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Taking buyer’s regret out of cogeneration

A step-by-step primer to help guide your decision making.

October 23, 2018  By Bob Hawkesworth and James Williams

When considering cogeneration, it’s important to look at the costs associated, the potential value it could bring and whether the difference makes it worth exploring.

Is cogeneration the latest innovation for greenhouse growers or just a passing fad? It’s understandable why growers are assessing the potential.

The concept of using natural gas to efficiently provide both electricity and heat is compelling. Once the additional benefits of improved power reliability, flexible power pricing, energy cost control, and reduced emissions are factored in, cogeneration seems to be a slam dunk. “Where can I sign up?” you’ll ask.

But, buyer beware! What is right for your competitor across the street might be wrong for you. Utility rates, the design of your facility and your seasonal operations are only a few variables that can make or break the benefits of cogeneration.


This article is a step-by-step primer to guide your thinking. It is not essential to do all these steps in the order listed here, but they must all be considered, so that whatever decision you make, it is right for you.

Step 1: Get a Grip on Your Use of Energy
It’s amazing how many growers do not understand their energy use. How much is used for lighting, for cooling, for heating? You need to know when you use energy and why. It will vary widely by time of day, month and season. If your site has a big need for cooling, you may not see a benefit from a cogen that is producing electricity and giving off unneeded heat. An energy analysis will provide you with a baseline; a template for measuring energy savings through the project. It is also vital for knowing what size of cogen unit might be appropriate for your site.  

Step 2: Know What Your Energy is Costing You
Understand the utility rates you pay. This is essential to determine the payback on any energy project. Alberta tends to have low natural gas and power costs. Ontario’s higher natural gas costs and electricity market design could make cogen a boon in some scenarios and a bust in others. The life of your equipment should ideally be more than 10 years, so investigate the long-term projections for your local energy markets. Getting the technology right is just the beginning. How you manage a cogen and the purchase of natural gas will also impact your outcomes.

Step 3: Do Your Energy Conservation Measures First
Do you use lights in your operations? If so, have you switched from using HPS lights to using LED lights? LED lights require less electricity. But the less efficient HPS lights might reduce your need for supplementary heating. A full system study of your greenhouse will help identify efficiency measures as well as overall energy needs. Minimizing energy needs first will reduce the required size of any generator, and will influence the overall business case.

Step 4: Really Ask Yourself…What Do YOU Want a Cogen to Do?
Once you have viable data, you can answer the key questions for your specific operation. Do you just need backup power during outages? Do you want to disengage from the grid during peak pricing/demand response? Would a cogen provide you with electricity for part or all of your operation on an on-going basis? Will a cogen lower your energy costs overall?

The number of hours you would be running your cogen, and the time of year you need it, will influence the right system for you. For example, when the cogeneration unit and HPS lights are both operating at night, they may provide more heat than is needed. If planned properly, the nighttime excess heat could be captured and stored in boilers to be used in the greenhouse later in the day.

Step 5: Finalize Your Business Case – Island or Grid Connected?
Even if your cogeneration assessment looks promising, there is still a key decision before finalizing your business case. Will your cogeneration system operate in parallel to the electricity grid? The grid would provide you with backup power in case your system fails. Alternatively, you may want your cogen to operate fully independently from the grid. This is known as “islanding”. In some jurisdictions, there can be significant charges for remaining connected to the grid. These charges might make islanding a very attractive option.

Cogeneration units have trade-offs. If they are sized to meet your onsite peak energy use, they will supply too much heat and power for regular operations. Larger units are typically more efficient, however. If your local utility is willing to purchase your excess power, installing a larger unit may enhance your business case.

Step 6: Ensure Your Utilities Can Deliver
Once you know the optimal size for your cogeneration unit, contact your utilities to confirm if they can meet your needs. Large cogen projects often require infrastructure upgrades for connection to both gas and electric distribution systems. Overcoming these issues can require time and money. It is best to speak to the utility and plan for these issues before investing in any units.

Step 7: Compare Vendor Options
Cogeneration support can be acquired through various business models, including purchasing and operating yourself; a time-bound lease agreement with a vendor; and an agreement to purchase power and/or heat from a third-party cogen owner. Each of these models will come with different conditions, risks, costs and benefits; and within each model, there will be multiple vendors who compete with different pricing and conditions. It is critical to understand the full package being sold, in conjunction with your on-site needs, and to shop around so you are comfortable you’re getting a deal that is the right fit for you.

In summary, adding cogeneration is an expensive undertaking. It requires careful thought and planning. Answering these questions will help you properly determine if a cogen is right for your greenhouse. It is worthwhile to understand your own needs, research options available, and consider multiple vendors before moving ahead. Any vendor that is not asking these same questions isn’t really working with your best interests in mind. As always, hiring a credible and independent energy management consultant to walk with you through these steps is always a prudent and wise investment.

Bob Hawkesworth is an energy consultant and James Williams is an energy analyst at 360 Energy.

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