Technologies take aim at electricity, set foundation for growth

August 5, 2011 By    

Deep in the South and within the modest borders of its Ocean Springs, Miss., headquarters, regional propane provider Blossman Gas is undertaking another worthy project not called propane autogas.

Propane marketers, take heed.

The genesis behind Blossman’s new multi-state push into the heat and power market can be summarized in one succinct comment – made by Williamson LP Gas’ Burl Williamson – that Blossman President and CEO Stuart Weidie likes to repeat.

“The electric people have been getting into my business for years,” Williamson once told Weidie. “I want to get into their business to generate power.”

Let the “power” struggle begin.

Blossman and Yanmar Energy System announced a partnership in May that would allow Blossman to sell the Japanese manufacturer’s 10-kilowatt propane-fueled micro-combined heat and power system (micro-CHP) into 18 southeastern states. And in its doing so, Weidie makes it clear that Blossman wants to work with other propane marketers, including its competitors, for the betterment of the industry.

“Our intention is that we want to be a resource for all propane companies to assist them in selling and/or promoting and ultimately installing this product,” Weidie says. “This is not exclusive to Blossman – we don’t want it to be. We are basically the facilitator to our industry in those states to promote, sell and install this Yanmar micro-CHP unit.”

A unit was installed at Blossman to power its 8,000-square-foot training center, where the company hosted a ribbon-cutting ceremony in May. Attending the event were representatives from Yanmar, the Propane Education & Research Council (PERC), the South Mississippi Power Association, the Singing River Electric Power Association, the City of Ocean Springs and Moses Electric Inc.

From left, George Woodcock of Yanmar; Chic Cody from the city of Ocean Springs, Miss.; Blossman President Stuart Weidie; and Katsumi Deguchi of Yanmar at Blossman’s ribbon-cutting event.

“Micro-cogeneration systems save energy, cut heating and electric costs and reduce environmental impact,” says George Woodcock, energy systems manager for Yanmar America. “We hope to spread awareness of this innovative heat and power technology by joining forces with Blossman.”

The Yanmar micro-CHP unit is one heat and power project in particular that’s gaining momentum and could help the propane industry further penetrate the relatively untapped commercial market. A completed CHP project at a Hawaiian resort and a current rooftop heat pump project are among notable propane-fueled technologies that could play key roles in growing commercial market share and gallons.

“I don’t think the propane industry understands that there are people out there every day working to take our business away from us,” says Larry Osgood, president of Consulting Solutions LLC and a technical adviser on CHP projects for propane. “We need to protect existing markets, but we’ve got to get new business.”

Coming to America
Yanmar’s micro-CHP technology is new to the United States but already proven in Japan, where more than 5,000 units have been installed in 13 years, and emerging in Europe. PERC was a facilitator in bringing the product to the U.S. market, providing $725,000 in funding to Yanmar. Demonstration projects are under way, with commercialization slated for 2012.

“I’m a great believer in on-site power,” Weidie says. “In 25 to 30 years, businesses and homes could generate power on-site instead of relying on the grid system. We’re in the early stages, but in eight to 10 years and beyond, this could be a completely new dynamic and a means for selling more volumes of propane for our industry. But we have to start now by getting the product out there to early adopters where it makes economic sense to them.”

Consider Williamson a believer in on-site power as well. In the Southeast, from North Carolina to Florida to Texas, “the heat pump people and the electricity people are eating our lunch,” the North Carolina marketer says. The propane industry is at a crossroads, and it needs a grassroots effort to counter propane sales declines – a trend that’s “on everybody’s lips,” he adds.

“We cannot make it by selling gas grills and logs,” says Williamson, a member of PERC’s Research and Development Advisory Committee. “We’ve got to think outside the box, and we’ve got to quit waiting around for somebody else to do it. It’s going to come from people like Stuart and from people like me. I’ve got a passion for this, and I want to see it happen.”

Added efficiencies
According to Yanmar, conventional power generation systems utilize only 35 percent of their source-to-site resources, while the micro-CHP unit utilizes between 85 and 88 percent of its resources. The micro-CHP unit produces reliable power on-site by using a propane-fueled engine that drives an electric generator, reducing power transmission losses and using captured heat from the engine – a key component. This recovered heat can be used for space and water heating.

The unit can serve as a primary power source for the site or provide a portion of its power, with an option of connecting to the grid to automatically provide backup power. Prospective customers for the unit include restaurants, hotels, nursing homes, hospitals and sports facilities, since all have hot water and heating needs.

“Electric and power companies are interested in working with us to promote this product for peak-load management in particular,” Weidie says.

