When workers at Cox Interior in Campbellsville trim wood while making doors, molding and stair parts, they’re not just crafting building products. They’re also creating fuel to help power the factory.
The facility has a combined heat and power (CHP) system that burns wood waste in producing electricity for lights and machines, and steam to heat wood-drying kilns.
Employees toss leftover pieces of wood into bins to be fed into the burner.
“Nothing gets thrown away here,” said Ruth Logsdon, environmental director for Cox Interior.
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The business generates 75 to 80 percent of the electricity it needs, and sells power back to East Kentucky Power Cooperative at night when the system produces more than the factory needs.
Combined heat and power, also called co-generation, is the on-site production of electricity and heat from one fuel source.
Supporters say it can provide a number of benefits, including cheaper electricity; increased efficiency and less loss of electricity during transmission; waste reduction; and lower overall emissions.
“It is better for the environment because you use less fuel overall,” said Cheryl Cole Eakle, senior engineer at the Kentucky Pollution Prevention Center.
Producing power and heat separately has an efficiency of about 40 percent, compared to 70 percent or higher for co-generation, according to the state Energy and Environment Cabinet.
More energy is lost as wasted heat during power generation in the U.S. every year than the total energy use of Japan, but CHP cuts the amount of wasted energy nearly in half, according to the U.S. Department of Energy.
Cox Interior is one of only about 10 facilities in the state with CHP systems. The largest is the Domtar paper mill in Hawesville.
Others include chicken and soybean-processing facilities, a chemical manufacturer, wood-products companies and Fort Knox, which installed CHP units to increase energy security after a 2009 ice storm knocked out power to some buildings for days, according to the federal energy department.
Co-generation is much more common in the Northeast and other areas of the country where electricity costs more than in Kentucky, which has long had among the lowest rates in the country.
More than 4,000 factories, commercial buildings and other facilities use CHP in the U.S.
There is potential for significantly more CHP generation in Kentucky.
The systems in place now have the capacity to produce a total of 135 megawatts of electricity, according to a list from the federal energy department.
One study estimated businesses in the state have the technical potential to generate nearly 25 times more megawatts of electricity with CHP systems than the current level, according to information from the state Energy and Environment Cabinet.
The fact that it would be technically possible doesn’t mean it would be economically feasible for many facilities, but there is interest in boosting co-generation in Kentucky.
The state Department for Energy Development and Independence encourages development of CHP systems, said Michael Kennedy, an assistant director of the department.
The department took part in a program beginning in 2013 to figure out the barriers in policies, regulation and economics that keep businesses and public agencies from putting CHP systems in place.
The Kentucky Association of Manufacturers, the Kentucky Pollution Prevention Center and the Southeast CHP Technical Assistance Partnership participated as well.
One key goal was helping the state’s manufacturers hold down costs and remain competitive.
“This is one of the components we think will need to continue to be explored,” Greg Higdon, president of the Kentucky Association of Manufacturers, said of CHP systems.
In 2015, the legislature approved letting local governments create what are called Energy Project Assessment Districts, which create a way to offer businesses low-cost financing for CHP systems, with their property tax assessments as security. Seven communities have set up districts so far, Higdon said.
There also likely will be a proposal in the 2017 legislature for tax incentives for energy-efficiency projects that could boost use of CHP.
Higher electricity prices also could make CHP a possibility at more businesses, Kennedy said.
Co-generation at Cox Interior has consistently produced benefits since it was installed in 1994 at a cost of $5 million, according to the company.
The system produced net savings of about $1.2 million in 2014 and 2015, Logsdon said. The return has been even higher at times, said Barry Cox, chief executive officer of the company.
“For 25 years, this thing has been the biggest savings of anything that we’ve invested in,” Cox said.
Cox, whose father Charles E. Cox started the business in 1983, owns it with siblings Lanny Cox and Kay Cox Legg.
The business has more than a dozen warehouses in the Eastern U.S. and 450 employees. That’s less than before the 2008 recession sapped the home-construction business, but employment has rebounded significantly from 2010, Logsdon said.
In Campbellsville, workers feed wood waste into two boilers using separate conveyors, one painted University of Kentucky blue and the other University of Louisville red.
The boilers burn at 2,000 degrees or more, heating water to create steam that drives turbines to generate electricity for the factory, which has more than 20 acres under roof.
The system, which includes emission controls, uses wood pieces, bark and sawdust from the factory. Cox also buys wood waste from sawmills and accepts tree debris from Danville.
The plant has a machine to grind pallets and other waste into pieces small enough to burn efficiently. The company doesn’t burn any treated wood.
The system could probably produce all the electricity the plant would need, but the top priority is heat for the 13 drying kilns, so some steam that could turn a turbine to make electricity is diverted, Logsdon said.
The company generates electricity for 5 to 6 cents per kilowatt, while the cost to buy electricity is at least 11 cents, Logsdon said.
In addition to supplying lower-cost power and steam, the system allows Cox Interior to buy less expensive green lumber and dry it, and it gets rid of waste economically.
“It fulfills many beneficial needs,” Logsdon said of the CHP system. “It’s absolutely a major benefit, and I don’t think the company could do without it and be as economically stable as we are today.”