ProPhase Provides All Stages of the Project
Assessment of Electricity
and Thermal Needs
Preliminary & Engineering Studies
Licensing & Permitting as Needed
CHP Equipment, Delivery & Installation
Maintenance & Service
Commissioning
How do we Size the System?
Initially, all of the power to a facility comes from the hydro grid. It provides the regular, day-to-day electricity – referred to as the “baseload” demand, as well as any short-term increase in electricity needed – referred to as “peak” demand.
The facility is always connected to BOTH the CHP system and to the hydro grid. The size of the CHP system is designed to provide the baseload electricity requirements of the facility. Hydro is only needed to provide any peak electricity (over and above the daily baseload electricity needs).
When the CHP system is down for scheduled maintenance, the Customer’s entire electricity supply is provided for by the hydro grid (just as it was before the CHP system was installed). When the CHP system comes back online, everything seamlessly reverts, and the baseload electricity is once again provided for by the CHP system and any peak demand will be provided for by the hydro grid.
Since the CHP system reduces the amount of electricity required from the hydro grid, the hydro bill is greatly reduced, which includes transmission and distribution fees as well as administrative fees. (Please refer to the diagram below).
CHP Provides Baseload of Electricity Required
Complete Transparency
It can be difficult to measure the actual savings to a facility, when a Customer installs a new lighting system, variable speed motors, fan coils or energy-efficient windows etc.
We make it very easy to measure savings. When a CHP system is installed, ProPhase installs sub-meters, which allow both the Customer and ProPhase to monitor the electricity, gas and heat usage accurately.
Sub-meters are installed on:
- the electricity line from the CHP generator to the main electrical panel, to measure how much electricity is being provided to the facility
- the gas line feeding the CHP engine, to determine how much fuel the CHP engine is using
- the engine’s cooling loop, to determine how much heat is being used
At all times, the sub-meters keep the electrical, gas and heat data completely transparent. It is easy to determine how much gas was used by the engine and how much electricity and heat was used by the Customer.
The Customer can always compare the CHP rate being charged for electricity to their monthly hydro bill to be sure that they are receiving the discounted electricity price that was agreed to in the Power Purchase Agreement.
How do we make money?
ProPhase sells electricity generated by the CHP system to the Customer at a discount of up to 20% to their monthly hydro bill, depending on the facility. We buy and install the most reliable CHP engines, and service and maintain them, to ensure that they generate continual, dependable electricity for our Customers. We buy and install the CHP system using the most reliable engines, and service and maintain them, to ensure that they continue to generate dependable electricity for our Customers.
We make our money based on the spread between the price we sell the electricity to the Customer at, and the price of the natural gas used to fuel the engine. This is referred to as the “Spark Spread” and it can vary over time, which can affect the discount rate. The discount provided assumes that the Spark Spread is economic for ProPhase. Should the government temporarily reduce electricity rates to a point that it is no longer economic for ProPhase to operate the CHP system, ProPhase would stop the CHP engine and the Customer would seamlessly transition to receiving all of their power from the hydro grid until the Spark Spread normalized, at which point the CHP system would resume operation.
In both cases, the Customer receives the lowest electricity price.
Power Purchase Agreement (PPA)
The most common business model utilizes a Power Purchase Agreement (“PPA”) which is simply an agreement by the Customer to buy the electricity and heat produced by the CHP system, from ProPhase. Depending on the facility and their demand for both electricity and heat, they can save as much as 20% or more off their monthly hydro bill over the term of the Power Purchase Agreement (which spans between 15 – 25 years). The term of the PPA is negotiable, however the longer the term, the more profits are available, and the more savings we can pass along to the Customer.
Under a PPA model, ProPhase designs, builds, installs, services and maintains the CHP system at our cost. ProPhase owns the system, so it is our responsibility to ensure that it remains serviced and operating efficiently over its lifetime. In some scenarios, the Customer pays for the gas, and in other cases, ProPhase pays for the natural gas to operate the engine, in which case ProPhase takes the commodity risk on the price of natural gas, not the Customer. There is no initial cost to the facility for the setup, installation or operation of the CHP system under a standard Power Purchase Agreement.
Other Business Models
Note: A PPA model may not be an option for some facilities, depending on the size and energy demand.
While some facilities are happy just to buy the electricity at a discount and want nothing to do with the equipment, others prefer to own the equipment themselves. Under that scenario, ProPhase will take care of the installation and commissioning, at which point the facility will purchase the system from ProPhase at an agreed upon price. The facility will then decide if they want to service and maintain the equipment themselves, or if they want to hire ProPhase for scheduled maintenance.