Novel methods to make CHP pay

By Rod Addy

- Last updated on GMT

Related tags: Investment, Cost

Combined heat and power (CHP) offers firms long-term savings, as well as green credentials, but can have big initial costs leaving manufacturers reluctant to purchase them. However, solutions could be at hand.

"Our members are coming up with lots of interesting mechanisms for reducing or even eliminating capital expenditure," said Dr Tim Rotheray, policy manager at the Combined Heat and Power Association.

Suppliers will install and run the CHP on a manufacturer's site for little or nothing. In return companies can sell some of the electricity generated to the national grid. The initial cost and proportion of electricity the supplier takes depends on an individual feasibility study conducted by the supplier, said Nick Burchett, marketing manager for energy management specialist Dalkia.

All the heat generated goes to the manufacturer, making CHP a good option for those requiring a large amount of heat in production. Electricity taken by the supplier can vary from the excess production to putting the manufacturer on a meter. It is a symbiotic relationship that can make sense for both parties.

"Installers benefit from economies of scale. They can operate multiple plants remotely, saving on running costs. They will also be in a better position to sell electricity because they understand the market and can use that knowledge to exploit it," said Rotheray. CHP also qualifies for tax relief under the Enhanced Capital Allowance scheme.

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