" the engine from the internet.

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#14

Re: Natural Gas Turbine/Generator Sets

05/26/2008 2:50 PM

after reading this i can see why people are all poking there eyes out with sticks

ok gas power generation of any kind will in the future be way over priced.

one only needs to look at the future and see the price of oil, gas and other fuels will increase in the near future and there are big drawbacks as to solar and wind that i see as a stop. cost per Watt needs to be in the $2.00 range and be small enough to put in any home.

i think there is a lack of small inverters at a good cost (under $2.00 a watt) this is why solar and wind are not making it for the small home owner. We hope in the future that we can offer a off grid option where you can get a 15 - 21 KW 3 phase off grid unit as well as our charging head and batteries for 10,000.00 financed so as not to put a bigger burden on you. you can also use electric heat and air on this size unit.

i did personally like the plug the car into the house thing as it was one of my quests as well. (honey i cant make dinner till you plug in the car so i can run the stove) i can see it now ! will it become a reality ? if i have my way yes i think in the next 5 years you may have a car that can power the home for free.

anyway i was board as its a holiday and i have to wait till tuesday to talk to my friends in the usa.

Richard

Flame suit on and ready for the rebuttle to start.

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#15
In reply to #14

Re: Natural Gas Turbine/Generator Sets

05/26/2008 3:37 PM

A lot of things need to get cheaper as energy, will only get more expensive.

I give you a GA for your comments.

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#16
In reply to #14

Re: Natural Gas Turbine/Generator Sets

05/26/2008 3:38 PM

"Rebuttal" is the correct spelling you needed...it got me confused at first!!!

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#17

Re: Natural Gas Turbine/Generator Sets

05/29/2008 6:27 AM

wow!

Some great answers here. I am getting together with my buddy this afternoon for golf (being self employed gives me the luxury of impromptu days off). I will be burning his ear off with all my new found knowledge.

Many thanks to all who contributed to this thread. Congrats and thanks also to all at cr4 for allowing us the opportunity to share and learn from our collected experiences.

This forum really is a great place to start any research into newer technologies.

Many thanks again - and I will update you all as (or if) this project develops.

James...

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