HomeDecentralized EnergyCogeneration CHPCHP sector not yet boosted by European energy efficiency drive

CHP sector not yet boosted by European energy efficiency drive

The European combined heat and power sector has yet to experience a boost from recent legislation on energy efficiency.

COGEN Europe‘s ‘The Power of Heat’ annual conference in Brussels on Tuesday heard that growth in installed capacity remain relatively modest although Managing Director Roberto Francia said, “key pockets are expected to grow significantly over the next few years.”

Despite recent, well-publicised announcements on the energy efficiency directive, as well as COP21, legislative impact is not yet visible in practical terms.

Francia’s comments came as part of an introduction to the industry’s Snapshot Survey which entailed analysis gleaned from 19 countries from the EU along with Turkey, capturing trends from 90 per cent of CHP installed capacity.

The organisation noted the disparity between member states with stable policy frameworks for CHP, which have seen positive growth in the sector’s installed capacity and energy generation, and those without.

“Where unstable frameworks exist… unpredictable and fragmented policies are eroding investor confidence in already unfavourable energy markets,” Francia said.

New enactments in Brussels has yet to be adopted into workable national policies that encourage further CHP market activity but he said the follow up to the new cooling and heating strategy ‘was likely to strengthen the role of CHP over the next five years.’

It was ‘up to members to enhance the dialogue with decision makers at national level to make the most out of an evolving business environment.’ He pledged that COGEN Europe would continue to advocate for high efficiency CHP at EU level, promoting an ever stronger role for advanced cogeneration technologies in the energy system.

12 per cent of electricity production and 15 per cent of heat production come from cogeneration within Europe with CODE 2 recently identifying a potential for those figures to be raised to 20 per cent and 25 per cent respectively

The survey highlighted that segments of the CHP market are expected to grow significantly in the coming years, including the commercial and renewable CHP sectors which are showing strong growth potential in the short-to-medium term.

One of the main findings by analysts was that installed CHP capacity was stable over the past five years, as growth reported in countries representing 39% of installed capacity was offset by flat trends or even decline in the rest of the countries surveyed.

The analysis found that generated electricity trends declined in most countries due to the economic downturn, decreased demand for industrial goods and energy and also quite unfavourable market conditions in terms of spark spreads and policy.

“While across nations policy instability has arisen most frequently,” COGEN Europe’s Alexandra Tudoroiu-Lakavice told the audience, “looking deeper, commercial CHP has proven quite strong in the last four to five years ” light industry commercial CHP has grown in a positive direction despite poor spreads, particularly in Belgium, the Czech Republic, Ireland, Poland and theà‚ UK.”

Lakavice referred to a renaissance in district heating in the Czech Republic, France, Italy and the UK and the general improvement of micro-CHP across the bloc, but overall she said performance is ‘patchy’.

Delegate Kees Den Blanken of COGEN Nederland questioned if the industry could make any real progress if it continues to rely on policy stars being aligned in the industry’s favour.

“EU CHP has remained stable at 12% over the last five years and so we have failed,” he said. CHP can “reduce GHG by 10-12% ” that type of bigger picture is what is missing and the drama of the big numbers we play with. If we continue to rely on pressing for stable policy measures we will be at 12% and still not fulfilling promises for another five years.”

In terms of energy efficiency policy implementation, namely the European Energy Efficiency Directive (EED), only 15% of member states surveyed were on target, with 17% reporting no progress and the majority of member states still in the middle of progressing projects, therefore the potential impact of that legislation on CHP remains unclear.

The energy efficiency directive (EED) implementation deadline was December 2015 so it may be later in the year before more solid signs of progress from that legislation are evident.

This year’s conference saw spotlight shone on Italy with Marco Baresi of Italcogen highlighting the challenges facing operators in what is the third largest market for CHP in Europe.

The most recent information to date revealed that the country’s capacity rate had fallen back to 2004 levels. On the positive side growth is being recorded in renewable CHP.

The importance of demonstrating ability of the technology to capture energy savings, as most recently evident in micro-CHP in Slovenia, was mentioned in a subsequent Q&A session.

Baresi told the audience that the industry had a difficult task at the moment thanks to the negative impact of government intervention.

“The main barrier in Italy is the lower cost of electricity for energy-intensive industries due to special discounts on energy bills and special incentives. It has a bearing whether you include CHP or waste heat recovery in your business plan. There is no link between the incentive they receive directly and energy efficiency legislation. In Italy we are working on linking that up.”