A solution for frustrated companies can be found in Good Quality Combined Heat and Power (CHP) – a once unfashionable solution now enjoying a surge in interest as a viable alternative to traditional renewable energy supplies. John Clark of npower business looks at the case for Good Quality CHP and how, by considering it,companies can still fulfil their environmental ambitions.

What is CHP?

Combined Heat and Power (CHP) is the production of electricity and useful heat in a single process. CHP plants are usually located within heavy industrial plants, such as oil refineries, where the heat produced during the generation of electricity can be put to good use within manufacturing processes, rather than being wasted.

Traditional coal fired power generation in the UK has an average efficiency of around 34 percent; in other words only about a third of the energy gets delivered as useful electrical power at the point of use. The remainder of the energy is lost as heat via power station cooling towers and from the electricity transmission and distribution systems. In recent years, there has been a move to use gas firing for power stations in an attempt to reduce atmospheric pollution, but even the modern combined cycle gas turbine stations only achieve a delivered efficiency of about 50-55 percent.

By contrast, CHP plants are up to 80 percent efficient, producing useful energy, at the point of generation, in the form of both electricity and heat.

What is Good Quality CHP?

Good Quality CHP refers to CHP generation that is particularly energy efficient in its production. The CHP Quality Assurance programme (CHPQA) launched in May 2000 by Defra, the Department for Environment, Food and Rural Affairs, determines that quality by assessing all types and sizes of CHP schemes.

Certification under CHPQA is being used to rate the eligibility of schemes for a range of benefits, including efficiency of the generator, the utilisation of the heat output, the type of generator etc. In 2000, the Government set a target to achieve at least 10,000 megawatts of Good Quality CHP capacity by 2010.

Is Good Quality CHP only a solution for large energy users?

While the electricity generation from CHP plants is primarily used to power the sites where they are located, the excess generation is sold back to the grid as Good Quality CHP electricity. As the production of Good Quality CHP is less polluting than energy generated from traditional coal or gas fired sources, energy suppliers can offer the excess electricity from certified sites to customers as another means to helping meet their environmental ambitions.

For the past few years, the installation of new CHP generation has been in decline, low energy prices meant that it was not viewed as economically viable. However, changes in legislation have meant that the Government has allowed for Good Quality CHP to qualify for Climate Change Levy exemption on electricity exported to the grid. This has prompted a revised attitude towards CHP which is now viewed as providing a positive boost to those looking to tackle carbon emissions. The sharp rise in energy prices will also strengthen the case for investment in CHP.

The Government has also stated that it wants to source at least 15 percent of the electricity used on the Government Estate from Good Quality CHP by 2010. It is therefore likely that industry and commerce will follow this example.

Why can’t I just buy ‘green’ energy?

The current issue with the output from renewable sources of electricity, such as wind farms and hydro plants, is that demand is outstripping supply. For example, during a recent sales campaign, npower business received requests for renewable supplies which would have far exceeded availability. Inertia in bringing in new renewable energy is not helping the situation, the reasons for this ranging from lengthy timescales taken to secure planning consent, to the time it takes to build new plants, to the capital costs needed to invest in new technology and the lead time in developing new solutions such as photovoltaic cells and wave power

Is Good Quality CHP as clean as traditional ‘green’ energy?

Although Good Quality CHP is not as ‘clean’ as renewable energy, it is generally a gas-fired product which means it is cleaner than many alternative fossil fuels. Separate boilers are not being used to produce heat for process and heating because the waste heat from the generator meets this demand. Gas is a cleaner fuel and less is being burned to meet the same energy requirements; this means you get, on average, a 2:1 improvement in emissions of CO2 to the atmosphere, compared to conventional power generation by fossil fuel.

The combined benefits to business of CHP

CHP has a number of benefits for all types of business. If you are a heavy industrial user, having a CHP generator on site can bring significant improvements in efficiency as well as reducing carbon emissions, plus the added financial benefits of selling excess energy back to the grid as Good Quality CHP. With the continuing volatility in energy prices, CHP generation can offer heavy energy users piece of mind.

npower Cogen is a sister company to npower business that specialises in installing CHP plants on heavy user sites. As market leader in the UK industrial CHP market, npower Cogen has entered into supply contracts representing 580 MW of electricity power and 1,445 MW of thermal output, investing £350 million of capital. Cogen’s CHP plants are in a wide range of industrial sectors including chemicals, petroleum, newsprint and pharmaceuticals and are specially designed to meet the operational requirements of a customer’s process.

As for other business energy users, we encourage all our business customers who purchase green energy to buy as much renewable power as possible and then take the balance as Good Quality CHP. By increasing the demand for Good Quality CHP, this will incentivise the building of more CHP generators with a greater electricity export capability. In a climate where traditional renewable energy is in short supply, Good Quality CHP represents a viable alternative for organisations looking to address environmental considerations and boost their corporate responsibility credentials.

The combined benefits of Good Quality CHP Case studies

Sainsbury’s

Sainsbury’s signed up to a four year contract with npower business to supply 150 GWh of green energy to all stores across the UK and 15 GWh to its head office in London. As renewable energy is in short supply, it was difficult to meet Sainsbury’s entire demand. npower business therefore made up the balance of Sainsbury’s portfolio with 650 GWh of Good Quality Combined Heat and Power (CHP). This is not as ‘green’ as renewable energy but is around a 2:1 improvement on conventional generation and is therefore a much cleaner alternative. It also qualifies for Climate Change Levy exemption.

BT

BT recently signed the world’s largest ever green supply deal of which a major part was with npower business. Over the three year deal npower will supply in excess of one Terrawatt Hour (TWh) of green electricity and almost two TWh of good quality CHP (one TWh is enough to supply 100,000 homes with electricity every year for three years). The contract will supply BT's 2,500 offices and depots. Overall, the initiative will save emissions equivalent to the amount of carbon dioxide produced by almost 50,000 homes or more than 10,000 cars.

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