Operating Strategies for Campus Cogeneration System in a Turbulent Utility Market

The future is unpredictable, natural gas prices are fluctuating wildly, and electricity rates are increasing sharply as a result of higher fuel prices. In unstable utility market environments like we are seeing today and that we expect in the near future, operating a large university cogeneration system presents opportunities as well as challenges. Will the existing "generate-as-much-as-we-can and buy-the-rest" operation scenario continue to be the best, or does the operation need to be optimized? If operational changes are recommended, what is the optimum scenario? How sensitive is the optimum scenario to natural gas prices and electricity purchase rates? The Texas A&M University combustion gas turbine is an old machine. The economics of an overhaul and upgrading costs also come into play. Various operation scenarios are proposed, then evaluated and compared for different natural gas prices and purchased electric rates. The results show how to maintain flexibility in the uncertain electricity market, and to minimize the impact of electric utility deregulation. The analysis also investigates the cost impact of increased natural gas prices, and the economics of the major gas turbine upgrade. The various scenarios analyzed include: 100% purchase of electricity, i.e., shutting down the gas turbine; generate as much electricity as you can and buy the rest; operate in a pure Combined Heat and Power (CHP) mode and buy the rest; and operate the CHP units during summer months only and buy the rest. The above scenarios are also evaluated with an overhauled and more economical gas turbine/generator set. The fact that Texas A&M's cogen system can produce up to 65% of its own electricity, has both electric-driven and steam-driven chillers, and can purchase its additional electricity on the wholesale market presents additional opportunities and operating strategies, which will be discussed in the paper.