DG Cogen Partners, LLC (Cogen) is a California-based installer and operator of energy efficient power systems, including cogeneration systems. Hess Microgen (Hess) designs, manufactures and sells cogeneration units, including the Hess Microgen 200 Packaged Cogeneration System (Microgen 200), which runs on engines made by Daewoo Heavy Industries America (Daewoo) (now Doosan Infracore America).
Cogeneration technology, also known as combined heat and power (CHP), uses fuel (usually natural gas) to produce electricity and, unlike traditional power systems, recycles and uses the heat released in the process. By some estimates, if the energy lost in the form of waste heat were harnessed it could provide one-fifth of the country’s energy needs.
Earlier this month, Cogen sued Hess, Daewoo, Doosan Infracore America and Advanced Power Distributors (APD) in federal court in San Francisco for damages Cogen allegedly suffered due to a fleet of faulty cogeneration units. The complaint (cogencomplaint.pdf) alleges, among other things, false advertising, unfair competition, breach of contract, breach of warranty and fraud.
In 2004, Cogen purchased a fleet of Hess cogeneration units, including Microgen 200s, from a third party, becoming the assignee of the third party’s purchase agreement with Hess. According to the complaint, Hess agreed to provide long-term maintenance for the units as required.
Cogen alleges that, prior to and at the time of its purchase, Hess misrepresented the capabilities of the cogeneration units through statements, technical documents and advertising and failed to disclose flaws in the products. In particular, Cogen says Hess stated that the units contained “rich burn” engines that generated high thermal output when the engines were actually “lean burn,” which provide lower output and require more steps to meet regulatory compliance.
The complaint further alleges that the units subsequently failed completely or did not generate electricity at the rated capacity. After repeated notifications and requests for Hess to remedy the problems, instead of repairing or replacing the units, Hess recommended that Cogen contact Daewoo to replace the engines. Daewoo, through its distributor APD, retrofitted the cogeneration units with new engine heads, but Cogen alleges that the replacements did not correct the operational problems.
Cogen has asked for damages to compensate for its lost revenue, the purchase price of the units and retrofit parts, the cost of service and maintenance and other business losses.
If the allegations in Cogen’s complaint are true, it would be a shame. Energy efficiency technology, particularly recycling waste heat by congeneration, is too important to be compromised by false claims, faulty equipment and shoddy service.