HOTELS AND SENIOR HOMES: GREAT CANDIDATES FOR COGENERATION TECHNOLOGY

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As the world quickly shifts into an environmentally conscious movement, the residential, industrial, and commercial sectors are being struck hard by increasing electricity prices. Electricity prices may be going up for good, according to the LA Times, and reflect 2-3% annually compounded rate increases, over inflation.

Large facilities, like hotels and senior care homes, depend on a lot of electrical energy from the grid, powering hundreds of rooms to accommodate a lot of people. The increases in electricity rates are due to U.S. government’s stringent energy policies being implemented to address rising greenhouse gases that are endangering our global climate.

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In California, Bill AB327 and Bill SBX1 2 promote the use of clean and renewable energy.The first bill allows the California Public Utilities Commission (CPUC) to increase the state’s Renewable Portfolio Standards (RPS) and also calls for revision of the state’s net metering program by 2017. The latter bill requires all retail sellers of electricity to have 33% of their energy produced from renewable sources by 2020, and that adds a premium to every KWh purchased.

With all of the ‘green things’ rapidly happening, hotels are responding fast but senior care homes are slow to follow despite their similarity in facility type. This is most likely due to the benefits that hotel gets by being ‘green’ to attract customers. 

The hotel industry is shifting over to the sustainable side by practicing energy efficiency initiatives, waste minimization, and further recycling in their hotels. Although waste minimization and recycling are important for green contributions, electricity and natural gas also represent large costs and are the most harmful to the hotel’s bottom line, after labor.  At the moment, energy efficiency seems like the best way to save money on electricity usage, but another way to save in the long run is cutting costs right at the source. Reducing energy usage just controls electricity costs from the demand-side. There are possibly even more savings by controlling the supply-side of electricity generation as well. Not only will changing how the hotel’s electricity is generated lower costs, it will also contribute to reducing greenhouse gas emissions.

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A clean energy technology that serves this dynamic process is called cogeneration technology. Cogeneration technology, also known as Combined Heat and Power (CHP) technology, is being heavily endorsed by the Environmental Protection Agency (EPA), U.S. Department of Energy (DOE), and U.S. Department of Housing and Urban Development. According to the EPA, “CHP is the production of both power and heat from a single fuel source. By making use of the waste heat from onsite electricity production for heating or cooling, CHP increases fuel efficiency to nearly 90% and decreases energy costs.” Using a single company for a turnkey installment process simplifies the change. Hotels with 150-800 rooms make great candidates for this cleaner energy source and the shift provides onsite power of  60 kilowatts (kW) to 850 kW. About 10,000 hotels in the U.S. have suitable characteristics for quick installation of cogeneration technology. (EPA)

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Unlike hotels, senior care homes do not need the ‘green’ initiative for its facility to attract customers but their investor pool may. Looking at the facility structure type, senior care homes are identical to hotels, with hospitality and shelter supplied to hundreds of people and corresponding large usage of electrical energy and water. A senior facility could surely take green measures similar to that of hotels to make their buildings more energy efficient and cost effective. As hotels are being introduced to cogeneration technology, senior care homes should also be looking into cogeneration technology as well. Not only will the cogeneration technology enable savings in money but it provides a secure energy grid that is produced from the facility itself. To get the CHP benefits, hotels and senior care homes have to address the initial cogeneration installment pricing. But they are not always happy with the initial capital required for cogeneration installment. According to Rob Howell, General Manager of Shawnee Inn & Golf Resort, he might agree in his article, Has Your Property Seen the Greener $ide of Sustainability?  by saying “Limited investment, limited thought; equals a limited return.” In today’s energy sensitive business environment new financial instruments, outside of owner capital, are available to make the investment very feasible, and in many cases, with 100% financing. The payback, around four years and about 400-500% return over costs in a ten year cycle. Now that can really energize a portfolio.