new guide to chp
  1. Home
  2. > Knowledge Centre

Your new guide to Combined Heat and Power (CHP)

Everything you need to know about cogenerating low cost, high efficiency on-site energy with CHP

We have partnered with Edie to publish a new guide to CHP. It covers everything you need to know about using cogeneration to reduce costs and improve business resilience.

The guide explains all the essentials of Combined Heat and Power, including technology and specification considerations; how to maximise cost savings; demand side response opportunities, plus finance options and government incentives.

Writing for the report, Centrica Business Solutions' Aaron Parker explores why organisations should urgently consider CHP as part of their energy efficiency saving plans. You can read his viewpoint below:

CHP: the future-proofed solution to energy cost savings

High efficiency combined heat and power (CHP) is relieving the pain of rocketing energy prices by delivering higher financial returns.

By cogenerating heat and electricity on-site you can reduce energy costs by up to 40%, protect budgets from market volatility, reduce grid dependence and deliver a payback within 1-2 years.

Grid electricity prices are currently around 4 times higher than gas, so using natural gas-fuelled CHP to generate on-site electricity and heat/cooling yields a big cost advantage.  

CHP cost savings in action

Hundreds of our customers across many sectors are using CHP for financial advantage. A leading UK supermarket group is saving £1.28 million in annual energy costs, while Alton Towers has cut its energy bills by 12%. We've installed CHP as part of integrated sustainable energy upgrades across many NHS Trusts. Among them, London St George's Hospital is reducing energy costs by £1m per year and Whiston Hospital is cutting its yearly energy spend by £500k.

1-2 year payback

In recent months, some of our CHP projects are yielding a payback within a year, with most delivering a return on investment within 2 years. When you consider that the lifespan of a CHP system is 10-15 years, the long term cost savings really add up.

There's potential to further increase financial savings by using CHP to load shift energy consumption for peak power avoidance and to drive flexibility revenues from Demand Side Response.

3 ways CHP can support net zero transition

With efficiency ratings in excess of 80%, CHP is almost twice as efficient as traditional generation. However, rapid power grid decarbonisation means natural gas CHP is playing a lesser role in displacing higher carbon fossil fuel power and contributing to emissions savings. Nevertheless, CHP can continue to support the transition to net zero in the following ways:

1. Hybrid and Tribrid CHP systems

Combining CHP with Solar PV generation and heat pumps can deliver a future-proofed transition to net zero. The impressive cost savings of CHP and solar can make the economics of electric heat pumps stack up, enabling organisations to capitalise on lower emissions now rather than waiting for technology costs to fall as the market expands.

Many sites that already have CHP in situ can be reconfigured with minimal disruption to share the heating/cooling load with electric heat pumps. This can also work as a hybrid solution, without solar.

2. Hydrogen CHP

As the UK’s leading supplier and operator of CHP units, we're developing a 20% blended hydrogen solution across a wide range of engines – with the switch achievable through minor changes to parts and software. Additional tests are being conducted in the 20-40% range. From 2024 we aim to supply 100% hydrogen-fuelled CHPs via our partnership with MTU.

3. Reinvest CHP cost savings in net zero

Many customers are reinvesting cost savings from CHP in sustainable energy projects with a longer return on investment. This is enabling them to make a cost effective and affordable transition to net zero.

Expert support and finance

Rapid payback on CHP makes it an attractive investment, but for those with capital constraints we offer a range of flexible financing options, including maintenance.

Subscribe to Centrica Business Solutions

Sign up to receive regular updates on:

  • Net zero, sustainability, low carbon and renewable energy
  • Insights into our energy solutions and the wider energy market
  • Our latest news, webinars, podcasts and events

By submitting your details you agree to process your personal data by Centrica Business Solutions as described on the Privacy Policy. Centrica Business Solutions will send you a regular newsletter and other marketing material we believe is relevant.  You will be able to opt out of communications from us at any time.