Combined Heat and Power (CHP) - the simultaneous generation of usable heat and power in a single process - offers significantly higher fuel efficiency compared with conventional centralised ways of generating electricity from fossil fuel. CHP can therefore make a significant contribution to European sustainable energy goals, bringing environmental, economic, social and energy security benefits

Scope of this report

*Awareness of the wide ranging cost, application and performance characteristics of the main established cogeneration technologies
*Appreciation of CHP’s significant contribution to sustainable energy goals, and its environmental, economic, social and energy security potential
*Insight into the European cogeneration industry structure, the associated regulatory regime and the various significant barriers to growth
*Information relative to the three likely CHP priority growth areas based on the current favourable European regulatory landscape

Research and analysis highlights

The EU-27 is now home to the world’s largest CHP industry, with c.104 GWe installed capacity. Nearly 40% of the electricity produced from cogeneration is produced for public supply purposes, often in connection with district heating networks, whereas 60% is generated by auto-producers, normally for industrial processes

The European CHP market lacks typical unifying competitive demand and supply structures. In its current initial form, the European CHP support framework does not fully meet the requirements of the sector. As a result, the relative efficiency of different European schemes aimed at boosting high-efficiency CHP varies widely

Micro CHP is likely to be one of the high-growth areas in the next few years. Similarly, the district heating sector could yield steady if not spectacular growth in the medium term. Biomass-fired CHP also has growth potential, but it is likely to remain a more niche market in most countries as it struggles to overcome significant hurdles
Key reasons to read this report

*
Identify the advantages and limitations of established Combined Heat and Power technologies and their suitability for specific user applications
*
Gain an appreciation of the current EU regulatory environment, current support schemes and future likely changes in investment landscapes
*
Discover new profitable opportunities for growth and isolate potential market pitfalls in order to develop successful CHP investment strategies

Table of Contents

CATALYST

SUMMARY

SOURCES

ANALYSIS

The practice of capturing and using surplus heat from electricity generation has many applications and is well established

Combined Heat and Power (CHP) is the simultaneous generation of usable heat and power in a single process

CHP systems can be employed over a wide range of sizes, applications, fuels and technologies

There is significant variation in the cost, application and performance characteristics of established CHP technologies

Key capacity and efficiency metrics of the principal established and alternative technologies are wide ranging

CHP can make a significant contribution to sustainable energy goals, bringing environmental, economic, social and energy security benefits

Reduced cost, both for electricity consumers and electricity producers, is arguably the most important benefit that CHP offers

Great efficiency gains can be obtained in the form of waste heat utilisation and reduced transmission and distribution losses

CHP is a front runner in the EU’s battle to reduce CO2

CHP can play a significant role in combating climate change: UK case example

CHP can reduce the environmental footprint of providing energy

CHP can help curb Europe’s dependence on imported gas

CHP can ensure greater power quality, reduce vulnerability of the grid, and increase self sufficiency

Circa half of the combined European CHP installed capacity is accounted for by five main markets

In the remaining markets the share of CHP in total electricity production ranges from moderate to insignificant

The European CHP market lacks well-defined competitor, demand and supply structures

The 2004 Cogeneration Directive has created the foundations for arguably the most comprehensive European support framework

Current incentives to develop CHP fall short in many countries

European CHP continues to face significant barriers to growth

Two segments of the CHP industry are likely to benefit most from the current regulatory framework

Domestic and commercial micro CHP is set to be one of the high growth areas in the next few years

Biomass CHP is more likely to remain a niche market in most countries as it struggles to overcome significant hurdles

In many central and eastern European countries, district heating could yield strong and steady CHP growth in the medium term

European CHP installed capacity could double by 2025

APPENDIX

Further reading

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Disclaimer

List of Tables

Table 1: The estimated land use requirements for decentralised CHP generating capacity is 66 to 400 acres less than that of more traditional centralised generation methods

List of Figures

Figure 1: In general, cogeneration can be applied in all cases where electricity is produced by thermal combustion

Figure 2: CHP technologies are at various stages of commercialisation

Figure 3: Available CHP technologies currently exhibit a large variation in their technical characteristics

Figure 4: Heavy generators and consumers of electricity are more likely to break-even within an acceptable timeframe

Figure 5: If the CHP unit is displacing less efficient fossil fuel technologies gains can be higher than the 25% shown

Figure 6: Emissions from heating and cooling account for 47% of Europe’s total CO2 emissions

Figure 7: Average European gas consumption is expected to increase by 2% annually

Figure 8: The major European CHP markets can be categorised in three groups

Figure 9: The European CHP market does not have a typical unifying competitive structure with a defined set of participants competing for a defined customer base

Figure 10: The EU Cogeneration Directive does not prescribe specific support mechanisms for cogeneration: instead, this is left to the discretion of the member states

Figure 11: The relative efficiency of schemes aimed at boosting “good quality” CHP varies widely

Figure 12: A doubling of the current European installed CHP capacity by 2025 is achievable

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