Taking a closer look at on-site generation through CHP Units

With the current investment landscape being increasingly focused on environmental and social responsibility, sustainable investing emerges as a powerful force for change and profit. It's more than just a financial strategy; it's a way to shape the future we want to see. 

Combined Heat and Power (CHP) units provide an environmentally-friendly, sustainable energy source for customers with large, consistent energy requirements at the same time as generating savings for the customers.

Keep reading to find out more about these units and reasons to potentially start incorporating sustainable investments in your portfolio.

What is CHP and how does it work?

The essence of it: CHP units are piston engines powered by natural gas, which efficiently produce electricity and heat at lower costs than the national grid. 

The process which the engines go through to generate electricity also generates heat, which is then made available as hot water or steam, which further helps the customers reduce their energy usage. 

CHP units aim to cover only the baseline energy requirements of the customers. This means that if there is a spike in energy requirements during one week, the amount of energy supplied by the machine won’t increase, the customer will get the extra energy from the grid.

The general benefits

CHP units create savings for customers by providing them with energy at lower rates than they would otherwise be getting their energy from the grid. 

Additionally, by capturing and utilising the heat that is a by-product of the electricity generation process, the units lead to customers requiring less direct energy, reducing fuel consumption and greenhouse gas emissions. 

By producing heat & power simultaneously, rather than separately as is the norm, CHP units contribute to significant reductions in carbon emissions. 

All of this leads to reduced environmental impact and plays a vital role in achieving energy efficiency goals and promoting sustainable energy practices. 

They are particularly beneficial in applications where there is a simultaneous need for both electricity and heat, such as in hospitals, care homes and hotels.

Customers usually save around 20% on their energy bills & reduce their carbon emissions by around 30% (source).

Government Support for CHP Units

The market for sustainable investing across the globe, and specifically in the UK, has been growing steadily in recent years. 

The UK government has been actively promoting CHP as a key strategy to enhance energy efficiency, reduce greenhouse gas emissions, and ensure a secure and affordable energy supply. 

What was known as the Department for Business, Energy & Industrial Strategy (BEIS) until 2023 (now the Department for Energy Security & Net Zero), supported the use of CHP units as sustainable energy sources through the introduction of the CHP Focus program. 

CHP Focus, an initiative by BEIS, is available to users at no cost and serves as a valuable resource for advancing combined heat and power (CHP) in the UK. 

CHP Focus facilitates CHP development through the provision of information, educational resources, and online tools, catering to both newcomers and experienced CHP developers seeking specific insights.

This support includes a helpline service, the CHP Site Assessment Tool, the UK CHP Development Map, a CHP Scheme Database, a comprehensive set of CHP developer guides, an array of CHP case studies, and engagement through CHP outreach events.

The Case for CHP Investment

Several factors have contributed to the growth and increasing interest in CHP technology in the UK:

  • Energy Efficiency and Cost Savings: This aspect, discussed above, has attracted the attention of industries, commercial buildings, and public institutions in the UK seeking to reduce operational costs and improve sustainability.

  • Government Support and Policy Framework: The UK Government has implemented various policies and initiatives to support CHP development and deployment. These include financial incentives, such as the Renewable Heat Incentive (RHI) and the above mentioned CHP Focus, which provide financial support and educational resources and support to encourage CHP adoption. Additionally, the government's commitment to decarbonization and the promotion of clean energy sources has created a favorable environment for CHP technology.

  • Climate Change and Emissions Reduction Targets: The UK has set ambitious climate change targets, including a legally binding commitment to achieve net-zero greenhouse gas emissions by 2050. CHP technology helps in reducing carbon emissions by efficiently utilizing primary energy sources and minimizing waste heat. This aligns with the country's climate goals and has propelled the interest in CHP as a viable solution for reducing emissions across various sectors.

  • Energy Security and Resilience: CHP systems can enhance energy security by decentralizing power generation and reducing reliance on the grid. They provide a decentralised source of electricity and heat, which can be crucial during power outages or grid disruptions. The ability to generate power on-site ensures greater resilience for critical infrastructure, hospitals, and other facilities, driving interest in CHP technology.

  • Heat Networks and District Heating: The UK government is actively promoting the development of heat networks and district heating systems as a means to decarbonise heat supply. CHP technology plays a crucial role in such systems by providing a decentralized and efficient heat source. This has led to increased interest in CHP technology as part of the broader effort to transition to low-carbon heating solutions.

In conclusion

Overall, the market for CHP technology in the UK is growing in size, driven by factors such as energy efficiency, government support, climate change targets, energy security concerns, and the push for decarbonization. As the country continues to prioritize clean and efficient energy solutions, the demand for CHP technology is expected to rise further in the coming years.