Deregulation of major energy markets like California opened the door for distributed generation (DG) on commercial properties. Although expensive to install, DG generates electricity more efficiently and at a lower financial and environmental cost than power from the traditional grid. A cogeneration DG system, preferred by Equity Office, also produces thermal energy (hot water and steam) as a byproduct, which in turn is used by absorption chillers to cool and heat a building. So far, 19 cogeneration systems have been completed nationwide, 15 of which are in California. These cogeneration systems are designed to generate about 20 to 25 percent of a building's energy requirements, resulting in a lower load profile. By using less utility energy during peak hours, Equity Office is able to purchase electricity at cheaper rates.

The goals and operational benefits of (DG) systems include the delivery of improved power reliability, cleaner electric power, and below market energy rates, in an environmentally friendly manner.

One Market Plaza in San Francisco was one of the first projects undertaken by Equity Office. The 1.5 MW cogeneration system is one of the largest ever to be interconnected to a network distribution grid in the United States. The system consists of three 500 kW generators with waste heat recovery that produce 4000 lbs. of steam per hour. Equity Office guaranteed that the system would run at 62 percent efficiency -- by comparison, central power efficiency can be as low as 27 percent. Since the original install, Equity Office has upgraded the system to allow tenants to use it for backup power in the event of a utility power failure.

Based on the success of its 1.5 MW cogeneration project at One Market Plaza, Equity Office installed another DG system at its nearby property 201 Mission in San Francisco. Equity Office contracted Northern Power System to design, engineer and build a turnkey, grid-connected on-site combined heat and power (CHP) system.

The 750 kW system features two 375 kW natural gas-fired engine generator sets. Waste heat (thermal energy) from electricity generation is used to produce hot water for the building's heating system. Cogeneration supplies about 40 percent of the building's electricity and 90 percent of its annual steam demand. Because of the heat recovery, the cogeneration system's overall fuel efficiency is about 80 percent. This dramatically increases fuel efficiency while reducing greenhouse gas emissions by up to 40 percent.