Open the door to energy incentives with CHPQA guidance

Posted by Ian Hopkins on 01-Mar-2016 11:58:26

Few businesses enjoy red tape, but in some cases the gain is worth the pain. Step forward, the Combined Heat and Power Quality Assurance scheme.

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Consider this: Your business has invested in a new system to heat and light the buildings. This has brought your carbon footprint down and, critically, your energy bills too. In fact, you’re saving almost £32,000 a year. It’s reason to be happy enough.

But what if you could save another £6,000?

Getting your hands on it would require some form-filling, energy accounting and dealing with the HM Revenue & Customs team and your energy supplier, but there are specialists who can help. Still interested?

Well, if you are, time's running out. The end of March marks the deadline for annual submissions to the Combined Heat and Power Quality Assurance (CHPQA) programme.

Never heard of it? Here’s how the government describes the scheme:

CHPQA is an initiative to encourage the wider practical application of Good Quality Combined Heat and Power, Community Heating and Alternative Fuel technologies. CHPQA aims to monitor, assess and improve the quality of UK Combined Heat and Power.”

 

Energy accounting

The data you’ll need includes the electricity generated, the fuel consumed and the amount of heat used. There are a few forms to fill out, but it’s nothing to worry about.

The first – and simplest – is a simple registration form (F1). In the second (F2) you provide details of your CHP scheme. What you do then depends on whether you have a CHP that’s up and running or one in the pipeline.

If you have an established CHP you’ll complete F4, with actual performance data from the previous year (in this case 1 January to 31 December 2015). Even if there’s only one month’s data available, F4 needs to be completed.

Meanwhile for schemes that are not yet operational, the technical details and anticipated performance is provided based on design information prior to commissioning (F3).

 

A decent incentive

From that data, your system will be given what’s called a quality index score. If you’ve used an established supplier, using standard technology, then the chances are that your scheme is on the registered list of unites with the CHPQA. This doesn’t mean that it would automatically comply with the CHPQA.

It’s also worth noting that the CHPQA standard is regularly revised, with the latest criteria detailed here.

The general rule is the more efficient the system is, the better its environmental performance and the more fiscal benefits there are available to you.

Indeed, once you have the CHPQA certificate, it will open the door to a number of incentives, this is what makes this voluntary scheme so commercially attractive.

 

Tax breaks

Successful CHPQA certification grants eligibility to benefits like the Renewables Obligation Certificates, Renewable Heat Incentive, Carbon Price Floor (heat) relief, Climate Change Levy exemption (in respect of electricity directly supplied), Enhanced Capital Allowances and preferential Business Rates.

Take ECA… The first year allowances let businesses set 100% of the cost of the assets against taxable profits in a single tax year. This means the company can write off the cost of the new plant or machinery against the business’s taxable profits in the financial year the purchase was made.

CHPQA will also unlock savings through exemption from CCL. The savings listed above are from a medium-sized leisure centre in the south of England. With a 110kW CHP unit, the business is saving £31,756 in energy costs alone. But having been certified CHPQA, it will save a further £5,893 from the CCL break.

Another larger site with a 500kW unit, running 17 hours a day all year, amassed savings of £117,678 in 2014, £20,894 of which came from its CCL exemption. Without the certificate the site would have lost over £20,000 in savings.

But the benefits aren’t available to just newer CHP or those working to optimum (100%) efficiency.

In some cases the heat generated is not all utilised. This may be in the summer months or due to changes in site processes, but this won't mean the door closes on the tax breaks.

Indeed, there’s no need to be scared off by the fact that this is a certification scheme, or by the words ‘quality assurance’. The government is a fan of CHP and this process is setup to recognise the benefits the technology brings.

DECC says: “While participation in the CHPQA programme is voluntary, the government is committed to increasing the UK’s CHP capacity because of the considerable environmental, economic and social benefits it can bring together with its contribution to security of supply.”

No one likes extra admin and the data you need for CHPQA can put people off. It shouldn’t, because there are specialists to help you and big (additional) savings to be made.

 

Takeaways:

  • Combined Heat and Power (CHP) brings considerable energy savings, but don’t forget the government incentives too.

  • Only Combined Heat and Power (CHP) that meets certain standards can access these benefits.

  • The CHPQA is a voluntary programme that opens the door to various tax breaks and incentive schemes.

  • Meeting the standard is not that difficult for many Combined Heat and Power (CHP) schemes.

  • Experts can help you gather the relevant information and fill out the necessary forms.

  • The deadline for submissions for 2015 is the end of March 2016.

 

Discover all you need to know about Combined Heat and Power (CHP) finances in your free eGuide Calculating CHP: A Guide To Savings and Operating Costs.

 

 Calculating CHP: a Guide to Savings and Operating Costs

Topics: Policy & Legislation, CHP / Cogeneration

Ian Hopkins

Ian Hopkins is a technical sales professional and business leader with more than 15 years’ experience in delivering energy efficiency projects and strategy in Europe and the United States. Ian currently heads up the Sales and Marketing function as one of the board directors at ENER-G Combined Power Ltd.