UK’s new CHP efficiency requirements “will be a challenge”

The UK’s Department for Business, Energy and Industrial Strategy (BEIS) has announced the outcomes of its consultation on amendments to the Contracts for Difference scheme (CfD). These include a number of revisions for Combined Heat and Power plants (CHP).

CfDs are used by the UK government to support new, low carbon electricity generation projects.

Generators compete in the auction by submitting the lowest fixed price (known as a ‘strike price’) possible in their application for CfDs. They are then paid this price consistently rather than at fluctuating market rates. The project with the lowest price is chosen first, then the second lowest and so on until a project is added and it exceeds the scheme’s budget limit.

In December 2017, BEIS launched a consultation on its proposed changes to the CfD scheme. One of the proposals was to increase the overall efficiency requirements for CHP eligible for the CfD scheme, “to ensure CfD supported plants are of a suitably high overall efficiency.”

 

Consultation responses

The consultation came to a close in March 2018. Following the responses, BEIS states the Government “intends to increase the minimum overall efficiency levels of CHP.”

Specifically, all dedicated biomass with CHP and energy from waste with CHP facilities applying for new contracts would need to have a minimum 70% overall efficiency (net calorific value), a primary energy saving of 10% (gross calorific value) and 10% heat efficiency.

Previously, smaller (those under 25MWe) biomass and EfW plants with CHP faced no overall efficiency requirement, other than delivering a 10% primary energy saving and a 10% gross calorific value minimum heat efficiency. Under the proposals however, the Government intends to apply the same efficiency requirements to plants under 25MWe as to larger plants.

“These new standards will be very challenging to meet and we pushed hard against them at the consultation, meeting with BEIS to express our opposition,” a spokesperson from the UK’s Renewable Energy Association told Bioenergy Insight.

The spokesperson pointed out that it wasn’t all bad news for CHP, however.

“It is good that they did not decide to implement an additional heat efficiency threshold alongside the overall CHP efficiency requirements.

“These changes must be seen in the context of declining generation assets, the need to decarbonise quickly and the jobs and investment such plants could provide.”