Wareham Development In the News

Microturbines made sense as a source of onsite power for a
mixed-use project.
By Dan Rafter
Geoff Sears admits that he works for an outfit that likes to experiment.
Wareham Development rarely shies away from trying anything new as long as
it makes good business sense, says Sears, a partner with the San Rafael, CA–
based company. “Someone needs to be the leader in these things.”

Wareham Development’s EmeryStation project—which comprises more than
400,000 square feet of office, laboratory, and retail space in Emeryville, CA—
features three microturbines boasting a combined 750-kW capacity. The
microturbines provide two development facilities, EmeryStation 1 and
EmeryStation North, with more than 30% of their baseload power needs and
80% of their thermal load.

The project, though now considered a major success, was a bit of a risk for
Wareham. The EmeryStation developments sit in the middle of a busy urban
environment. The tenants include biotechnology companies, software
developers, and retailers. Microturbines, for all their benefits, are far more
common in rural areas, far from any neighbors that might complain about the
noise, or in industrial centers.

The microturbines’ manufacturer, Davidson, NC–based Ingersoll Rand Energy
Systems, a business of Ingersoll Rand Co., was embarking on an experiment
of its own when it agreed in 2005 to supply the three microturbines to the
EmeryStation project. The mixed-use development marked the first time that
Ingersoll Rand worked directly with a developer to install microturbines rather
than with a specific property or business owner. Ingersoll’s work on
EmeryStation also marked the first time that the firm took on a project where
not only would it install the microturbines but would own and maintain them,
too, selling the electricity and thermal energy they produced back to the client.
Officials with Ingersoll Rand and Wareham Development celebrated an open
house and dedication of the project in September 2006. Now that more than a
year-and-a-half has passed since Ingersoll Rand and Wareham first discussed
the project, the question is an obvious one: Have the experiments by both
companies been successful?

Officials with both Ingersoll and Wareham offer the same answer: “Yes.”
“We hope that this helps motivate other developers to consider microturbines
for their projects,” says Roger Larson, a manager with Ingersoll Rand. “In my
past experiences, developers haven’t been that interested in things that reduce
energy costs. They assume they can pass these costs on to their tenants. But
in this case, the developer viewed having the microturbines—and the potential
they brought in reducing energy costs—as an advantage. Developers are
looking for that little edge over their competitors. This is one edge.”

Officials at Wareham, in fact, are so pleased with the performance of the
microturbines that they plan to order four more to provide onsite power to a
new building that was under construction late this spring on the EmeryStation
campus.

 “We feel good about the way the other microturbines are running,” Sears
says. “We look at our business as a service business. We are charged with
creating environments in which companies can operate profitably. They make
some money, some of which they give us as rent. By providing them a way to
save some money on their energy bills, we think we are doing more to provide
them with the kind of service  they need.”

The Project
Rising from the growing biotech community of Emeryville, EmeryStation covers
a total of 440,000 square feet. Its offices, laboratories, and retail spaces come
equipped with such amenities as wireless infrastructure and operable
windows. Adding microturbines to this mix made sense.

“There are always risks to experimentation, but this experiment made sense,”
Sears says. “It’s harder to be a leader. It’s easier to be the 100th person to do
something. We are a class-A office and lab space in an urban environment.
There are fewer microturbines running in environments like ours. But we
thought it would be a real benefit to our tenants to provide them with power
that they can use.”

A pair of 250-kW microturbines provides 24-hour power and heat to
EmeryStation 1, while a third 250-kW engine does the same for EmeryStation
North. This installed capacity of 750 kW provides about one-third of the
electricity and more than half of the heat used by both buildings. All three
microturbine units are fired by natural gas.

Ingersoll Rand and Wareham Development signed a 10-year Environmental
and Energy Services Agreement to handle the inevitable maintenance issues
that will come up in the future. Under the agreement, Ingersoll Rand is
considered the owner of the three engines and will handle the design,
permitting, and electrical interconnect portions of the project. The agreement
also allows Ingersoll to sell the electricity and heat that the microturbines
produce back to Wareham at reduced rates.

The microturbines made sense when Wareham officials considered the mix of
tenants at the EmeryStation developments, Sears says. Many of the
businesses in the centers are biotech companies. Software developers, too,
hold much of the office space. All of these businesses consume a lot of power,
he says.

Many of them also remember California’s history with brownouts. They know
that Pacific Gas & Electric Co., the public utility serving much of California, has
had problems in the past with providing reliable service.

Having microturbines as an onsite source of power generation makes sense
for these businesses, Sears says. The businesses tap into the 750 kW of
microturbine-generated power before they accept energy from the public
utility’s grid. If there is an emergency, such as a blackout or brownout, the
onsite microturbines will continue to provide power for both EmeryStation
campuses.