Other notable features surround the 70-inch high, 58-inch wide, 31-inch deep micro-CHP model, which burns 1.3 gallons of propane per hour and between 7,000 and 10,000 gallons per year, depending on utilization. According to Yanmar specifications, the unit can reduce carbon dioxide emissions by 41 percent compared to a conventional system; it has a 60,000-hour (12-year) design life, with 10,000-hour maintenance intervals; and it runs at a quiet 54 decibels.

There is one potential downside: a $40,000 to $50,000 price tag. But the unit can pay for itself in four to six years with proper utilization and then send those savings back to the business, Weidie says. And in some states, excess electricity production can be sold back to the grid for a credit.

“We have a tendency in our industry to say something costs too much, where other industries seem to be effectively rolling out new and innovative products that oftentimes cost more than our new and innovative products,” Weidie says. “It goes back to being committed to a product that allows us to sell more gallons and clean up the environment as well.”

PERC is placing 10 demonstration units in the field to prove out the system, says Greg Kerr, director of research and development for the council, and marketers are still needed to help with the effort. The units can be placed at marketer or customer sites.

On-site power generation equipment such as the Yanmar micro-CHP unit is going to be “the salvation of the industry,” Williamson believes.

“I want to go into the electric business – I don’t want to fight them; I want to join them,” he proclaims, recounting old legal battles between the North Carolina Propane Gas Association and electric membership cooperatives as well as the flameout of propane fuel cells, trumped now by this latest technology.

“Williamson Gas and Electric sounds really nice to me,” Williamson says.

Strategizing for the commercial sector

Education, training and new technology could open new opportunities

A report prepared earlier this year for the Propane Education & Research Council (PERC) reveals promising prospects for industry growth in the gallon-rich commercial sector.

In “Strategic Market Assessment for Commercial Sector Propane Sales,” released in February, consultant ICF International details how the propane industry, despite not focusing much attention on this market segment, still sells about 19 percent of the overall odorized propane load for use in commercial applications. A concerted effort to grow the market likely would be highly successful, the report states.

According to the report, the commercial sector has been the fastest-growing segment of the U.S. economy, in terms of total energy usage.

Electricity (at more than 50 percent), natural gas (17.5 percent) and petroleum-based fuels (3.3 percent), including propane and fuel oil, are consumed most in this sector. Propane’s share of total commercial primary energy consumption is on the increase – from 2.47 percent in 1990 to 3.85 percent in 2009, the report shows.

The report’s authors conducted interviews with commercial/institutional energy users, including retailers, restaurants, hospitality and healthcare facilities as well as schools, regarding their energy use and perceptions of propane. According to the report, an overall lack of familiarity with propane among commercial energy users and commercial builders is a critical barrier in the market and must be addressed.

Likewise, propane marketers have a lack of knowledge about the commercial sector and the propane technology that can be used in commercial applications, the report shows. Propane marketers shared their insights into the commercial sector, and nearly all of them recognized the market as important to their company and were receptive to learning ways to expand there.

The report identified new PERC technologies in development for the commercial sector, including a number of propane combined heat and power (CHP) units, propane rooftop heating and cooling units, propane heat pumps and other new propane engine-driven technologies – all beneficial for areas with high electricity prices.

“We’ve already started pushing development projects in the direction of commercial – this has a lot to do with the fact that the economics are more favorable,” says Greg Kerr, director of research and development for PERC. “The majority of projects in our pipeline will make more of an impact with the commercial market than residential. CHP products are most effective and most efficient when there is a constant demand for heat and power, and many commercial applications satisfy that need.”

According to a separate PERC study from 2010 on distributed generation, CHP applications in the commercial and industrial sectors could add more than 430 million gallons of propane per year, while heat pumps have the potential to add more than 140 million gallons per year.

PERC also presented data on the commercial sector at its July meeting in Portland, Ore. New technologies, including CHP units, heat pumps and generators, can grow potential gallons from 464,000 per year in 2012 to more than 30 million in 2016.

The ‘Holy Grail’ for propane

Rooftop heat pump gives industry its sought-after air-conditioning unit

An 11-ton propane engine-driven rooftop heat pump progressing through the PERC pipeline of projects may soon open a new set of opportunities for propane marketers. Never before has the industry offered a reliable, cost-effective propane air conditioner to customers. But a product by IntelliChoice Energy could soon change that outlook and provide new technology for the commercial sector.

About half of the commercial buildings in the United States utilize rooftop package units for their cooling needs, PERC notes, potentially big-box stores, restaurants and businesses open seven days a week.

