Introduction
Why does a major biotechnology company in the Boston area decide to take a nearly unprecedented move and install an entire power plant in the basement of its new building? The answer to that question is not a simple one – but is nonetheless important for all businesses in and around the Boston area to address as they assess their own energy needs. The “brave new world” of energy management will require all companies and institutions to be smarter, more self sufficient, and more flexible in terms of how they assess and manage their energy needs. If they do not, they will be forced to spend more money and incur a greater risk of losing power.

Biogen Idec's decision to build a co-generation plant in the basement of its new building in Cambridge was based on an analysis of the needs and the risks as the business continues to build. Only with the expertise of a company like SourceOne, Inc., one of the nation's leading private utility companies, was any of this able to happen. Biogen's decision represents an opportunity for other businesses in congested urban areas, as they go forward, to think innovatively and creatively and to operate more efficiently, with less risk and less cost, to meet their energy needs.

What is Co-Generation?
Co-generation, a process and technology that has been available for at least a century, allows one utility plant to produce more than one form of usable energy. For instance, such plants will burn one type of fuel, recover heat from that combustion, and then use it to generate another form of energy, often steam. This means that co-generation plants are much more efficient than many of the older power-producing generators. Co-generation can improve a plant's efficiency as much as 85%. Increased efficiency not only means lower costs for the consumer, but produces a much less severe impact on the surrounding environment. Greater output efficiencies from new plants translate into reduced ratio of emissions to the air.

Additionally, it is a sustainable form of energy generation, something that is becoming more and more necessary for businesses and individual consumers alike to survive in today’s economy. Improved reliability means reduced vulnerability to outages and the economic burden attributable to them. Loss of product and production restart costs can be enormous vulnerabilities to the biotech and biopharmaceutical industries. For these economic and environmental reasons, and because of the increased push by regulators and public officials to create distributed generation energy resources in congested areas, co-generation is an old idea whose time is fast approaching.

Biogen Idec Inc. is a global biotechnology leader with leading products and capabilities in oncology, neurology and immunology, and is committed to transforming scientific discoveries into advances in healthcare. The company's core capabilities include drug discovery, research and development, biomanufacturing, and a global commercial infrastructure.

A company with facilities all around the world, Biogen maintains one of its two major research centers in Cambridge, Massachusetts, adjacent to intellectual leaders at Harvard University and the Massachusetts Institute of Technology (MIT). The company's second major research center is in San Diego, California, a state that has also dealt with energy reliability issues. But this Cambridge location—which gives Biogen Idec a competitive advantage—also presented some initial challenges with its aging energy infrastructure and deregulated energy market. Cambridge provided Biogen the cultural and intellectual climate it needed, while its legacy energy infrastructure presented a tremendous risk for its operational needs. For Biogen, reliability of service was paramount.

In 1999, Biogen Idec called upon SourceOne, Inc. to help assess their energy needs. In Massachusetts, deregulation was looming on the horizon and it was clear that it would have a huge impact on the future of Biogen. When this energy deregulation took shape in 2000 and 2001, the professionals at SourceOne were able to project that it was going to increase instability to the energy service that Biogen relied on heavily. That instability was caused not only by capacity concerns, but by the financial troubles of those seeking to capitalize on deregulation by purchasing key power plants.

In 2003, SourceOne recommended that Biogen undergo a feasibility study to see if co-generation was indeed a viable option for the company. SourceOne recognized that co-generation had its challenges: for a co-generation plant to work properly, it needs to be geographically close to where its power is consumed. Additionally, although a mature technological concept, co-generation was then seen as an unconventional idea in a new marketplace of deregulated energy.

But there were also factors in favor of co-generation: Biogen's primary need, still to this day, is for reliable energy in order to maintain its biomanufacturing and research capabilities. Major blackouts that hit the U.S. in 2001 and 2003 helped to convince the decision-makers at Biogen that they had to take control of their energy generation. Furthermore, as SourceOne explained, a declaration of bankruptcy by the company owning the closest power plant, the Kendall Station, convinced the biotech business that their energy future was not in their own control.

SourceOne believed Biogen was a good candidate for co-generation because, logistically, they fit key requirements. By purchasing property for a new building, situated close to the rest of campus, Biogen's co-generation facility would be in a contained area close to where the energy would be consumed and have a predictable load. The metrics for both steam and electricity also lined up nicely. Even more importantly, Biogen Idec had the kind of corporate culture that encourages innovative problem-solving and the kind of people who can swallow the recommendations of knowledgeable advisors—like SourceOne—and then implement them.

The Facility
Biogen Idec’s co-generation facility is located in the basement of its new building—30 feet below ground level. The facility will provide three sources of electricity as well as three sources of steam to the Cambridge campus, therefore providing the reliability that the needs of Biogen demand. Additionally, the facility will stay connected to the district system, thus relieving stress on the region's power grid.

Costing around $12 million in capital, the plant will save Biogen at least $3 to $4 million annually. It will produce 5.6 megawatts of electrical energy, and 120,000 million pounds of firm steam capacity. Furthermore, SourceOne, who oversaw development of the project, required two additional boilers to ensure that redundancy was added to the system. It will be one of the most reliable energy generation plants in the area.

Recommendations for Energy Needs
Unfortunately, energy cost increases and volatility are phenomena that are here to stay. Businesses around the region and across the country must therefore learn how to deal with each of them in order for their industries to thrive. SourceOne's experience working with Biogen Idec can teach a number of lessons to businesses when it comes to their own energy management needs.

1. Assess. Analyze. Work to understand the complexity of the energy market, then assess and analyze your own company's energy use and future needs in light of how they impact your business. Unlike many major companies, cost was not the primary factor for Biogen. Reliability was. But Biogen needed to first come to terms with what was contributing to an unreliable energy system—deregulation, the financial problems of outside actors, and an aging physical infrastructure.
2. Even if you cannot change your infrastructure, you can change your operating behaviors.
3. Think creatively.
4. Know what you don't know. Learn from an expert.

The View from Biogen Idec
Ed Dondero, Director of Facilities for Biogen Idec, good-naturedly claims that the decision to install a co-generation plant in the company's new facility was "rooted in desperation." Having made a serious commitment to maintaining their presence in Cambridge, Massachusetts, the biotechnology company turned to Brian Casey, CEO of SourceOne, Inc., to help them address some of the considerable challenges they faced when it came to their energy needs.

"Our long-term contract with the local steam company was not favorable," says Dondero. "The other options, like only installing boilers to produce steam, were problematic. It forced the project to become bigger than we intended, but ultimately, it was the right time for the co-generation plant." According to Dondero, the co-generation plant makes financial sense—initially, it appeared as if the plant would save Biogen Idec $3 million annually, but it has become clear that it will actually save them $4 million annually. The plant will pay for itself within 3 years. "As utility rates rise, this decision has become more lucrative," says Dondero. As for the environmental benefits, Dondero believes that the co-generation plant's efficiency helped ensure a smoother ride through the Commonwealth of Massachusetts' permitting process.

Dondero has two recommendations for any business exploring the co-generation option:

1. Align yourself with someone who can objectively identify the alternatives. So many projects fail because they take a narrow view of the whole selection process. SourceOne, a private utility company that has acted as an outsourced energy manager for a variety of facilities, was the perfect choice for Biogen because of the breadth of their experience.
2. Get out in front of the issues associated with this kind of a project, particularly some of the political concerns. Because this was an innovative option, both companies recognized a need to be explaining to the surrounding community and permitting agencies why this was such a valuable development. It took some high level discussions, between Biogen and the Commonwealth of Massachusetts, but it happened because of careful planning.

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