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Contractor Kent Thuesen’s client had an uncommon house with a common problem. The client’s luxe 14,000-square-foot home in Waccabuc, N.Y., was guzzling fuel oil and electricity, and he needed to cut his energy bills — big time.

Thuesen, who owns Thuesen Mechanical, a heating and plumbing business in Mount Kisco, N.Y., priced out some ambitious energy-saving options. Solar photovoltaic panels? They’d have a 20-year payback, even with tax credits. Geothermal? A likely 12-year payback.

Instead, Thuesen suggested a third option. By retrofitting a powerful, high-performance cogeneration heating system in the home, Thuesen could shrink his client’s bills by about $14,000 a year, or 30 to 40 percent, while offering a 5- to 6-year payback. The client was sold.

The Yanmar CP10WN CHP system uses an internal combustion engine, fueled by propane or natural gas, to produce both heat and electric power.

The propane-fueled cogeneration system provides the astonishing savings by combining on-site production of electricity with heat for the home. The Yanmar CP10WN CHP (or combined heat and power) unit activates whenever the radiant heating, domestic hot water, or pool and spa heating systems call for heat. The internal engine provides 10kW of electrical power that feeds the home or is sold back to the grid. Heat from the engine is captured to bring water to about 160 degrees to feed the heating systems.

In its first two years of operation, the cogen system has run for about 4,000 hours per year. It ends up providing about 90 percent of the home’s heat; the old oil-fired boilers were left in as backup. “Those one or two weeks of the year where the temperature gets so cold outside, I need the backup of the oil boilers to get past those months,” Thuesen says. “We’re going to end up taking the oil boilers out and I’m going to put a modulating propane boiler in place of that. We just left them in there to show how easily you can retrofit into an existing system with cogeneration.”

Net gains

Amazingly, the client’s savings would have been even greater if he lived just four miles east in Connecticut. The reason: varying net metering rules between the states and utilities.

When the cogen system produces more power than the home needs, the excess electricity is sold back to the grid, essentially turning the meter backward. That happens more in the winter, when there’s a greater call for heat, and less in the summer, when the home is consuming lots of electricity for air conditioning. Connecticut allows CHP users to earn full credit for excess power generated, taking advantage of the unit’s production in the winter. Thuesen’s client only receives a partial refund for excess power generated each month.

While the credits earned by the client in winter are enough to pay for the electricity the home uses in the summer — resulting in zero net electricity bills — the refund could have been greater. “If he was able to get a dollar-for-dollar credit over 12 months, then he would probably have a $20,000 [annual] savings,” Thuesen says. Thuesen is lobbying to have the policy changed in New York.

Vital backup

While Thuesen’s client enjoys his monthly energy savings, he’s perhaps just as pleased with the CHP unit’s backup generation abilities. The unit was installed with a battery that instantly provides power to the home in the event of a grid outage. The system kept the client’s home running throughout Superstorm Sandy, but it’s also useful for protection against Waccabuc’s inadequate electrical grid.

“When the cogen system produces more power than the home needs, the excess electricity is sold back to the grid.”

“You’ve got

electric that sometimes, instead of 240 volts, we’ve got 198 volts,” Thuesen says. “That low voltage actually puts a surge on any compressors — refrigerators, dishwashers, microwaves, TVs. In the hottest days of summer, the voltage drops so low it actually registers as a power outage.”

The cogen unit balances the electricity in the house, providing a stable, constant 240 volts. “Since we installed this, he hasn’t burnt out a television, a computer, anything that he used to lose,” Thuesen says.

Smart hybrids

While Thuesen’s retrofit provided plentiful energy savings for an existing home, CHP systems have been more popular in new construction, says Jonathan Davies, CFO of Blueprint Energy Group, a CHP distributor based in Norwalk, Conn. In new homes, the cogen system can be factored into the home’s mechanical engineering up front, offering potential savings offsets by eliminating a furnace, downsizing a geothermal system, or reducing the need for pool heaters or standby generators.

Combining geothermal and CHP systems can be a particularly clever hybrid solution, Davies suggests. Standard geothermal systems in the Northeast tend to be sized for the greater heating load (a delta of 60 degrees or more between indoor air and frosty winter temperatures). When builders combine geothermal and cogen, they can reduce the number of wells and the size of the geothermal system to be closer to the cooling load (a delta of only 30 to 40 degrees).

“Combining geothermal and CHP systems can be a particularly clever hybrid solution.”

“So now you have saved a third of the geothermal infrastructure,” Davies says, “and you have a system that can supplement the cogen when needed for additional heat and can provide the cooling in the summer as planned.”

Federal incentives make the solution even sweeter. Residential cogen units aren’t eligible for federal tax credits (state and utility incentives may be available), but geothermal systems are eligible for a 30 percent federal tax credit on the whole capital cost of the system. “If you combine the two together, we’ve had guidance that the cogen can be thought of as part of the heating backup for the geothermal system,” Davies says. “That way you can actually get a 30 percent tax credit on the combined infrastructure.”

The Propane Education & Research Council’s (PERC’s) Propane Heat and Power Incentive Program offers additional incentives of up to $10,000 to builders or homeowners who install eligible propane-fueled CHP systems and agree to share their experiences with PERC. That incentive certainly factored into Thuesen’s client’s decision to sign off on his CHP installation, which amounted to $80,000 including the pool heat exchanger. “That was probably the deciding factor,” Thuesen says. “It not only knocked my ROI down, it really helped on the sell.”

Visit for full details and to apply for the Propane Heat and Power Incentive Program.