8 Feb 2002 – The final report aimed at helping smaller power generators issued by UK power regulator Ofgem yesterday has been criticised by the association representing the Combined Heat and Power (CHP) industry. In a statement issued today, CHP Association director David Green said Ofgem had failed to address the government’s concerns over the decline in the use of CHP.

Ofgem published its report on “Consolidation”, its longstanding attempt to limit the damage caused to the achievement of the Government’s CHP target of doubling UK use of CHP to ten GWe by 2010.

David Green, Director of the Combined Heat and Power Association said, “It is frankly incredible if Ofgem believe that a few minor tweaks at the margin will overturn the enormous damage of – a 60 per cent fall in the output of CHP with revenues down by £140m ($200m). “The report contains no analysis to support Ofgem’s speculation that consolidation will help smaller generators, and no suggestion of the scale of the benefit. Without this evidence, Ofgem are making hollow claims.”

The CHP and renewables industries represented in the working group have stressed that the real barriers to consolidation are the enormous risks that Neta’s artificial settlement arrangements have introduced, and the weak commercial position of small generators. The CHPA believe that the report provides no clues as to how these fundamental difficulties will be addressed.

Since the introduction of Neta, all the major commercial developers of CHP plant have either exited the market, or placed their plans for new projects on hold said Green. “Neta was introduced to tackle yesterday’s problems in the electricity industry, with scant regard for the sustainable generation technologies of tomorrow.”

The CHPA say that weaknesses in Neta have meant that the costs of delivering sustainable energy have been artificially inflated, limiting customer choice and crippling a fledgling industry. “Until the fundamental problems of the Balancing Mechanism are resolved,” say the CHPA; ” CHP must be removed from the risks of Neta.”