Why HP Hood Installed a 15-MW Industrial Microgrid: Hint. Milk Sours.

Feb. 25, 2016
HP Hood almost didn’t install its 15-MW industrial microgrid. Then it saw the savings it could achieve with a microgrid in PJM’s market territory. Read on to learn about the microgrid business model used by the Virginia dairy manufacturer.

Credit: USDA

No one likes power outages. But dairy manufacturers really don’t like them. And it’s easy to see why. If the power goes out for even just a moment, the dairy plant may have to shut down for 6 to 12-hours.

How can such a short blip have such a big impact?

It comes down to food safety requirements, explained Dennis McNutt, HP Hood utility manager, in an interview. After even a short shutdown, the plant must clean and re-sterilize equipment. The work can take hours.

So it’s not surprising that Hood sought a way to avert this risk at its 150-million-gallon processing facility in Winchester, Virginia.  Last year the plant became home to a 15-MW microgrid.

Hood saw the microgrid as a way to ensure reliable power. But there were other reasons, as well, to make the capital investment: reduce energy spend, increase efficiency, and contribute to corporate sustainability goals.

“Hood is not in the energy business. We’re in business to put milk in a bottle. But we want to do that as efficiently as possible,” McNutt said.

The microgrid uses a combined heat and power (CHP) system fueled by natural gas.  ZF Energy Development (Z-FED) designed and built the microgrid and continues to manage it for Hood.

Michael Overturf, CEO of Z-FED, said that the Hood project presented several challenges, among them food security, uptime and cost-sensitivity. With that in mind, the Pennsylvania-based company developed an end-to-end solution for Hood that incorporates its microgrid controller, ReD.

The controller connects the dairy facility to the PJM wholesale power market, which creates both revenue and cost-saving opportunities for Hood.

Z-FED CEO Michael Overturf will be among the industry thought leaders speaking at the May 19 Microgrid Knowledge conference, “New York and Beyond: Advancing Microgrids Nationally with Lessons Learned in New York.”

These opportunities stem from the microgrid’s ability to operate in several different configurations. Under normal conditions the microgrid runs in parallel with the grid, matching generation to the facility’s load. Other times – when energy pricing conditions warrant — the Solar Turbine generator can ramp up output so that Hood can export power.

When bigger is better

Before settling on the Z-FED system, Hood had looked at several energy technologies, including CHP generators that use biomass for fuel. The company ultimately chose natural gas because of its low prices and proven track record, McNutt said.

Hood also considered a conventional CHP installation without microgrid capability. After talking to Z-FED, Hood changed its thinking. It went with not only a microgrid, but also a larger generator, in keeping with Z-FED’s model. This approach “squeezed out more savings,” McNutt said.

Z-FED takes the approach of installing the largest engine that the electrical system can support, according to Brian Flynn, chief technology officer at Z-FED. It then exports power that the facility does not use. In this case, the Hood facility can export on average about 5 MW into PJM. The microgrid sells primarily capacity and energy products.

The financials work because scaling up plant capacity only marginally increases the microgrid’s capital costs, Flynn said. “The incremental cost from 7 to 15 MW gets smaller per megawatt.  So you can spend a little more money and get way more bang for your buck by adding more capacity.”

Hood’s McNutt noted that the microgrid offers other advantages as well, such as operational flexibility. When the grid fails, the facility can island and rely on its on-site power. Or conversely, if Hood needs to do maintenance on the turbine, it can rely on grid power, so does not have to shut down its manufacturing operation.

And because of its CHP system, the microgrid is highly efficient. CHP re-uses heat byproducts created in electrical production. In contrast, conventional generators let the heat spew wasted into the air or nearby water.

Since the industrial microgrid began operating last May, the plant has decreased its energy costs by net 15 percent (including maintenance), according to Hood. Gross cost savings are 28-30 percent, Flynn said. The microgrid cut carbon dioxide emissions by 30 percent and improved energy intensity (mmbtu consumed per product unit) by 24 percent.

Hood isn’t stopping there. Next it plans to bring further sophistication to its energy plant by transforming it from a cogeneration (heat and power) to a tri-generation (heat, power and cooling) facility. This means that in addition to creating heat and power, the microgrid will produce refrigeration with waste heat and an absorption chiller. Hood expects to finish installation of the trigeneration project by year’s end.

About the Author

Elisa Wood | Editor-in-Chief

Elisa Wood is the editor and founder of EnergyChangemakers.com. She is co-founder and former editor of Microgrid Knowledge.

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