Two years ago, as the Government announced it was closing its grants scheme for community heating projects and it became clear that there was to be no CHP obligation, the industry seemed about to slip into terminal depression.
The director of the Combined Heat & Power Association (CHPA) summed up the general frustration in the sector, saying: “The CHP and district heating industry cannot understand why the Government would undertake such a U-turn on a programme that is successfully delivering low-carbon heat and power to communities.”
Yet in mid-February, CHP manufacturer ENER-G was celebrating as it despatched its one thousandth unit from its Manchester factory. The announcement has even prompted a Government minister to arrange a congratulatory visit to the factor in March.
Combined Heat & Power is back in business it seems. But why? Investment in CHP is a long term commitment so what is driving this change of attitude? And it is important to stress that this new focus on the technology is being translated into real orders, it is not just a matter of ‘window shopping’ and expressions of (general) interest.
Several factors appear to be encouraging developers to buy new generating units (gensets). These include pure economics, planning and regulatory changes, climate change related issues, and to a degree the London effect.
The economics
For CHP to be viable a number of conditions need to be fulfilled but ultimately the difference between the price of the fuel used – normally gas or diesel – and that of the utility-supplied electricity it displaces is crucial.
This difference, known as the ‘spark-spread’ has to be big enough to repay the cost of the equipment, installation and maintenance. Otherwise a cheaper, conventional boiler system would be specified for the heating load.
Two years ago, that difference was not sufficient to justify much in the way of CHP investment. Today, with energy prices having risen dramatically, there is a sufficient differential between primary fuel and power prices to make developers and consumers think again.
“People seem to have accepted that energy prices are not likely to come down significantly in the longer term,” notes Michael King, Associate to the CHPA. “If price differentials are likely to hold up, that makes the longer term viability of CHP more certain. In addition, many people think that climate change issues are likely to favour low and zero-carbon options.”
When working out the size of unit that is suitable for a particular application, the calculation is normally based on the size of the thermal (heating) requirement. So swimming pools, hospital laundries, etc, provide ideal baseloads.
However, with the advent of so-called ‘tri-generation’ systems (standard CHP is commonly known as co-generation, especially on the Continent) other energy loads can be counted in too.
“Tri-generation systems allow you to use the thermal output for heating in the winter as usual, but in the summer the heat is used to drive an absorption chiller, providing cooling to the building,” explains Paul Hamblyn, Head of Group Market Development at ENER-G.
“However, the capital costs of tri-generation sets are quite high, so the economic evaluation needs to be thorough. That having been said, the use of tri-generation is definitely increasing.”
Building Regulations
The revised Building Regulations, which came into force in April last year, require a significant improvement in energy performance. This is expressed in a Target Emissions Rating (TER). Among the options for reducing emissions is the installation of a CHP system as it is much more efficient than conventional systems per delivered kilowatt hour of energy.
“Although CHP is not a renewable energy source unless you use biomass as a fuel source, its greater efficiency and lower emissions will help building developers to achieve the TER for the building more easily,” explains Paul Hamblyn.
London is also playing its part in driving the resurgence of this market. Ken Livingstone, London’s Mayor, has made tackling climate change a priority.
Among a number of recommendations regarding CHP and community heating in the revised London Plan is the following: “Large residential developments will offer economies of scale to achieve particularly high environmental standards and very low carbon emissions. Unless there are exceptional circumstances, Combined Cooling Heat and Power should always be incorporated.”
And again, “Every opportunity should be taken to incorporate CHP infrastructure in new developments.” Other authorities are looking at the changes being incorporated in London planning and considering if they could be introduced in their own localities.
Climate change issues
Planning Policy Statement: Planning and Climate Change (Supplement to PPS 1) was published for consultation on 13 December by DCLG. Released alongside the PPS was a further consultation document Building a Greener Future: Towards Zero Carbon Development which builds upon the Chancellor’s recent Pre-Budget Report statement that all new homes developed will be zero carbon by 2016.
Also published on that day was the final version of the Code for Sustainable Homes which includes the use of CHP and district heating as options to help homes comply to the Code’s higher rating standards. These documents show that the Government is committed to low and zero carbon energy solutions such as CHP. Developers are aware that this is the direction that policy will take over the coming years.
Government bodies, both at central and local level are increasingly looking for ways to reduce their carbon footprints, especially in regard to the premises they lease. And it is not just Government.
“People are becoming a lot more conscious of their carbon footprint,” says Paul Hamblyn. “It is steadily rising up through the list of priorities.”
http://www.chpa.co.uk
http://www.energ.co.uk