Coalition could get behind CHP

The Feed-in Tariffs (FiTs) that came into effect in April 2010 were a welcome development, but also a missed opportunity. Pure renewables such as wind, photovoltaics (PV) and hydro power were the big winners, but only very small-scale combined heat and power (CHP) was supported, which confused a lot of energy experts.

However, during the election campaign the Conservatives emphasised that they would support a bolder tariff scheme and indicated they would provide greater support for CHP. The inclusion of micro-CHP systems in the original scheme was welcome, but the complete exclusion of mini-CHP led to some serious head scratching.

“We strongly believe that larger CHP systems are deserving of support through the FiT programme,” said Phil Jones, Chairman of the CIBSE Energy Performance Group. “There is a real danger that this will skew the market away from larger systems that deliver significant carbon savings. This surely cannot be the consequence the Government intended. It is, quite simply, wrong to have a system that incentivises small scale systems at the expense of larger ones that can deliver far more carbon savings.”

Domestic micro-CHP units, with an electricity generating capacity below 2kW, receive 10p for every kWh they generate and use on site, and 3p/kWh for surplus electricity sold back to the Grid. Originally, it was understood that mini-CHP (up to 50kW electrical capacity) would also be included, but there was a late change of plan.

Vince Cable, now in position as Secretary of State for Business, Innovation and Skills, and Chris Huhne, Secretary of State for Energy and Climate Change will, hopefully, recognise the huge potential for business users to both reduce their energy bills and improve their security of supply through CHP.

Before the election Professor Jones, along with a number of other independent experts, had been encouraging the Department for Energy and Climate Change (DECC) to have another look at the figures in the hope that hey might come to a different conclusion. And the Conservative manifesto contained proposed changes to the FiT scheme that would incentivise the generation and capture of waste heat. This is exactly what end users would want to hear and opens the door for the inclusion of mini-CHP systems.

CHP is at its most efficient when it is correctly sized to meet the base heat load of a building or facility. Ideally, you would look to use all of the heat and electricity generated by your CHP system on site as that will return the greatest energy efficiencies.

A FiT for any excess exported to the grid and sold back to the electricity supply company is a bonus, but a welcome one that helps a potential user make a financial investment in this tried and tested carbon saving technology.

The CHP Association was delighted by the Conservative manifesto commitment and its director Graham Meeks said this could have a “transformational effect for CHP”. The association was highly critical of the Labour government’s decision to exclude mini-CHP from the FiT scheme.

“Mini-CHP offers a practical and low-cost approach to saving energy that is of real benefit to many in these difficult economic times,” said Mr Meeks. “We are, therefore, urging Government to reconsider this policy and take up the powers available to them in the Energy Act.”

CHP is delivering energy savings and carbon cuts right across the built environment and power generation industry. Unlike renewables, which are receiving a disproportionate amount of financial incentives, it is not weather dependent, and it is already improving the energy security situation in this country. It is seen as a key element of a number of national energy reduction strategies across Europe where FiTs have been incentivising investment in CHP for many years.

“The principle of FiTs is right, but we feel the previous Government was too tentative,” said Paul Lewis, CEO of energy services company Self Energy. “We have delivered a number of projects in Spain and Portugal where FiTs are more generous and are working well.”

The very large CHP generators, whose output is measured in megawatts, will not be affected by omission from the FiT because they are able to negotiate individual tariffs agreements with energy utilities. However, mini-CHP is caught in a middle ground where they are too big to qualify for the current FiT scheme, and too small to be of direct interest to the power companies.

In effect, this means all mini-CHP users would simply be exporting free electricity to the National Grid whenever they have a surplus on-site. We can but hope that our new coalition leaders recognise that this is fundamentally unfair and move swiftly to change it.

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