Electricity key to CHP economics & low resident heat prices

Obtaining value for electricity generated from CHP engines is a critical issue in order to make operating CHP engines economically attractive and thereby minimising resident heat costs. This is because there are two outputs of a CHP engine: heat & electricity, as opposed to just heat from a boiler. Without obtaining value for the electricity, CHP engines are just an inefficient way of generating heat.

There are a number of options available that should be explored on all sites during detailed design:

• Private wire to residential: Requires advance Regulatory approval from OFGEM (to prevent later consumer challenge), with uncertain results, but has the potential to reduce both resident heat and electricity prices;
• Private wire to local non-residential load: Enables electricity to be sold for more than if it was being sold to the Grid, and bought by the non-residential building for less than they would normally buy electricity from the Grid. Consequently, heat prices can be reduced, benefitting residents. Does not require Regulatory approval;
• Use onsite in landlord’s load: Depending on the size of Energy Centre and building it’s within, there may be a reasonably sized load that could be supplied from the CHP. This would reduce the amount of electricity the building had to buy from the grid, thus reducing the general Service Charge (or heat tariff). Any surplus not used would go to the grid (ideally with Power Purchase Agreement);
• Power Purchase Agreement with electricity supplier: The price of electricity sold is generally less than with a private wire arrangement, but avoids additional cabling and is not reliant on being near a large non-residential load;
• Do nothing: This is the default position if none of the above is done. Basically, this involves giving away electricity to the Grid for no return. CHP engine is not economic to operate.

It is always more difficult to obtain value for electricity from small CHP engines. Consequently sometimes the only option is the ‘do nothing’ approach. In these circumstances, an alternative energy strategy, which does not incorporate communal heating, may be more appropriate.