Mohegan Sun Pocono Casino Doesn’t Consider Cogeneration a Gamble

The appeal of getting two for one – heat and power from the same source – is compelling enough to make cogeneration among the hottest energy approaches on the landscape.

It is a bit odd to think of a hospital and a casino as similar institutions, but they are – in terms of HVAC. Of course, one is a place where one goes to find his or her health and the other is where they go to have fun. But there are deep similarities in that both are active around the clock and both stand to lose a lot if there is even a slight disruption in the electrical supply.

This week, Mohegan Sun Pocono announced that it is installing a combined heat and power/cogeneration system. The press release says that work will begin next month and the system will be fully operational in the fall. The cogeneration plant is expected to cut the casino’s carbon footprint by 3,900 metric tons annually. That, the press release said, is the equivalent of removing 820 vehicles from the road and or the planting of 100,000 trees.

UGI HVAC did the development work for the project. It is designing the system and will be the general contractor. Gary Fechter, the General Manager of Performance Solutions and Engineering Services for the company, told Energy Manager Today that the heart of the installation will be an a natural gas-driven internal combustion engine that generate 828 KW of electricity. The exhaust heat from that process will be used to heat water for residential use, for the kitchen and for the air conditioning system.

Fechter said that there are three drivers of interest in cogeneration for a facility such as Mohegan Sun. The highest profile is monetary savings. It is, however, not necessarily the most important to facility managers and their bosses. The other two — reliability and quality power and the avoidance of long outages – may be of far more value to them.

Efficiency, of course, is directly related to ongoing costs. Fechter said that generating heat and electricity separately generally has an efficiency level of 60 percent to 63 percent. The cogeneration approach of combining the two increases that efficiency to the 85 percent to 88 percent level.

The financial benefits of cogeneration are greater when both heat and electric are being used, Fechter said. Conversely, the proportional benefits shrink in buildings in which the bulk of the tenants leave when the work day ends.

Reliability issues are somewhat softer in that they are difficult to precisely quantify. They are, however, exceedingly important.

Slot machines, he said, are comprised of two small computers with lights and bells to excite the winners. Mohegan Pocono has almost 5,000 of them. Even a short outage is problem – as any desktop PC user can attest. Bringing power closer to where it will be used is a huge advantage – and is growing more so as the grid’s reliability gradually erodes. This is a potential benefit to any business in which momentary disruptions are disastrous. For instance, a food processing plant must discard food that is unrefrigerated for a certain period of time. Cogeneration reduces these incidents. “CHP is attractive because generation is right where the power will be used. You don’t have all those crazy transients, like somebody hitting a pole three miles away or a squirrel jumping into a transformer.”

The related driver of cogeneration is protecting the facility over the long term. Fechter said that UGI currently is working on a cogeneration protect with Messiah College in Mechanicsburg, PA. Superstorm Sandy, he said, had left the school without most of its power for five days. The CHP platform will produce enough power to run the student union, kitchens and other critical operations indefinitely. “CHP will save them almost $800,000 a year and provide a safe haven,” he said.

Clearly, CHP initiatives require great capital expenditures, and periods to payback can be long. Ken Silverstein – the Editor-in-Chief of Energy Manager Today and sister site Environmental Leader – wrote at Forbes last year that central power generation itself is cheaper, but getting the power to the end user drives up costs. How that relates to the overall cost of energy and the subsequent impact on payback periods and return on investment calculations will continue to be a moving target. Thus, it may be that CHP and other onsite energy producers will rely on the significant other benefits – day-to-day reliability and the ability to keep outages short when they do occur – to make their case.

Fechter said that the financial advantages often are an afterthought to the operational benefits. He referred to another client – one he declined to name – in the food processing industry that came on board for those reasons, even though the payback period for the project was an unimpressive 37 years.