Cost-Effective Electric Boilers

The United States has achieved a new level of consciousness regarding the environmental impact of the boilers we manufacture, specify, purchase, install, and maintain. Emerging as a more environmentally sound (zero emissions) and financially prudent (26 percent more efficient) choice than gas boilers is the electric boiler. This article discusses the benefits and potential advantages of electric boilers as well as the various arguments against them.

Opposition to Electric Boilers

Arguments against electric boilers typically are based on three widely accepted beliefs:

• The electricity used to power electric boilers most likely is generated by a process that creates as much pollution as gas boilers, such as electricity that is generated from coal.

• Electricity is expensive and likely to rise in price.

• Electricity can be unreliable, such as during power outages and rolling brownouts.

These beliefs fail to account for economies of scale, technology and regulation changes, rate discounts by volume and time (demand-side management), and electrical requirements of all boiler types (electric and gas).

Pollution

Shifting energy and pollution production to generators allows energy-consuming societies to benefit from economies of technological and capital scale. Generators are capable of cost-effectively implementing cleaner coal, natural-gas, nuclear, wind, solar, and hydro technologies. For example, combined-heat-and-power (CHP) technologies allow traditional steam turbine generators to achieve system efficiencies of up to 80 percent.¹ CHP generators use waste heat from the primary generating cycle to power heat-recovery steam generators (HRSGs or boilers), which, in turn, drive turbines and create secondary electricity sources. Waste heat also can be used for thermal-energy applications, such as hot water. Finally, waste heat can be used for district heating. Although micro-CHP technologies exist for smaller applications, large generators, power plants, and utilities improve CHP-system cost-effectiveness and efficiency.

Generating and distributing electricity at utilities, coal scrubbing, carbon capture/sequestration, selective catalytic reduction, and electrochemical reduction of carbon may ultimately improve the environmental performance of large-scale, even coal-burner, generators. However, these technologies may never be cost-effective in micro or end-user scales. Generators also are better positioned to comply with existing and imminent pollution regulations. For example, pollution regulations for small gas boilers, especially gas-fired high-pressure steam boilers, require expensive and complicated combustion-control technologies.² These control technologies often add more than 20 percent to the cost of a small gas boiler.³

Control technologies can be difficult to operate and maintain. As a result, end users frequently circumvent pollution controls between inspections or when otherwise possible. This problem is compounded by enforcement complications. Regulatory agencies cannot enforce pollution regulations that apply to every small-gas-boiler owner. However, it is relatively easy to enforce compliance at the generator scale, as there simply are fewer generators.

A national carbon tax or carbon cap-and-trade system could be authorized in the near future. Under a carbon-tax system, operators of carbon emitters, including gas boilers and electricity generators, could face pollution taxes, depending on the pollution-generation method. Electric-boiler users would not face additional taxes. Under a carbon cap-and-trade system, generators would be able to turn their high efficiencies and low carbon-emission rates into money by selling certified emissions reductions or renewable-energy certificates. Carbon credits already are traded voluntarily in the United States on public markets, such as the Chicago Climate Exchange.⁴ Carbon credits are traded involuntarily — as the direct result of regulation — in other parts of the developed world (Kyoto Protocol member countries), particularly the European Union.

Expense

High-voltage technology can help make highly efficient direct-current transmission cost effective. Flexible alternating-current transmission systems can help stabilize voltage and allow grid operators to add load to transmission lines safely.⁵ Additionally, utilities and boiler manufacturers are working together to produce high-voltage (13.2-kv) electrode boilers, which minimize transmission losses and help maximize boiler operating efficiency (up to 99.5 percent).³

The amount of energy and the time in which it is consumed also are key factors in determining electricity's cost. Consuming electricity cost-effectively primarily is a matter of demand-side management. Consuming electricity during peak hours increases costs; consuming it during off-peak hours decreases costs. In addition, the more electricity consumed, the lower the cost per kilowatt-hour. In certain instances, it is possible to cost-effectively implement fuel-switching systems to take advantage of time-of-day discounts. Timing and volume have an enormous and often favorable effect on the price of electricity per kilowatt-hour.

Reliability

No boiler, electric or gas, will operate in a blackout or rolling brownout. Electric boilers obviously need electricity to generate steam or hot water. Gas boilers need electricity for control, pilot, and valve operation.

Benefits

In addition to environmental soundness, electric boilers offer other benefits, including:

• Low cost. Low-emissions gas boilers cost approximately $1,732 per boiler horsepower; electric boilers cost $1,001 per boiler horsepower.³ Electric boilers also are less expensive to install because they do not require stack or venting materials. Some jurisdictions do not even require electric-boiler rooms. Local authorities should be contacted to verify boiler-room requirements.

