The European market for small-scale packaged CHP has expanded in recent years, due to the popularity of no-capital finance models, the growing use of biofuels and ever-increasing pressure on organizations to both cut energy costs and ‘green’ their operations. Dr Julian Packer writes.

Even though CHP is now common in industry, the commercial sector in the UK and overseas often still sees it as a ‘new’ technology. Yet packaged options suit a broad range of commercial applications, from retail, hotels and leisure through to office buildings, schools and even small healthcare facilities.

Local authorities in the UK are also tapping into benefits that packaged CHP units can deliver to campus-style education, healthcare or residential sites, ranging from eliminating fuel poverty to providing heat and power for the UK’s ‘Decent Homes Standard’ housing.

In fact, on-site cogeneration is an attractive option in almost any application that requires both heat and power, whatever its size. This message is fast becoming the vehicle whereby smaller sites are adopting packaged CHP options. Whatever the size of installation and the demands made on it, users can be sure of reliable and cost-effective power, 24 hours a day, 365 days a year, with the assurance that they are creating minimal environmental impact.

Inside a small-scale packaged CHP unit
Inside a small-scale packaged CHP unit

The advantage of a small-scale, packaged solution is that power outputs are scaled to the needs of the site, so anything from a power output of 130 kW up to about 2 MW can be packaged to meet the needs of small, medium and larger projects without the need for a bespoke design-install approach. In the UK, a typical scheme operating a 200 kW CHP unit will save about £45,000 ($73,000) per year in energy costs and 325 tonnes of carbon.


Advances in CHP technology also enable small scale CHP to use renewable forms of energy such as organic waste, which would otherwise be sent to landfill but can be used to generate biogas for burning in CHP units. A recent upsurge of interest in on-site cogeneration using biofuelled CHP reflects growing corporate social responsibility (CSR) awareness,as well as escalating fossil fuel costs, a wider ‘spark gap’ causing prices of energy from the grid to soar, and the need for all organizations to reduce their carbon footprint.

Now, with the increasing development of CHP plants designed to burn alternative fuels, there is more chance to generate both electricity and heat without resorting to fossil fuels at all. In addition to biogas, on-site fuels derived from process by-products and other fuels such as life expired wood can be used to the same effect. A CHP plant can also operate on natural gas, landfill gas, liquid gas, propane, diesel and biodiesel.

CHP Unit


New finance options have also opened up CHP plants to organizations that would previously have been unable to consider one due to the cost. Cheaper heat and power from day one and amortization of capital investment in as little as two years makes a clear economic argument for using a small-scale packaged CHP.

Leasing options now make it possible to pay only for the power used, without any capital investment. With the cost agreed in advance, based on the customer’s energy requirements, there are no ‘surprises’ when it comes to invoicing either. A simple energy audit will establish what the requirements are in the first instance, also taking into account practical considerations such as where to site the CHP.

Financing packages such as ‘ECO2Synergy’ from Dalkia see ownership of the CHP asset retained by the company, meaning limited financing risk for the customer. Instead, the customer has its CHP unit installed and maintained by Cogenco, receiving a monthly invoice at a pre-agreed rate per kWh cost according to the electricity generated. This means that organizations can benefit from a consistent approach, with no surprise costs. This type of arrangement is for a minimum contracted period of 10 years and includes CHP units ranging from 30 kWe to 3 MWe.

In addition, for trigeneration, chilling is also provided for organizations with a requirement for chilled water for air conditioning or other cooling loads. For example, under ECO2Synergy, the customer pays only for the electricity, but not the heat or chilling energy that its CHP unit produces.

There are multiple benefits for organizations exploring this route to financially risk-free CHP. The corporate responsibility collateral in reducing carbon emissions and taking an environmentally sound route to energy generation combine to provide a platform for positive PR, while cost savings are gained from the avoidance of price fluctuations and the loss of energy in transmission over standard grid-fed schemes.

CHP Unit


Success elsewhere in Europe and the world provides experience from which to draw. Packaged CHP units have been used for several years and have been adopted by the commercial sector in Europe and elsewhere far faster than in the UK. This is partly down to greater access to the right funding and to higher green energy incentives than have been available in the UK until recently.

Across Italy, France, the Benelux countries and further afield in Finland and Korea, packaged CHP is being applied to healthcare and commercial sites. For example, in Milan a 210 kWe CHP is being used to provide heat, power and cost savings to the Milano Harbour Club, while in Korea a 380 kWe CHP district heating scheme has been delivering savings to the Gimcheon region since 2005. Dalkia has also provided Athens University with a 1.5 MWe CHP, which is serviced remotely from its UK facilities.

Financial viability and the growth of renewable fuel technologies is pushing CHP to a much wider audience in the UK and abroad than it has ever had before. As a result, we will see a rise in the number of health, education, retail commercial and light industrial sites improving their environmental performance through energy generation in the coming years.

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