“Our utility has had problems,” Sears says. “There is a risk with receiving your
power from it. The distributed energy gives us diversity away from the public
utility. It also is a supplement to the public utility. We do remain attached to the
grid, and we can get every ounce of power we need from the utility. But the
distributed energy from Ingersoll Rand is the first energy we take. It’s additive.
Pacific Gas & Electric is still there to give us its power, but it is better to have
more than one source.”

The microturbines also provide tenants some relief from rising energy bills.
Wareham Development officials pay less for the onsite distributed energy than
they do for the power provided by Pacific Gas & Electric. Most of these
savings, Sears says, flow to the tenants of EmeryStation 1 and EmeryStation
North. This is also a benefit to Wareham itself, Sears adds. It’s just one more
benefit that the developer can tout when promoting EmeryStation to potential
tenants.

Larson says he expects this will become an even greater selling point in the
future, as businesses and developers grow increasingly frustrated not only with
high energy prices but with the constantly fluctuating nature of these costs. It’s
hard to budget accurately for energy prices when their costs are shifting so
wildly.

Developers providing onsite power sources, then, offer their tenants both cost
savings and greater certainty of how high the power bills will be every month.
“The developer here looked at the energy prices, saw them going up so high,
and figured that providing these microturbines would give it an advantage
when trying to bring tenants to the project,” Larson says. “The developers
decided that if they can provide their tenants some reduction in their energy
costs and share with them the awareness that this energy they are getting is
also greener from an environmental standpoint, they can use it as a selling

The Green Benefit
Onsite power, of course, is considered a green source of energy, one that has a much
lower negative impact on the environment. It doesn’t tax the existing public grid.
Microturbines are especially green. They are gas-fired and, therefore, a clean power source.

For proof of the green benefits of microturbines, one has only to take a quick look at the three operating now at Emery-Station. Combined, the three Ingersoll Rand MT250 microturbines generate enough electricity to power 100 homes, simultaneously offsetting 241 tons of carbon- dioxide emissions on a yearly basis. The three microturbines, then, offer the equivalent environmental benefit of either planting 55 acres of forest or removing 31 cars from the road.

This is a benefit to the environment. But does that translate into a positive for
developers or site owners? Do they care about green benefits? After all,
business professionals, including developers and individual companies, are
usually more interested in economic benefits than they are in promoting green
technology.

Sears, though, says that, yes, the microturbines’ green qualities did play a role
in Wareham’s decision to go with them. Wareham officials were well aware of
the environmentally friendly aspects of microturbines, Sears says, and while
their green nature wasn’t the sole reason for Wareham’s choice of engines, it
was at least one factor.

“I refer to it as a sort of ‘psychic income,’” Sears says. “We know that these
engines are greener. These are very efficient microturbines. They are all gas-
fired, which is cleaner than the mixed bag of legacy power sources that our
utility has. This is a cleaner source than what we are using from Pacific Gas &
Electric. We are scavenging the waste heat from our development to create
heat for our buildings. That’s a nice green psychic benefit.”

Proponents of onsite power say that the environmentally friendly qualities of
microturbines alone aren’t enough to boost their popularity. Instead, it’s the
combination of all the benefits that microturbines bring—their green qualities,
economic advantages, and reliability—that will help them capture the attention
of more developers, property owners, and businesses.

“We definitely believe that we will see more developers doing what Wareham
is doing,” Larson says. “We think we’ll see it particularly in those areas of the
country where they have these higher utility bills.”

The reason? According to Larson, it’s the entire package of benefits that is
causing developers to explore microturbines.

“In EmeryStation, the microturbines are designed to pick up part of the load in
A pair of 250-kW microturbines provides 24-hour power and heat to EmeryStation 1.
case the utility drops out,” he says. “We are providing a reliability function here,
too, rather than just a reduction in energy costs. Developers can tell their
tenants that they can tie into this premium power. This is power that is backed
up. If the grid goes down for a long period of time, the microturbines pick up.
The tenant never sees even a blip in his lights or a blink in his computers. And
it’s a clean energy. They are not burning diesel fuel.”

Tackling a New Project
Before installing the microturbines, officials with Ingersoll Rand had first to
study the EmeryStation project to make sure that the engines would provide
not only the power that the mixed-use development needed, but that they
would also fit in well within the business park environment.

Officials with Ingersoll determined that EmeryStation, because it was serving
mainly companies specializing in biotechnology, needed a significant level of
temperature and humidity control as well as reliable electricity. 

These requirements practically called out for microturbines, Larson says.
“We are always looking for these clients and customers that have this 24-
hours-a-day, seven-days-a-week need for both electricity and thermal energy,”
he says. “The biotech marketplace is traditionally a very good source for this
opportunity. That was confirmed as we took a look at its historical usage both
of energy and natural gas in boilers.”

