Q&A

Gas prices are very low right now; why would I consider switching to district steam?

When comparing district steam and an on-site system, it is critical to look at the impact the energy market values will have on the overall cost.

Since natural gas comprises more than 72 percent of the incremental cost of onsite steam production, the impact of increases in the natural gas price creates a larger differential in operating cost when the same increase is applied to district energy fuel prices. In effect, district steam provides the customer with a physical hedge by lowering the risk associated with the turbulent natural gas market.

The true operating costs of a natural gas plant should be based not on current gas rates, but on the historical average. Market indicators suggest natural gas rates will rise in the near future. District steam’s advantage is that the risk associated with fuel increases, which will occur, is significantly reduced. District steam is a long-term budgeting solution.

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Now that consumer markets have fully realized deregulation, electric prices are lower. Why should I consider district cooling over an on-site chiller plant?

District cooling continues to save energy when compared to present electric pricing. This can easily be verified by calculating the actual electric costs incurred with on-site equipment versus the same calculations minus use and demand adjustments by not using chillers and towers. District cooling lowers overall electric costs by reducing demand in the cooling months.

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Historically Cleveland Thermal’s fuel adjustment charges have been high, compared to what we could buy natural gas and/or electric for per MMBtu. Is this true?

Cleveland Thermal’s pricing is competitive with the current market conditions. There were a few months during the 2008-2009 heating season when fuel costs increased, as did the cost of oil and other energy commodities. Cleveland Thermal has since negotiated short-and long-term fuel contracts and has the capital reserve capacity for spot market purchases to insure a stable fuel charge for its customer base. The anomaly of the 2008-2009 heating season was just that.

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Capital costs for a district energy conversion, on-site plant replacement and ECM project are virtually impossible to fund right now, both internally and externally. How has Cleveland Thermal overcome this hurdle?

Every candidate considering a district energy conversion and/or energy efficiency retro-fit are different. Cleveland Thermal has helped many owners and managers to finance projects directly through their energy and operational cost savings. Despite the financing challenges in today’s market, Cleveland Thermal has the committed capital resources available to contribute to strong projects. Additionally, it has the capability to monetize various energy-related funding incentives, such as stimulus funds, tax credits and grants.

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Cleveland Thermal’s district energy plant technology is more than a century old. When will the company install a more efficient boiler and/or chiller plant?

Cleveland Thermal is in the process of replacing all of its coal boilers with high-efficiency natural gas boilers. In the winter of 2014-15, a temporary gas rental boiler replaced one of the three coal boilers for the entire winter. A new gas boiler is on order and will be installed in June 2015. CT expects to install two more gas boilers during the summer of 2016, thereby discontinuing the use of coal at that time.

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What has Cleveland Thermal done to make Cleveland a more sustainable city?

Cleveland Thermal has adopted the following measures to aid in Cleveland’s sustainability:

  • Regular infrared auditing of its steam distribution system, which has enabled the company to reduce system losses by 22 percent, saving $1 million annually
  • High-efficiency lighting retro-fits at both generation facilities, which are producing savings in excess of $5,000 per month
  • Installation of a condensate reclamation system that is reducing water consumption and chemical usage for treatment, while also diverting it from the sewer. Estimated annual savings are expected to exceed $30,000 per year
  • In the process of converting from coal to natural gas boilers
  • In the process of implementing automated air system boiler improvements and facilitating various energy conservation measure projects within customer facilities with the county as the lead pilot project

Sustainability initiatives still in the development stages include internal and external waste to energy projects; development of a combined heat and power plant (CHP); implementation of automated air system boiler improvements; and the facilitation of various energy conservation measure projects within customer facilities.

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