Environmental guidance for your business in Northern Ireland & Scotland
Combined Heat and Power (CHP) is a highly fuel-efficient means of generating electricity and useful heat in the same process. It is one of the most common forms of energy recovery.
High fuel efficiency means lower fuel bills and carbon savings compared to the separate generation of heat and power, eg within a boiler and central power station.
This guide outlines the main benefits of CHP, and describes the opportunities available to businesses that choose to adopt a CHP scheme.
Combined Heat and Power (CHP) is the generation of usable heat and power - usually electricity - simultaneously in a single process. It utilises the heat which would otherwise be wasted when generating electrical or mechanical power. CHP is technologically proven and reliable and plays a key role in helping to reduce the UK's carbon emissions.
It is a highly flexible way of providing the energy requirements for businesses, as it can be used on any scale - from a micro-CHP unit of several kilowatts suitable for small businesses, up to a medium-sized power station servicing a whole industrial complex.
It can also run on a range of fuels, including gas, waste and biomass.
CHP systems supply heat where additional fuel would ordinarily need to be burned to get the same output - for example, by a conventional boiler.
A gas or steam turbine or an engine is used to drive an alternator, with the electricity produced either used on-site or exported to the grid.
The heat produced can then be used for a number of applications, including steam for industrial processes and hot water for space heating and for cooling via a technology known as 'absorption chillers'.
Schemes that have been certified under the UK Combined Heat and Power (CHP) Quality Assurance programme as being highly efficient are termed 'Good Quality CHP schemes'. In recognition of the reduced carbon emissions such schemes provide, Good Quality CHP schemes are eligible for a number of incentives from the government. For more information, see the page in this guideline: The Combined Heat and Power Quality Assurance Scheme
There are several other benefits to using CHP to supply the energy for your business. For example, CHP can help you to:
CHP is also not restricted to new builds, as it can be installed on existing sites - eg during boiler room refurbishments.
One of the major benefits of using CHP systems can be a significant reduction in your business' energy bill. The amount you can save will depend on whether the CHP is custom-built or a packaged unit. For more information see the page in this guideline on different types of CHP systems for business.
The diagram below illustrates how you can reduce your energy bill by using a combined heat and power system. In this example the conventional system uses 34% more fuel to produce the same amount of heat and power.
If your business works with a demand for electricity and a similar demand for heat in the same or in nearby buildings, you should consider using a Combined Heat and Power (CHP) system.
Businesses that will benefit the most from using a CHP system are usually those with a constant heat demand, whether the heat is used as steam for industrial processes, hot water and space heating or used to supply cooling through absorption chillers. Examples might include:
Individual businesses that do not have a constant heat demand may find that in periods of low demand they are able to export excess heat through a district heating network. As an added benefit, the business may be able to generate revenue from heat sales.
Before deciding which kind of Combined Heat and Power (CHP) system will be best for your business, you should consider the options available. You could either use a packaged or a custom CHP system. Each has different benefits and costs for your business.
Packaged CHP is designed and supplied as complete units that are either connected to or added to a building's existing electrical and heating system. They will often be installed, operated and maintained by an energy services company (ESCO) specialising in CHP. A standard ESCO will usually involve the sale of heat and electricity to your site at lower prices than those offered by utilities.
Packaged CHP units are available in sizes ranging from 50 kilowatt electrical (kWe) to over 1 megawatt electrical (MWe) generating capacity, and include a built-in remote monitoring and control system.
The advantages of using packaged CHP instead of a custom system are that:
Packaged CHP will use well known technologies, such as reciprocating internal combustion engines. Fuel cells and micro gas turbines could also be used.
They are usually designed to provide low grade heat in the range of 70-90°C.
Custom CHP is designed to be integrated into your site's utilities and services. Being larger than packaged CHP systems, they are typically between 1 MWe and hundreds of MWe of electrical generating capacity.
The advantages of using custom CHP instead of a packaged system are that:
The economic and environmental benefits you can gain from your Combined Heat and Power (CHP) system will depend on how it is set up and maintained - as reflected in the relationship between the annual operating costs of the plant and capital outlay.
There are three different types of maintenance for CHP systems - the 'design and manage' approach, the 'turnkey' approach, and using a contract with an energy service company (ESCO).
With a design and manage approach:
If you use turnkey arrangements for your CHP system:
If you use an ESCO for the development of your CHP system:
The Combined Heat and Power Quality Assurance (CHPQA) Scheme is a voluntary programme for assessing CHP schemes. The responsible person - the person in charge of managing the scheme - can register to apply for certification in accordance with the criteria for Good Quality CHP.
The CHPQA Scheme is administered by the Department of Energy and Climate Change (DECC).
You can find out what benefits you may be entitled to by submitting a self assessment and certification form.
In order to maintain certification with the CHPQA Scheme, you will need to submit information about your scheme annually to the DECC. They can assess the actual performance of your CHP scheme, as well as the expected performance of newly designed or upgraded schemes.
Assessment for the CHPQA Scheme is based on threshold criteria - there are indices for efficiency - which must be met or exceeded for your scheme to qualify.
In order to determine the quality of your scheme, DECC will assess data on:
If your scheme qualifies for the CHPQA Scheme, you will be sent a CHPQA Certificate and a proforma letter to apply for a Secretary of State Exemption Certificate. You will need this to claim your benefits.
CHPQA Enquiry line: Tel 0870 190 6196
CHP Focus helpline: Tel 0845 365 5153
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