Ingersoll officials also had to do their research regarding Pacific Gas &
Electric, which provides power to EmeryStation. This project marked the first
time that Ingersoll Rand had done an interconnect with the utility.

It wasn’t difficult, though, to sell Pacific Gas & Electric on the plan. The three
microturbines aren’t just kicking in during the utility’s peak-demand hours. The
engines instead are constantly relieving the public utility’s load, 24 hours a
day. They are providing baseload energy and easing, at least a bit, some of
the demand placed on Pacific Gas & Electric.

“That is helpful. The utility likes that,” Larson says. “I think we’ve established a
very good relationship with Pacific Gas & Electric. They were very helpful
during the entire process. I found them to be extremely cooperative. But it was
a learning procedure. They had to understand how microturbines work. We
had to understand what their system requirements were.”

Larson expects his company’s relationship with the utility to get stronger.
Ingersoll this summer was completing a second interconnect with the public
utility grid for a new microturbine project with Wareham across the street from
EmeryStation 1 and EmeryStation North. The new building, EmeryStation
East, will feature four microturbines. Again, the microturbines will relieve some
of the pressure from Pacific Gas & Electric.

“I think the utilities are getting more familiar with microturbines and the benefits
they provide,” Larson says. “As time goes on, it’ll be even easier to convince
them of how beneficial microturbines can be.”

The first group of microturbines has been running for more than a year at
EmeryStation, giving officials with Wareham Development and tenants at the
mixed-use project the chance to see firsthand how the engines work.

The Early Reviews? All Positive
“We haven’t had any problems with tenants using the energy,” Sears says. “There have been no problems with turning on the lights. It’s been seamless. Our customers who are using the onsite power have had no disruptions at all. That is why we are interested in using microturbines again. We’ve already cut our teeth. We might as well do it again.” Larson says he isn’t surprised by the positive reactions. Tenants certainly appreciate knowing that their offices will remain in operation even if the public grid suffers a major outage, he says.

This doesn’t mean that the microturbine project didn’t entail some challenges, the main one being that of noise levels. Microturbines, for all their benefits, are not noise-free.  That’s not a problem if microturbines are operating in an industrial complex or in a remote location. But if they’re operating in the midst of an urban area in a complex where tenants are trying to do business, then it is a problem. In EmeryStation, the microturbines are located 6 to 8 feet from building walls. To negate the noise of the engines, Ingersoll Rand crews installed exhaust silencers. The silencers not only muffle the engines’ noise levels, but they help keep exhaust away from the surrounding buildings.

This one step resolved the noise issue. “We’ve had no problem at all so far from the tenants with regard to the noise issue,” Larson says. “For commercial properties like this one, sound is a big issue. It was probably the biggest issue we had to address.” For his part, Sears was pleased that Ingersoll Rand was willing to adjust its microturbines to meet the needs of EmeryStation’s tenants. “They decided to do the updating and install the new pieces,” Sears says. “It worked. It was another experiment, but it worked.” Ingersoll Rand officials also had to deal with aesthetic issues. Again, when microturbines are operating in industrial sites, it doesn’t matter as much what they look like.

But when they’re humming away in such commercial sites as EmeryStation,
aesthetics plays a far bigger role. Ingersoll Rand solved the problem by
providing microtubines that are sleek and efficient. These are not boxy
machines. They look clean and lean.

“You can see the equipment as you go over the bridge. It is visible from the
street. But to me, it looks good,” Larson says. “Maybe I’m biased, but from a
packaging standpoint it’s a very nice-looking piece of equipment that is really
not an eyesore in any way.”

Sears agrees. He also agrees that the experiment Ingersoll Rand and
Wareham Development embarked upon back in 2005 has proved a success.
“Putting microturbines into an office-and-lab-space environment was an
experiment,” he says. “We knew there would be some learning curve. But
while the challenges we had may have taken up more time, they didn’t cause
our tenants any power disruptions. There were no real disruptions at all. We’re
happy with this project. I see no reason why we wouldn’t turn to microturbines
again.” 

Based in Chesterton, IN, Dan Rafter is a frequent contributor to Forester
publications.
DE - September/October 2007

About Wareham Development

Wareham Development is committed to the long-term economic and environmental vitality of the communities where we do business. During the planning process, we work closely with city and state agencies to ensure that each project provides maximum benefit to its surrounding community. And, unlike many developers who build projects only to sell them, we retain ownership of the majority of our developments, many of which have come to define the thriving technology corridor between the Bay and Richmond-San Rafael bridges.

The Wareham vision encompasses the spark and promise of small companies on the verge of growth, and large corporations whose fortunes span the globe. We are proud of our associations with all of our tenants, and feel deeply privileged to play a role in their success.