Combined Heat and Power factsheet

CHP systems can be highly efficient as they reduce transmission and distribution losses that occur from centralised power generation. They also make use of the heat that would otherwise be wasted when generating electrical or mechanical power. This allows heat requirements to be met that would usually need additional fuel to be burnt, therefore saving money and resources.

Combined Heat and Power production

The UK Government announced, in 2000, a target of achieving at least 10,000 megawatts electrical (MWe) of 'Good Quality' CHP capacity by 2010. Good Quality CHP refers to CHP generation that is energy efficient in operation. Total installed CHP capacity in the UK increased from 2,000 MWe in 1990 to more than 5,500 MWe at the end of 2006, with at least 90% of the total capacity located on about 400 industrial sites, according to Defra. More than 1,000 smaller-scale, buildings-related installations accounted for the remainder.

For many organisations, CHP is the measure that offers the most significant single opportunity to reduce energy costs and to improve environmental performance with existing users of CHP typically saving around 20% of their energy costs.
Source: Defra website

The benefits and reasons to implement Combined Heat and Power

Companies are facing a range of pressures relating to profitability, legislation and environmental compliance, and CHP can help address these issues. Benefits of investing in CHP currently include:

Climate Change Levy exemption
Enhanced Capital allowances
Exemption from business rating of CHP plant and machinery
CHP typically has an efficiency of over 80%
Can save up to 30% on energy bills
Can save up to 20% on carbon emissions
Increases fuel supply security
Provides low temperature (up to 90ºC) hot water heating and space heating
Power an absorption refrigerator to provide cooling in summer, giving tri-generation
Demonstrates that a company’s activities are environmentally friendly, both to the marketplace and to the public at large

Small and medium enterprises may be eligible for a Carbon Trust interest-free Energy Efficiency Loan
For further details visit Quality Assurance for Combined Heat and Power.

(Source: Defra, Carbon Trust and BIOMASS Energy Centre)

The disadvantages of Combined Heat and Power

Generally, small-scale thermal electricity generation has low efficiency rates compared to large-scale generation.

New generation technologies for small-scale thermal electricity generation are being developed but conversion efficiencies remain low compared to heat only applications.

There needs to be a legitimate use for the heat produced during electricity generation, and consideration given to what this will be used for during summer months when heat demand is likely to be reduced.

Some manufacturers have used the heat to drive an absorption chiller to provide cooling when heat is not required; this is known as Tri-generation.

An alternative approach is to generate electricity only when there is sufficient demand for heat, and use electricity from alternative sources at other times. However, this may extend financial payback times for the installation.

(Source: BIOMASS Energy Centre)

How suitable is CHP?

To be able to determine the suitability of CHP for a particular process or application a detailed appraisal of heat and electricity requirements, along with other factors, should be undertaken. According to the Carbon Trust, a feasibility study should be carried out on a site-by-site basis.

Installation

According to the Carbon Trust, the key factors in the decision to install CHP include:

Running time: in order to be cost effective the system ideally needs to run for a minimum of 4,500 hours/year
Total capital cost
The capital cost per kW of output
The ability to use the heat generated by the CHP system
Fuel price is critical to the economic viability of CHP
The relative price of the fuel used to the price of electricity and heat produced from other sources

Considering installing CHP?

CHP is worth considering at a time of reinvestment or process change. Typically, the payback on investment in CHP is more than five years

Consider installing CHP when the current market conditions favour investment in CHP, and the opportunities offered by CHP become financially attractive

(Source: Carbon Trust)