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CHP keeps costs under control

Generating energy, using on-site Combined Heat and Power (CHP) provides a highly efficient, cost-effective alternative to centralised grid supplies. John Hyde of Centrica Business Solutions discusses how to maximise asset performance for best results.

With increasing electricity demand, rising power prices and growing supply instability, organisations are seeking sustainable alternatives that provide greater energy control at lower cost.

CHP can deliver major energy cost savings, compared to purchasing network electricity and using boilers to provide heat. CHP achieves substantial energy savings by recycling the heat (that is wasted in traditional centralised power production) as part of a single, high efficiency cogeneration process. In addition, there are no transmission losses in transporting power to end users from remote central generators.

The key cost saving advantage of CHP is spark spread (the difference in price between purchasing grid electricity and the natural gas used to generate that power). Gas prices have been substantially lower than power prices for many years, resulting in a highly favourable spark spread. CHP can thus deliver huge cost savings, while providing a secure and flexible energy supply.

The financial benefits of CHP are evidenced by a rapid return on investment – often delivering a payback within two to three years, which makes it one of the best energy-saving solutions available.

This provides opportunities for organisations to use cost efficiencies to fund pure green technologies with longer paybacks and more marginal economics.

CHP works at highest efficiency where there is a strong and sustained heat or cooling demand, so it is critical to assess viability. This starts with calculating the technical and economic feasibility of a proposed project to determine both energy and site requirements. There are two key components to the feasibility study:

1. Energy data collection and validation is essential to accurately calculate savings and correctly size the system, which is the most crucial factor in ensuring efficiency. This information will enable you to calculate your load profile and the correct heat-to-power ratios. At a minimum, data should include utility consumption of the site (grid electricity and natural gas). The associated tariffs (i.e. pence/kWh) should also be determined to estimate spark spread.

2. Conduct an on-site review to understand the site’s suitability for CHP and how it would interface with site services. No two sites are the same and installation costs can vary dramatically from site-to-site depending on several key factors, e.g:

• Location of CHP plant, gas availability, space allocation and maintenance restrictions

• Planning implications, including noise issues, emissions regulations and local regulations

• Electrical connections i.e. LV, HV, network restrictions and thermal integration

CHP planning checklist

Careful project planning is required to achieve sustained benefits for the lifetime of your asset and ensure regulatory and environmental compliance. The following checks are critical: • Permissions: Is planning permission necessary? Are your plans compliant with relevant rules and frameworks, ie. BREEAM, Building Regulations Level 2, etc.?

• Low NOx: Do you understand the environmental compliance requirements, especially operating within NOx guidelines? Modern CHP energy systems should reduce your overall NOx emissions, which you need to calculate to a BREEAM-approved format.

• Low noise: CHPs are often situated in plant rooms in built up areas, so noise outputs must be assessed.

• G99/G100 protection: Is the generator connected to the mains in accordance with the requirements of G99/G100?

• Remote monitoring system: Does the CHP utilise control systems that are linked to a cloud-based control, protection and monitoring system? Can the provider control engine starting, synchronise the generator to the mains electricity supply and help control the power output?

Operational considerations

To get the best results and deliver long-term energy cost savings, there are some key operational issues to factor into your project, including:

Project finance: The strong and proven economic returns of CHP make it a sound capital investment. For those organisations experiencing capital constraints in the current difficult economic climate, flexible asset financing is available from solutions providers or 3rd party financers.

Gas supply: Nearly 19% of UK CHP schemes run on renewable fuels, but the majority are fuelled by natural gas. There is an option to switch to green gas, which will play an important role as the grid decarbonises.

Operation and maintenance: Ensuring the ongoing, safe and optimal performance of your CHP is key to getting the best savings over the long-term. It is essential to arrange the correct service and maintenance plan.

Optimisation: Power from CHP can be used flexibly to reduce peak-time electricity costs or generate revenue via demand side response. The potential to cluster energy assets in a decentralised smart-grid or virtual power plant is exciting and likely to become more commonplace.

18 November 2020

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