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The U.S. electric grid is facing several pressing challenges that put commercial businesses at risk. A recent Department of Energy Resource Adequacy Report finds that the grid is facing an energy emergency due to an aging grid, retirement of coal and natural gas plants, overreliance on alternative energy sources, and increased demand for electrification. They project power outages to increase 100% by 2030 as the electricity supply is unable to meet demand, leaving commercial facilities vulnerable.
Adding to the burden for businesses is increasing electricity rates nationwide. Infrastructure costs to build grid improvements, additional facilities, or extend service are very costly and require a long time for completion—these costs are often handed down to the customer in the form of higher rates.
As the grid falters and electric rates continue to rise, what does this mean for your commercial facility and how will you adapt? Propane power generation is the answer for many large-scale commercial facilities and specifiers must understand the different equipment types available.
Equipment Types for Power Generation
Propane technology is readily available to support prime power, back-up power, and microgrid use—it is safe, reliable, affordable, and abundant. It can be used to operate building system applications—such as water heating, building heating, and cooling—and can provide primary and backup power regardless of power outages or access to public utilities. Utilizing propane-powered equipment and building systems reduces the demand on the electric grid and allows businesses to avoid fluctuations in costs and availability during peak hours.
Propane Standby Generator
According to Bloom Energy, the cost of an outage for large companies can escalate into the millions of dollars per hour of downtime, while the Department of Energy estimates that outages cost the U.S. economy $150 billion annually. On a market-based scale, an E Source survey of 800 energy decision makers reported that “the cost of power outages for U.S. businesses show that reported losses exceed $27 billion per year within eight key market segments studied: Batch Manufacturing, Continuous Manufacturing, Financial Services/Digital Economy, Offices, Healthcare/Hospitals, Government/Education, Grocery/Food Stores, and Retail.”
These statistics, combined with the growing prevalence of power outages, make it clear that commercial facilities must have backup power, meaning an additional power source that can be used in the event of a power failure. There are many reasons a commercial building may select backup power: code requirements, for redundancy, enhanced energy or cost savings, energy independence, decentralized supply, environmental benefits, or simply to ensure an uninterrupted power supply.
About 75 percent of commercial businesses in the United States already have backup generators but the remaining 25 percent must think seriously about following suit.
Propane standby generators offer scalability and performance to power any size of project or business, but are ideal for emergency backup power in small- to medium-scale facilities. They provide distinct advantages for backup power over alternative fuels such as natural gas and diesel. Propane offers many of the same benefits as natural gas, including its cost-effectiveness for smaller single-engine applications. But unlike natural gas, propane is stored on site, adding resilience and meeting on-site fuel storage where it is either required or desired. Propane does not degrade or oxidize over time like diesel.
Propane can also serve in additional applications in the building, such as space and water heating. The design team can combine a propane generator with a suite of propane appliances to provide commercial clients with whole-building standby protection at an affordable price.
Propane prime power
Propane prime power is the primary source of power for heavy-duty commercial and industrial applications that are isolated, or choose to remain independent, from a central energy grid. These applications include everything from agricultural and food production operations to microgrids, remote data centers, and even critical care facilities. They keep an operation running affordably and sustainably. There are several strategies for prime power generation.
- Base loading strategy. A base loading strategy uses the generator to provide the constant minimum power needed. The prime propane generator runs at a fixed output to cover the commercial building’s consistent, minimum power needs (base load). The utility grid only handles the variable, peak power demands. This avoids the highest, most expensive peak demand charges from the utility company, leading to significant monthly savings.
- Prime power rating. A prime power propane generator acts as the primary, continuous source of electricity for a location, rather than a backup during outages. The facility will typically still have access to some electricity, up to a certain threshold. Once that is reached, the prime power generator makes up the difference for the power needed. They operate 24/7 almost indefinitely, and have typical lifecycles from 30,000 to 40,000 hours.
- Peak shaving. Prime power generators can also offset grid load demand, benefitting the utility and user. This is called peak shaving, which uses the generator as a strategic tool to avoid paying the highest rates from the utility. The prime propane generator automatically switches on to offset the building’s load during the utility’s highest-priced hours (peak demand times). This shaves the highest energy peaks, directly reducing Demand Charges (also called Capacity Charges), which are often a significant portion of a commercial utility bill. Prime-rated generators are designed for frequent, continuous use, making them ideal for predictable, recurring daily peak shaving events. This ensures the transition on/off is seamless, allowing operations to maintain high-energy activities such as HVAC and production machinery without grid reliance at peak rates.
Microgrid
A microgrid is a distributed energy system of localized energy with control capabilities that enable it to disconnect from the traditional grid and operate autonomously and continuously. Microgrids combine one or more sources of distributed energy—solar panels, wind turbines, combined heat and power (CHP), and generators—producing power and often storing that energy for a complete solution. They are typically used for prime power (and heat if it’s a CHP system). These solutions are critical during sudden or planned power outages and are ideal for resilient remote operations.
Unlike a standby generator, a microgrid can supply power to multiple buildings, or even an entire community or campus, in the event of a planned or unplanned main power grid outage. By collecting and storing electricity from renewable energy sources, the microgrid only uses its propane generator as needed, making it incredibly efficient and environmentally friendly. Every aspect of the microgrid’s performance is locally controlled at a centralized station, allowing for optimization.
Combined Heat and Power (CHP) system
A combined heat and power system uses propane-powered engines to generate on-site electricity while capturing thermal energy for heating and hot water. Excess electricity can be sent back to the grid, ensuring dependable heat and power without relying on the electric grid. Unlike centralized electrical generation plants that operate at only 33 percent efficiency, CHP systems capture heat and achieve total system efficiencies of 60-80 percent for producing electricity and useful thermal energy. Some systems can achieve efficiencies approaching 90 percent. Almost no energy is lost as it travels from tank to application. They are ideal for medium-scale sites needing high efficiency heat and power and offer continuous runtime.
Next Steps
Facilities ready to begin using prime propane equipment can look into PERC’s convenient Commercial Equipment Directory to understand the products available and how to work with local propane marketers. Users simply choose the desired equipment from a dropdown, then review parameters that will help to further narrow the equipment options and respective manufacturers.
In addition, PERC‘s Alternative Technology Demonstration & Research Program helps commercial and industrial businesses adopt propane-powered CHP and cooling systems—providing lower energy costs, improved reliability, and reduced emissions. Plus, Alt Tech Demo participants earn up to $30,000 for sharing performance data!