Download information sheet 11 combined heat and power (chp)

INFORMATION SHEET 11
COMBINED HEAT AND POWER (CHP)
Introduction to Combined Heat and Power (CHP)
A significant proportion of the energy used in industry is in the form of
electricity. This electricity is generated in a variety of power stations that
have typical efficiencies in the range 35 to 55%. The remainder of the heat
input into these power stations is waste heat, which is usually rejected to
the air. That is why large cooling towers are often seen at power stations.
Power stations are designed to reject heat at a relatively low temperature so
as to maximise the power station efficiency.
Because of its low
temperature, useful sinks for heat rejected by power stations cannot easily
be found.
However in an industrial environment (and some others), it can be
worthwhile to generate power on-site and use the heat rejected from the
power generation system.
Heat can be rejected at relatively high
temperature. Although this reduces the efficiency of power generation the
heat can be usefully used in the factory, so the overall system efficiency can
be very high, up to 90% of the heat content of the input fuel. This
simultaneous generation of heat and power is known as Combined Heat
and Power often abbreviated to CHP. It is also sometimes referred to as
cogeneration.
There are many different types of CHP scheme. Useful means to
differentiate between them are the type of prime mover, the size and the
usage of the heat and power generated.
•
The key prime movers are reciprocating engines (either gas or oil
fired, spark ignition or diesel engines), gas turbine-based
systems (either simple or combined cycle turbines) and steam
turbine systems.
•
The power output of industrial CHP systems can vary from a few
tens of kilowatts to ten of megawatts.
•
CHP schemes can be designed so that all their heat and power
output is used within the host site, with sites continuing to import
electricity and heat, or the CHP scheme may sized to export
power and/or heat some or all of the time.
In most CHP systems, the power output is in the form of electricity provided
by a generator driven by the prime mover. However, the prime mover can
be used to provide a direct mechanical drive to a power user.
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CHP and the Climate Change Levy
Good CHP schemes offer considerable primary energy savings compared with conventional
energy conversion systems, and hence the UK Government wishes to encourage the more
widespread adoption of CHP through the following links with the Climate Change Levy:
•
Firstly, all energy used in “good quality” CHP is 100% exempt from Climate
Change Levy (see below for definition of good quality);
•
Secondly, the Government will include CHP in the list of technologies eligible for
Enhanced Capital Allowances, which were announced by the Chancellor as part
of the Climate Change Levy package (See Information Sheet 18).
The Government has launched a scheme “CHPQA, Quality Assurance for CHP”, to
determine how to appraise good quality CHP. Those with a CHP plant who wish to benefit
from CCL exemption must register their plant with CHPQA. Certain key aspects of CHPQA
are described in this Information Sheet.
IMPORTANT NOTE: The basic energy efficiency targets for the FDF Climate Change Levy
Discount Scheme shown in Information Sheet 3 DO NOT make any allowance for CHP
opportunities. The agreed targets are based on reductions in use of “delivered” energy.
This means that CHP projects will be additional to the delivered energy target.
Impact for Sites with Existing CHP Systems
If a site already has a CHP system that was installed before the site’s CCL Base Year the
impact of the Climate Change Levy CHP rules is as follows:
a) The CHP system must be registered under the CHPQA Scheme to gain CCL exemption.
If the system is “Good Quality” all fuel used by the CHP system will be 100% exempt
from the Levy. For CHP systems not of “Good quality” the Levy exemption will be
reduced on a sliding scale.
b) If the CHP system supplies all the site’s energy no further action is required – the site
already has 100% exemption, so a CCLA is not required.
c) If other energy is purchased to supplement the CHP system supplies (e.g. import of
electricity from the grid) you will need to sign a CCLA to obtain the 80% discount on this
part of your fuel costs.
d) For a site that applies for a CCLA, the basic energy efficiency targets for the FDF
Climate Change Levy Discount Scheme shown in Information Sheet 3 will apply to the
use of all “delivered energy” which includes the outputs from the CHP system as well as
the imported energy.
Impact for Sites with CHP Systems Installed SINCE the Base Year
If a site has installed a CHP system since the Base Year (e.g. Base Year 2005, CHP
installed in 2007) then the site target must be modified to take the CHP system into account.
This is because, as stated above, the CHP system cannot be a contributor to the basic
energy efficiency target. The Scheme Administrator will calculate the modified target.
The rules (a) to (c) above also apply in this situation.
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Immediate Actions
If you already have a CHP scheme and you wish its fuel use to be considered for exemption
from CCL then you should obtain the CHP QA consultation from the contacts listed below. A
form, F1, is included with the consultation papers; you should immediately complete and
return this form to CHPQA to register interest in the scheme. CHPQA will send further
details to you, as they become available.
Good Quality CHP
The government’s CHP QA Scheme has been set up to define and certify good quality CHP.
Recent important documents are available as shown in the box below.
“CHP QA - Quality Assurance for Combined Heat and Power –The Government’s
decisions following consultation.”
may be downloaded from :
http://www.chpqa.com
and is also available from Environment and Energy Help Line, Tel: 0800 585794.
This document gives full details of Good Quality CHP and its treatment. The most important
outcomes of the CHP QA process are as follows:
1. For a CHP scheme to be certified as “Good Quality” it must achieve a “Quality Index”
(QI) of 100 and must have an electrical efficiency of at least 20%. The calculation of QI
is described in the consultation document.
2. If the electrical efficiency is less than 20%, then the proportion of system input that has
“good quality” outputs is defined and is exempt from CCL.
3. If electrical efficiency is acceptable, but the QI < 100, because there is a low degree of
heat recovery, then the electrical output consistent with the actual heat recovery is
calculated. Electricity supply up to this level is exempt from CCL; additional electricity
generation is subject to CCL.
4. Reduced QIs are acceptable for good quality CHP during commissioning.
5. A lower electrical efficiency of 15% is acceptable for steam turbine-based CHP for a
transitional period.
6. Applicants can define scheme boundaries
7. Most schemes will require monitoring of fuel input, electrical output and heat supplied.
8. Simplified reporting requirements are in place for small schemes of less that 2MW e
capacity.
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