Selecting CHP: The Ultimate

Checklist

www.energ.co.uk/chp
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Selecting CHP: The Ultimate
Checklist
An essential checklist for consultants to ensure theyve got
every aspect of CHP planning covered.
Assessing the feasibility of a CHP scheme, and specifying an appropriate technical solution
involves the interaction of a number of factors technical, commercial and legislative to which
it is essential to give adequate consideration. Here are some suggestions of how to ensure that
important factors dont get overlooked:

1. Client energy strategy

This should be the starting point for the client to introduce the possibility of implementing a
CHP scheme, either as part of a regular strategy review or as a possible solution to a perceived
problem relating to energy use/cost.

A CHP scheme will have even better feasibility at a time when energy-related plant components
(particularly boilers) require upgrading or replacement, as there is likely to be the need to commit
to some capital investment anyway.

Heat
Demand 75%

Loss
50% 25%
CHP 35%

Power 30%
Demand

Loss Loss Waste

15% 5% 65%

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2. Site load/operational profiles
The clients first decision point will arise as a result of analysing the site requirements for power
and heat/cooling. Unless the requirements are sufficient, relatively predictable and within a
feasible heat to power ratio, it is unlikely that you will be able to identify a suitable CHP scheme
that will promise worthwhile energy cost savings and carbon emissions reduction. Your analysis
in this area will need to use all the monitoring data available, both internally and through the
clients energy suppliers meter readings.

Dont forget that this historic data may not be such a good guide to future requirements in cases
where the clients business strategy is likely to prompt significantly different energy use going
forward. Additionally, it may be worthwhile adjusting the data to represent normal weather,
particularly where the data only covers limited history and relates to warm or cool years.

3. System design primary fuel, heat recovery, optimisation and

grid arrangements
Analysis of site requirements will have suggested an optimum size of CHP scheme, whilst
consideration of the power-to-heat ratio will suggest feasible CHP technologies and
configurations. Hopefully this gets the client to the stage of having an outline CHP scheme in
mind and will prompt discussions of some key technical issues:

Primary Fuel
Availability, price assumptions, reliability of supply.

Grid Arrangements
Can a generation connection be obtained?

Heating/cooling
Whether trigeneration (utilising heating and cooling) is an option. Also whether there
are options to sell heating and/or cooling to nearby third-parties.

Maintenance
Who is responsible and who bears the risk in case of technical problems?

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4. Finance capital cost, optimising savings, incentives, grants etc.
The optimum way for the client to finance a CHP scheme will depend on a number of factors,
including their access to investment funds, their tax position and their required payback period.

Essentially there is a choice between the client owning the installation for themselves, or hosting
the installation and contracting for some form of benefit sharing with a specialist Energy Services
Company.

On the income side, the client will need to understand the impact of a proposed CHP scheme on
existing energy bills but also the availability of a range of incentives designed to encourage the
uptake of CHP. The incentives for accredited CHP schemes largely fall under these headings:

Enhanced Capital Allowances (ECA)

Businesses are allowed to write off 100% of the the cost of eligible schemes in the
relevant tax year.

Climate Change Levy (CCL)

Accredited CHP schemes will be exempt from CCL on the primary fuel used and on
any power produced by the scheme.

Business Rates
Preferential treatment for some of the assets within a CHP scheme.

Feed in Tariffs (FiT)

Accredited renewable CHP schemes will earn the relevant FiT for all power generated.

Renewable Obligation Certificates (ROCs)

Accredited renewable CHP schemes will earn ROCs, which are tradable and have
value for supply companies, for all power generated.

Renewable Heat Incentive (RHI)

This is payable for the heat output of an accredited renewable CHP scheme.

This area is subject to considerable political attention, so it is essential to check up to date

eligibility criteria and rates from the DECC website.

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5. Energy supply contracts
It is essential to understand how a proposed CHP scheme is likely to interact with existing Energy
Supply Contracts. In particular, if existing contracts are long-term and/or inflexible, changes in
requirements may be difficult and costly to incorporate, and this aspect will need to be estimated
in any cost/benefit analysis. If supply contract renewal/renegotiation is due before a final decision
is to be taken on a CHP scheme, it will probably be worthwhile considering. This might include
some element of volume flexibility in the renegotiation.

6. Compliance and accreditation

There are a number of benefits, both tangible and reputational, to be gained from ensuring that
your clients prospective CHP scheme is implemented with due consideration to compliance and
accreditation. The 3 main areas of importance are:

CHPQA - Good Quality CHP

It is essential that the scheme is classified as good quality CHP if the economics of the
scheme rely on accessing the incentives detailed under point 4. The CHPQA process to
achieve this classification can be quite complex but is summarised here.

BREEAM
This is the worlds foremost environmental assessment method and rating system for
buildings, and a new CHP scheme has the potential to make a major contribution to a
site/buildings rating.

Environmental
In terms of environmental impact, the clients scheme will be more efficient,
avoiding losses and hence reducing carbon emissions. There are incentives via the
CRC (Carbon Reduction Commitment) with emissions credit available on exported
electricity and no emissions attributed to heat from CHP.

Pla
Che nning
Ensure no key issues around selecting CHP are ckl Co
ist nsi
dera
overlooked. tio
ns

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