Mike Sewell, Energy Services Director for Dalkia explores the advantages of generating heat, electricity and cooling using Combined Heat and Power (CHP) to significantly reduce carbon emissions from buildings.
Where there is a stable base load of heat and electricity, and in some applications cooling, CHP has a very real role to play as part of any planned energy strategy that has the aim of reducing the amount of carbon emitted to the atmosphere. There is a drive among many organisations to seek routes for investment in new plant equipment that will pay back the initial outlay with a more cost-effective energy transformation into the future.
The Carbon Trust has recently found that UK companies waste £1 billion a year on energy largely due to energy plant optimisation issues, energy wastage and demand side energy usage. When this energy is regarded not in terms of the cost but in terms of the volume of carbon emitted, the implications can involve the additional cost burden of Climate Change Levy and a requirement to balance the deficit on the EU Emissions Trading Scheme. Use of efficient CHP schemes (as defined by the CHPQA standard) provides climate change levy exemption.
The UK’s carbon emissions, green credentials and carbon saving combined with the incentive measures the government has put in place – the Climate Change Levy, environmental compliance, and for some sectors targets set by Climate Change Agreements – are driving organisations to seek alternative methods of on-site energy transformation and strategies to improve process usage. The cost of energy of course adds to the need to carefully buy, use and save energy.
DEFRA recently described CHP as ‘The most cost effective single non-transport measure in the Climate Change Programme’. By drawing on the experience and expertise of an energy management company, the customer can benefit from full energy and environmental auditing that will assess and implement effective energy management and saving measures that can include CHP – these will see direct results in carbon savings, and its associated energy costs, taken down to the bottom line.
Many buildings have a demand for a supply of electricity, heating and hot water to maintain internal conditions. By harnessing waste heat from on site electricity generation CHP yields efficiencies in excess of 80%. This compares to around 34% for traditional power stations and 46% for the new generation of gas-fired power stations. As approximately 7.5% of the total electricity supplied in the UK is wasted every year due to its transportation over the National Grid, on-site generation provides even greater energy efficiency. In turn, the organisation can gain further by uploading surplus energy generated to the grid.
One of the optimum ways to operate CHP is through a contract energy management agreement. There are many benefits to the organisation in handing the responsibility of operation and maintenance to an outsourced partner: risk is transferred to the energy management company while the internal building conditions, as well as the CHP and other plant, are maintained in line with energy and carbon targets.
CHP systems require specialist skills to operate and maintain effectively and the requirement to provide this cost effectively as part of an in-house team is difficult for building managers to justify on an economic basis. With CHP supplied under a CEM contract the necessary skills are fully supported for the duration of the contract – enabling building managers and owners to concentrate on their core activity.
By using an energy management company, an agreement in place will cover a CHP plant and is also likely to carry a risk guarantee scheme whereby the management company will replace or refurbish failing plant without additional cost to the customer.
Neath Port Talbot County Borough Council has firsthand experience of the benefits of CHP. Afan Lido Aquadrome and leisure centre has a new CHP and ancillary plant, with 24-hour remote operation and consequent maintenance, managed by Dalkia. The service includes fuel purchase and energy recovery. The 210kWe capacity CHP scheme at Afan Lido now reduces annual carbon dioxide emissions by 300 tonnes and produces energy cost savings of £45,000 per annum while the Borough Council gains from climate change levy exemption. The system will provide secure and stable future energy supplies that provide a more cost effective and reliable energy solution.
For CEM agreements that involve capital investment for new or refurbished CHP many ventures have already used this type of financing to extend their roles. New investment can not only provide for the core CHP outputs but also cover the provision of the additional utilities. The 800-bed Freeman Hospital in Newcastle-Upon-Tyne is an example of this approach as outside funding has provided the impetus to invest in new energy plant and contract out various areas of estate management. By using external capital investment of £3.69 million in partnership with Dalkia the Hospital now has its own combined heat and power energy centre which produces energy cost savings of around £200,000 per year. In recognition of the success of the scheme Dalkia and Freeman Hospital were awarded the Combined Heat and Power Associations CHP in Buildings Award.
When implemented as part of a corporate responsibility policy, this type of approach to energy generation has strong green credentials. CHP provides an excellent solution to the energy needs of many different building types that have a simultaneous requirement for heat and electricity for in excess of 4,000 hours per annum. According to CIBSE there are approximately 1,000 individual buildings with CHP in the UK, representing an installed capacity of approximately 320MWe, The UK’s current CHP capacity of approximately 5,000 megawatts is helping to deliver savings of over four million tonnes of carbon annually, with CHP representing one of the largest carbon reducing measures in place. In fact, if the level of CHP was increased to the Government’s target of 10,000 megawatts, the UK could be one third of the way to meeting its international commitments to reduce carbon dioxide emissions.
There is great potential for further growth in the UK’s CHP capacity for buildings. With such tangible customer benefits an energy management company can design and deliver an effective energy management programme, including CHP and manage it to maintain the building environmental conditions and reduce emissions and costs – all for the benefit of the customer.