• Reliable construction. Because of inherent construction differences, electric boilers typically are not subject to the same design-related failures as gas boilers. Electric-boiler vessels do not include firetubes, watertubes, or complicated heat exchangers. Electric boilers' heating elements make direct contact with the water being heated. Therefore, burned-out jackets, cracked tubes, leaky tube sheets, improper combustion, pilot disruption, and gas seepage are not possible.

• Easy maintenance. Electric boilers are easy to maintain for some of the previously mentioned reasons. Like all boilers, they require consistent blowdown, proper water-quality management, and appropriate control maintenance. However, they do not require fire-side cleaning, tube replacement, or regular burner tuning. At most, they require infrequent element replacement or disengagement, which can by performed by most licensed electricians.

  (Most new electric boilers last longer than most new gas boilers because of their construction and ease of maintenance. It could be argued that the slow replacement rate of electric boilers also is good for the environment.)

• Small footprint. Because electric boilers do not require complicated heat exchangers or tubes, their footprints are comparatively small. For example, a 1,000-kw high-pressure cabinet-style electric steam boiler has a footprint of approximately 40 sq ft. Including element-removal space, its footprint reaches approximately 67 sq ft. A gas-fired three-pass dryback scotch-marine steam boiler with the same British-thermal-unit-per-hour input (about 100 hp) has a footprint of approximately 95 sq ft. Including tube-removal space, its footprint reaches approximately 141 sq ft. A difference of 74 sq ft will have a notable impact on the cost of constructing and/or leasing production space, especially in commercial applications.

• Smart metering. Electric boilers can be equipped with smart meters. Meters can track energy consumption, voltage, current, etc. They also can include alarm indicators, Modbus/personal-computer links, and Ethernet connectivity. Integrated smart meters allow energy consumers or utilities to monitor and control electric boilers remotely.

• Precision controls. Almost all electric boilers now include solid-state programmable step controllers, or sequencers. Step controllers control the number and sequence of electrical circuits (heating elements) powered at a given time. In turn, a pressure or temperature controller informs a step controller how much steam or heat is required. Depending on the information supplied by the temperature or pressure controller, the step controller might provide power to two of five total steps. If the process needs more steam, such as with a steam boiler, the step controller might provide power to all five of the steps. Ultimately, the step controller will increase or decrease the power as needed.

  Although similar to a modulating gas burner's operation, step controllers allow greater articulation and precision. In addition, they do not require annual tuning.

• Distributed-energy applications. Electric boilers also can be used reliably in distributed-energy applications, such as wind turbines, photovoltaic solar panels, and other means of electricity generation. For example, a system consisting of several large wind turbines that power two electric steam boilers significantly decreases the amount of fuel transported to a desalination facility in the Ascension Islands.

Potential Advantages

There are several other, although more nebulous, issues to consider when evaluating electric boilers, including sustainable competitive advantage, marketability, and regulatory, litigation, and valuation risks.

Sustainable competitive advantage

Electric boilers create a sustainable competitive advantage because they are the most efficient choice available.

Marketability

Electric boilers are easy to market in the current “green” business climate. Popular programs, such as the U.S. Green Building Council's (USGBC) Leadership in Energy and Environmental Design Green Building Rating System, support the growth and marketability of the electric-boiler market.⁶ Energy consortiums, green-technology alliances, and environment forums also are natural complements for electric boilers.

Regulations

As mentioned previously, electric boilers could help mitigate regulatory, litigation, and valuation risks. Regulatory risk is best exemplified by increasingly stringent pollution regulations. Most pollution regulations probably will be tightened (beyond current best-available control-technology limits) before present-day gas boilers become inoperable. In fact, it is likely that modern gas boilers will outlive any “grandfather” period, too. The end result will be wasted boiler life, capital, and opportunity.

Litigation

According to a paper published by the U.S. Environmental Protection Agency:⁷ “Ground-level ozone (smog) is formed when NOx and volatile organic compounds (VOCs) react in the presence of sunlight. Children, people with lung diseases, such as asthma, and people who work or exercise outside are susceptible to adverse effects, such as damage to lung tissue and reduction in lung function.

“Ozone can be transported by wind currents and cause health impacts far from original sources. Millions of Americans live in areas that do not meet the health standards for ozone. Other impacts from ozone include damaged vegetation and reduced crop yields.”

Because they produce zero emissions, electric boilers likely mitigate litigation risks.

Valuation

Low-efficiency buildings demand risk premiums. High-efficiency buildings command price premiums. The more efficient the building, the greater the premium.