“Propane retailers will be able to retain their current customers by offering a valid air-conditioning unit and gain new ones because of the product line, especially in the commercial arena,” says Tommis Young, founder, CEO and chief technology officer for Phoenix-based IntelliChoice Energy. “It’s a whole new market segment, a whole group of customers and, oh by the way, a whole bunch more gallons sold.”

According to a 2010 PERC study on distributed generation, heat pumps are a large market opportunity for propane, with the potential to add more than 140 million gallons per year. The engine-driven rooftop heat pump is capable of burning about 3,000 gallons of propane per year, Young says.

Developed with PERC funding of about $2 million, the IntelliChoice Energy NextAire product could be best utilized in areas with high heat and high electricity rates. It is ideal for applications where electric service is limited or unreliable and where high electric demand charges make commercial air conditioning and heating expensive. It could be useful for builders and developers in rural construction projects, as well as in backup emergency generation applications.

“Propane for air conditioning is a huge subject. That’s been the Holy Grail for the propane and natural gas industries for years, and the rooftop unit is part of it,” says Larry Osgood, president of Consulting Solutions LLC and a technical adviser on the project. “This is basically breaking new ground in the U.S.”

Project officials are seeking out and interviewing propane marketers to help establish yearlong demonstration sites for the product. The propane unit has run successfully for the last two years at an Army base in Fort Irwin, Calif., but the next phase, which completes the final process toward a commercialized product, focuses on marketers, manufacturer representatives and a distribution network, Young says.

“We’re identifying and working with those aggressive, forward-thinking retailers who want to be part of this. We’ll educate, train and qualify them,” he says.

According to PERC, the unit will serve as a platform for other cooling and heating products.

Propane paradise

Gallon-growth potential from CHP projects proven in Hawaii

When Charles Senning set out on a large-scale project at Hawaii’s Kauai Marriott Resort and Beach Club, he sought to establish propane as a credible fuel for combined heat and power (CHP).

“And that was done beyond a doubt,” says Senning, then project manager for The Gas Company, a retailer supplying propane to more than 40,000 customers in Hawaii.

The Gas Company had been seeking ways to increase its involvement in supporting CHP statewide. It partnered with the Gas Technology Institute through the National Accounts Energy Alliance; PERC; and Marriott to develop and verify the performance of a propane‐fueled distributed generation CHP system for a major U.S. commercial user in a high-profile application.

Senning, who has since become an energy engineer for Redhorse Corp., says The Gas Company promoted CHP systems for two reasons: sales – the Kauai Marriott system increased the marketer’s sales to the island by 20 percent, he says – and the opportunity to push propane’s role in energy-efficient technologies that are so attractive to customers. Senning advises other propane marketers to do the same.

“AmeriGas and those guys would really benefit by expanding their capabilities to include some aspect of energy efficiencies,” Senning says. “The nice thing about CHP is that you participate in energy efficiency, and you sell gas like it’s going out of style. The potential gain is outstanding, and you leave a customer who’s operating much more efficiently.”

At the Kauai Marriott, an 810-kilowatt system was designed to generate power and capture waste heat at high efficiencies to meet a portion of the full-service resort’s electric, heating and cooling loads. The multi-million-dollar demonstration project spanned 18 months and concluded in April 2010.

“It is an excellent example of what propane can do in a large application,” says Larry Osgood, president of Consulting Solutions LLC and a technical adviser on the industry’s CHP projects. “It really works.”

According to the project report, the propane industry can realize sales gains in the sought-after commercial market – Marriott’s CHP system burned about 581,000 annual gallons during the demonstration – while the lodging industry can reduce its dependence on the electrical grid, its energy costs and greenhouse gas emissions. Under average economic conditions, the system offers a payback period of 6.3 years.

“As PERC gets more involved in the commercial market, this is something we need to look at closely, and as long as the economics are still there it’s something we need to help push because of the high demand,” says Greg Kerr, director of research and development for PERC.

In recent months, however, Senning learned about problems with the system, primarily due to the loss of support and ongoing service needed in such a complex setup, he says. Components from several manufacturers have to mesh and work seamlessly, sometimes creating issues. More integrated CHP systems are available today, he adds.

“In terms of the implementation of the project, it was very well done. The engineering was topnotch, the equipment was topnotch and the installation was topnotch,” Senning says. “It’s just that the ongoing success in a system like that is dependent upon constant vigilance and making sure that when something goes wrong you take care of it.”

Photos courtesy of the Propane Education & Research Council and Yanmar

About the Author:

Brian Richesson is the editor in chief of LP Gas Magazine. Contact him at or 216-706-3748.

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