United Technologies Corp. wants to reduce its greenhouse gas emissions 27 percent by 2015.
The corporation also wants to control its energy costs.
To achieve both these goals, UTC is installing onsite power generation at all six Connecticut facilities of its subsidiaries — putting in natural gas co-generation plants, solar arrays and fuel cells.
What UTC started with Pratt & Whitney’s East Hartford facility in 1995 and will finish with Sikorsky Aircraft’s Stratford facility later this year is rapidly expanding to other companies in Connecticut and throughout the world.
The concept of installing a power plant onsite at your own facility — called distributed generation — instead of relying on the electrical grid is growing in both the local and international business communities, especially as energy prices increase and become more volatile.
“It was really a cost savings measure to look at getting our power from somewhere off the grid,” said Sean West, UTC environmental health and safety manager.
Installing generation onsite is really about hard-core business decisions, said Andy Konigsberg, Northeast power and resources leader for Deloitte LLP. Companies want to better control their bottom lines, increase competitiveness and lower business risk. Managing power production achieves all these goals.
Companies using distributed generation — especially those with green power such as solar, fuel cells and co-generation — get the added bonus of being seen as eco-friendly, which builds brand awareness and customer loyalty, Konigsberg said.
“It is a step toward broader resource management,” Konigsberg said.
Connecticut Light & Power is seeing a record interest from installers wanting to learn about distributed generation. The utility held a training session in late March for companies wanting to learn how to install and service onsite systems, and the turnout was more than double previous years.
“There is a general interest in renewable power and being able to produce power at your own facility,” said David Ferrante, CL&P supervisor of distributed resources.
In 2003, CL&P had fewer than 30 residential and commercial customers with distributed generation. By this year, that number has grown to 2,000 customers, with the bulk coming in the past two to three years.
The utility predicts another 500 customers will have distributed generation by the end of 2011. The most popular sources of power are co-generation plants and solar arrays.
“A lot of the customers are receiving state and federal incentives to do these projects,” Ferrante said.
CL&P hosts training session because the utility wants its customers to safely install these systems. Even though onsite generation takes power off the grid, it doesn’t cost the utility money because they don’t make a profit on electric generation, just on their transmission infrastructure.
The Connecticut Clean Energy Fund first saw the spike in interest for commercial distributed generation five years ago, said acting president Dale Hedman. The interest is particularly focused on large-scale fuel cells, a clean technology that — like natural gas co-generation — creates both electricity and heat.
Legislation proposed in this year’s General Assembly provides extra funding for commercial solar and fuel cell projects, particularly Senate Bill 1, the omnibus energy policy legislation.
“That will match a lot of demand for onsite generation,” Hedman said.
With state and federal incentives, companies can reduce their payback period on the projects by a number of years. The CCEF awarded $2 million in April to 14 onsite generation projects around the state, all of them solar. The agency is preparing another round of funding in order to give $13 million total by July 2012.
“For companies, a lot of it is about cost,” Hedman said. “Having onsite generation hedges you against future rate increases.”
UTC uses fuel cells at its UTC Power facility in South Windsor and co-generation plants at its other five Connecticut facilities. The onsite generation allows UTC to stabilize its expenses by eliminating some of the question marks that come with buying power off the grid, West said. Since co-generation also captures the heat produced by the electric processes, the company saves on heating costs, too.
Despite the large upfront costs, the payback period for each of the UTC co-generation plants is between 30 months and five years.
“Two and a half years is pretty quick,” West said.
The company would install more co-generation plants at its Connecticut facilities, but UTC already maxed out its capacity, as any new installations would produce more heat than the facilities’ need. When the co-generation plant at Sikorsky Aircraft Corp. in Stratford is complete, UTC is finished with its Connecticut distributed generation.
However, the corporation has more than 300 facilities across the globe, and the locations in Illinois, Florida and Poland might be ripe for their own onsite power plants, West said.
FuelCell Energy Inc. of Danbury — specializing in onsite power plants using eco-friendly technology — has seen a 60 percent increase this year in clients’ need for distributed generation. The company’s biggest clients are wastewater treatment plants and manufacturing company, including Carla’s Pasta in South Windsor.
The demand for distributed generation has increased to the point where FuelCell is increasing its Torrington production workforce by 20 percent. The company’s two largest markets are California and South Korea, with Connecticut circled as a potential major market.
And it’s not just onsite power that companies are looking for. Proton Energy Systems in Wallingford saw huge increases in 2010 from companies wanting to produce their own hydrogen, said Mark Schiller, Proton vice president of business development. The power plant industry was a huge market for Proton last year and expects to be so again in 2011.
Companies that produce their own hydrogen don’t have to store all the gas onsite, saving on shipping and storage costs, as well as increasing safety. Interest in Proton productions comes particularly from the international market, although the domestic market is up, too, Schiller said.
“These companies like more control over what goes on at their facilities, and onsite generation certainly does that,” Schiller said.
This comes down to the bigger picture of resource management, said Konigsberg. Larger companies see inefficiencies in their supply chain and at their own facilities, and they want to start doing more with less. Smaller companies are then following suit.
Energy portfolio management is the start of that control, as it can take up 5-20 percent of a company’s expenses, Konigsberg said. The first step is companies need to be more aware of their energy use and how all decisions effect that use.
“Somebody inside the company needs to stand up and ask the tough questions,” Konigsberg said.
At UTC, the push for distributed generation started with the corporation’s desire to reduce its environmental footprint, West said. The corporation conserves through measures such as upgrades to lighting, use of compressed air and overall energy management.
“The co-generation systems are just one way we reduce our energy costs,” West said. “Conservation is a big part of our energy strategy in general.”
