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5 ways to maximise CHP benefits

Make the most of your Combined Heat and Power (CHP) with these essential tips.

Combined Heat and Power (CHP) is increasingly and consistently recognised for some of the great benefits it can deliver. Not just for the user, but for the environment too. Get the most from your CHP and maximise your return on investment (ROI) by following these five essential insights.

Maximise CHP benefits by sizing the system correctly

Identify the goals you’re looking to achieve in the CHP project specification and define the CHP size you need to support those objectives. When it comes to CHP, size matters because:

  • Undersized CHP will fail to operate at maximum output, and additional energy and emissions savings will be missed.
  • Oversized CHP will operate below its full output rating and at a lower efficiency, meaning potential savings and financial incentives will be overlooked.

Identify the profile of a site’s energy consumption including its minimum and maximum demands. Also consider any seasonal variations. This will help you to determine the correct size.  Keep in mind any future changes you may want to make to the site’s energy demands. For maximum energy savings, reduction in emissions and ROI across the system’s lifetime, you need to cater to the site’s requirements now and in the future.

Set end goals for ROI

CHP systems will have associated capital costs, as will the site installation works required to integrate the CHP system into the existing or new site infrastructure. 

Remember, energy efficient technologies with low capitals may not always be the most cost-effective solution in the long term. This can be due to higher maintenance cost. CHP systems are known to deliver significant payback, achievable within 3-5 years. 

Calculate all anticipated life cycle costs at an early stage in the project so that you understand the project viability and payback. Costs should be monitored and reported as the project progresses so that any change to the ROI can be flagged up and actions taken where necessary.

Include all objectives

In addition to ROI, there are other benefits and objectives that are important, including:

  • Emissions performance
  • System reliability
  • Improved operating performance and efficiencies

CHP can be used to achieve these objectives, however they should be clearly defined in the project specification to inform selection and design.

Focus on efficiency to achieve financial rewards

To maximise ROI, CHP must operate at high efficiency. CHP systems that utilise a high proportion of the heat generated are classified as ‘Good Quality’ under the Combined Heat and Power Quality Assurance (CHPQA) scheme, Aim for ‘Good Quality CHP’ certification as this allows:

  • Exemption from the Climate Change Levy (CCL), an environmental tax on fuel supplies and electricity use, other than exported electricity.
  • Eligibility for Enhanced Capital Allowances (ECAs), where a business can write off the full capital cost of the investment in CHP against taxable profits in the year in which the investment is made.
  • Business Rates exemption for CHP power generation plant and machinery, where applicable.

You must be able demonstrate that the CHP meets the criteria for Good Quality CHP in its annual performance reports. Performance monitoring is required to obtain the necessary data for annual performance reports and should be part of the CHP maintenance regime.

Don’t neglect preventative maintenance 

Plan for maintenance right from the start of the project. By doing so, everyone understands the expectations of the CHP system, especially the associated costs involved. Systems must be periodically inspected and routine servings should be carried out at regular intervals.

Performance monitoring and preventative maintenance are fundamental to optimised CHP operation. Remote monitoring is also essential so that any problems are highlighted and rectified as soon as possible, minimising overall CHP downtime.

Selecting the right maintenance regime is crucial for the reliable, long-term efficiency of a CHP project, providing system longevity and maximum ROI.

Key takeaways

  • The expectations and objectives of a CHP project need to be fully defined and specified early on in the project.
  • CHP needs to be correctly sized to be fully utilised and operate at high efficiency.
  • Evaluate all costs at all projects stages, to ensure maximum ROI.
  • Good Quality CHP under CHPQA is necessary to access key government financial incentives, be sure to support your application with data from remote monitoring.
  • Ensure the right maintenance regime is in place for your CHP project.