A response by the European Commission’s energy department to a question by the vice-president of the European Parliament will be seen as a positive sign by the industry of Brussels’ commitment to assisting a badly needed resurgence in cogeneration technology within the bloc.

Industrial CHP is in difficulty in several countries due to extreme fluctuations in electricity prices and overcapacity in much of the electricity market and DG Energy acknowledged that “some industrial gas-fired CHPs” have recently been affected by “market failures”.

Elaborating on its response to the question posed by MEP Alejo Vidal-Quadras, DG Energy indicated its intention to take further steps: “The Commission regularly monitors market developments and is putting in place various initiatives aiming at further facilitating investment in CHP and providing long-term outlook.”

The response also introduces “a dedicated platform on the implementation of the industry-related provisions of the Energy Efficiency Directive, in particular CHP and energy audits, to be set up in 2014”.
The statement will be appreciated by a beleaguered industry. Recent statistics from the Netherlands have shown falling electricity output from industrial cogeneration is eroding previous energy efficiency gains while in Spain the industry has announced that 25% of industrial cogeneration (1.5GW) has stopped since the middle of 2013.

With the ongoing debate on the EU’s 2030 climate and energy policy framework making headlines this month, news of losses of highly energy efficient plants will not be welcomed by Europe’s energy chiefs, who are keen to improve the bloc’s energy efficiency.

The issue of falling industrial output, combined with high gas prices, has made industrial CHPs particularly challenging to operate in the short term. These energy market developments come at a particularly crucial stage of the investment cycle, presenting many industrial plant operators with unbearable financial risks regarding reinvestment in these highly efficient plants.

Drawing attention to the situation in Spain, Mr. Vidal-Quadras says “these are difficult times for industry in Spain. There is no doubt that the high efficiency of cogeneration supports Europe’s energy efficiency ambitions and industrial competitiveness. We must find ways to maintain the installed base of cogeneration through this turbulent period so that industry can emerge strongly from the crisis and profit in the long term”.

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