Following the historic climate change deal in Paris at the end of last year, what will 2016 bring for combined heat and power (CHP) in the UK?
The Paris Climate Agreement, signed at the end of 2015 as part of the UN conference, makes a significant step forward to reducing global emissions. For the first time, 195 countries have committed to act together to combat climate change.
The Paris agreement marks a fundamental turning point towards a sustainable and low carbon future. Countries will now have to come together to review their climate plans and ensure that necessary action is being taken to tackle climate change.
What does the Paris climate change agreement mean for low carbon supplies such as CHP? Energy and Climate Change Secretary, Amber Rudd, notes in her speech setting out the UK’s agenda for a new direction in energy policy that “nowhere in the energy system is the need for innovation more acute than in how we use heat to keep warm in our homes and for industrial processes.”
What’s the industry view? ENER-G spoke to three key figures from the UK’s energy sector to find out what’s on the horizon for CHP in 2016 to overcome climate change.
Tim Rotheray; CEO, The Association for Decentralised Energy
Energy productivity, and particularly the amount of energy that is wasted in the UK electricity system, should be the key issue of 2016 in light of the Paris Climate Agreement. Around £9.3 billion is wasted every year; divided up that’s equivalent to £350 per household. However, it’s not only money that is wasted, enough heat is wasted in the power generation sector to heat every home in Britain.
The UK government recognises that heat will be a big issue for 2016; it’s half of our energy use, it’s half of our emissions from energy, and it’s about a third of our overall country emissions – and we’ve got to tackle it.
As CHP is the most efficient way of burning gas, it is something that affects not only security of electricity supply, but also security of the actual energy (the gas that we buy, or import, by reducing demand) as well as reducing carbon emissions and managing energy costs.
Last year, the government achieved several milestones which will support the CHP market and the productivity agenda, including the commitment of £300m to support the development of heat networks and the publication of their industrial roadmaps which identify significant efficiency and productivity opportunities for both businesses and the system as a whole.
I expect the debate on energy to remain very active, and that keeps it on the minds of financial directors and CEOs. As the gas price remains fairly low, and the electricity price rises, CHP in the industrial and commercial sectors will continue to be an attractive solution in 2016.
Phil Jones; Chairman, CIBSE Energy Performance Group
I think a big talking point for the CHP community in 2016 will be NOx emissions as these are now being regulated to quite low levels, particularly from certain machines in the 200-750kWe range. I chair the CIBSE CHP-District Heating Group and we’ve been concerned over the last 18 months about the pressure this is putting on some of the most common machines to go for catalytic convertors to meeting NOx limits. This can add significantly to capital cost and can sometimes be make-or-break for some projects going ahead or not. We are talking to regulators about this, but in the next 12 to 18 months the government is probably going to get even tougher on NOx.
A key area for CHP growth will be in the under 2MWe market as that still benefits from climate change levy relief which is favourable to the economics. I think the smaller end of the CHP sector will continue to do well, although the government is currently doing a wide ranging review of taxes and reporting in the energy sector that may affect this.
Government could always do more to encourage and educate people about CHP. I think a lot of people are aware of it, but are frightened by the long-term nature of the maintenance contracts that you usually have to wrap around CHP but these costs should be part of any feasibility study. Recent government funding and encouragement across the district heat sector has been great and is giving rise to more DH, often with CHP as the supply technology.
Although CHP is currently quite a big CO2 saver, I think we are going to see that reduced compared to say heat pumps, given that the electricity grid carbon factors are going to drop quite quickly due to ongoing decarbonisation.
Paul Blything; Director General, AMPS
Combined heat and power is clearly the sensible route to go down and will always have a market because it’s logical due to cost saving and efficiency – and it ticks a box that says “we in the UK are thinking about climate change, we’re thinking about efficiency and savings”.
The big thing for the market in 2016 will be all of the new changes surrounding emissions levels, what that means for CHP, and what you have to do to adhere.
CHP also has a strong lobby within government, but politicians don’t do as much as they should to help the industry. The problem is that they’re not quite sure which is the best way forward.
In the UK, we seem to be switching around between renewables and what we’re going to do, what we’re not going to do. We need to find a way to make energy more useful and utilise the energy that’s there. I think there is going to be a challenging future for wind farms, solar panels, and CHP – probably with CHP leading the way.
A huge change to the way Europe generates electricity is currently sweeping through the regions of Continental Europe and Great Britain. The change is due to a rapid growth in operational renewable energy systems (RES), combined with the need to simplify cross-border trading between EU member states (MS) so electrical power can be transmitted from a region with an RES power surplus to neighbouring regions.
To put in place the necessary rules and regulations, the EU is in the process of creating the associated technical documents. These documents have become a family of ten Network Codes (NC). The most important NC has been identified as the Requirement for Generators (RfG).
The period for RfG introduction has already begun. Its implementation is a stepped process whereby each MS is charged with the legal responsibility to present proof, on a regular basis, of progress in implementing RfG into its national Grid Code or equivalent.
In this way, mandatory performance and product accreditation requirements will be placed on all newly installed DGs after a set date in 2018. Many distribution network operators (DNO) are likely to invoke tight controls over what types of DG are allowed to be connected to their networks ahead of the 2018 date.
- Energy efficiency reform, as well as the cost of energy, is high on the government's agenda and will become a pressing issue for 2016.
- Heat is rising on the energy agenda. The government recognises that heat is a big player; it’s half of our energy use, it’s half of our emissions from energy, and it’s about a third of our overall country emissions – and CHP can be fundamental in tackling it.
- RfG introduction has already begun and its implementation is a stepped process whereby each EU member state is charged with the legal responsibility to present proof, on a regular basis, of progress in implementing RfG into its national Grid Code or equivalent.
- A key trend for the 2016 market will be all of the new changes surrounding emissions levels, what that means for CHP, and what you have to do to adhere.
- With the current gas price being low, and the electricity price rising, it means that CHP continues to be financially attractive and a potential spur for sector growth.
Discover why you should choose CHP in 2016. Download your free eGuide, The Essential Guide to Small Scale Combined Heat & Power.
Topics: CHP / Cogeneration