“The benefits of building green include cost savings from reduced energy, water, and waste; lower operations and maintenance costs; and enhanced occupant productivity and health,” according to a paper published by the USGBC.⁸ “Analysis of these areas indicates that total financial benefits of green buildings are over 10 times the average initial investment required to design and construct a green building. Energy savings alone exceed the average increased cost associated with building green. Additionally, the relatively large impact of productivity and health gains reflects the fact that the direct and indirect cost of employees is far larger than the cost of construction or energy.”

It makes sense to invest a fractional amount of additional capital at the outset of a project to capture future value (and, thus, present value). The prospect of not doing so is valuation risk. Furthermore, private and public companies that do not build energy-efficient low-emissions buildings will be subject to higher costs in the future, such as costs related to regulations, litigation, energy consumption, etc. Like any other costs, these will be reflected in their valuations.

Conclusion

Electric boilers are not appropriate for every project. Perhaps counterintuitively, electric boilers are not appropriate in some partially deregulated states, in which consumers have a choice of electric-service provider, and uncompetitive markets have created fixed-retail, free-market-wholesale, and inflated prices. Conversely, some regulated and monopolistic states are home to utilities that encourage the use of electric boilers by offering efficiency, fuel-switching, and time-of-day pricing programs.

The bottom line is that engineers, architects, contractors, and sales professionals should consider electric boilers as cost-effective alternatives to gas boilers. The easiest way to do this is to calculate the operating cost per boiler horsepower per hour for each boiler type.

To calculate an electric boiler's operating cost, determine a project's cost per kilowatt-hour and cost per therm of natural gas. Multiplying cost per kilowatt-hour by an electric boiler's estimated efficiency by 9.809 kw per boiler horsepower equals cost per boiler horsepower per hour:

cost × efficiency × 9.809

To calculate a gas boiler's operating cost, multiply 100,000 Btu per therm of natural gas by a gas boiler's estimated efficiency. Divide the result by 33,478 Btu. Finally, multiply the inverse of the result by the cost per therm of natural gas:

cost ÷ ([100,000 × efficiency] ÷ 33,478)

Examining the results of each calculation gives an “apples-to-apples” comparison of the boilers' operating costs.

Typically, the cost-per-kilowatt-hour threshold for cost-effectiveness is around 7 cents. This usually is possible for industrial electricity consumers. In 2008, the U.S. Department of Energy reported that the average cost per kilowatt-hour for industrial end-users in the United States was 6.36 cents.⁹ This threshold actually may be too low, considering the low upfront cost of electric boilers and the potentially higher costs of enhanced environmental regulation, litigation and valuation risks, etc., when gas boilers are utilized.

The total cost of owning an electric boiler often is lower than the total cost of owning a gas boiler. Perhaps more importantly, electric boilers do not harm the environment or our health.

References

1. U.S. Environmental Protection Agency. Combined heat and power partnership. (n.d.). Retrieved from www.epa.gov/chp/basic/efficiency.html.

2. South Coast Air Quality Management District. (1998, January). Rule 1146.2: Emissions of oxides of nitrogen from large water heaters and small boilers and process heaters. Retrieved from www.aqmd.gov/rules/reg/reg11/r1146-2.pdf.

3. (D. Jackson, personal conversation, n.d.)

4. Chicago Climate Exchange. CCX offsets program. Retrieved from www.chicagoclimatex.com/content.jsf?id=23.

5. 5) ABB Inc. Energy efficiency in the power grid. (n.d.). Retrieved from www.abb.com/cawp/seitp202/64cee3203250d1b7c12572c8003b2b48.aspx.

6. U.S. Green Building Council. Project certification. (n.d.). www.usgbc.org/displaypage.aspx?cmspageid=64.

7. U.S. Environmental Protection Agency Office of Air Quality Planning and Standards. (1998). NOx: How nitrogen oxides affect the way we live and breathe. Research Triangle Park, NC: U.S. Environmental Protection Agency.

8. Kats, G., Alevantis, L., Berman, A., Mills, E., & Perlman, J. (2003). The costs and financial benefits of green buildings: A report to California's sustainable building task force. Washington, D.C.: U.S. Green Building Council.

9. Energy Information Administration. (2008, November). Average retail price of electricity to ultimate customers: Total by end-use sector. U.S. Department of Energy. Washington, D.C.: Energy Information Administration.

Vice president of sales and marketing for Lattner Boiler Co., Sutherland D. Junge is a fifth-generation boilermaker. He has a multidisciplinary bachelor's degree in architecture and political science from the University of California, Berkeley, and a master's degree in business administration from the Tippie School of Management at The University of Iowa.