UK AND EUROPEAN MARKETS
The benefits of CHP in community heating schemes are largely promoted on the basis of assisting disadvantaged people escape fuel poverty, by the provision of affordable warmth and cheaper electricity from a secure, local source. However, there is considerable scope to market domestic CHP to the ‘fuel rich’ – those who spend less than 5% of their total income on heating and lighting. These people comprise one third of households in Britain, and tend to be the least affected by price signals in domestic fuel. As a result, this market sector is difficult to target for energy reduction.
On the basis of the replacement rate for standard boilers in the UK, it has been estimated that there is the potential to replace 600,000 new systems every year. Over a 25-year period, this could transform the energy efficiency of 16 million UK households, while delivering cost savings to consumers of €5.0–6.4 billion per year.
According to predictions by Cambridge Consultants Ltd, the early adoption of domestic CHP could easily lead to sales and service contracts worth over €2.1 billion per year across Europe by 2010. The company also predicts that utilities could see additional profits of €200 million per year, based on a figure of 10% electricity generated by CHP. Ian Halliday-Pegg of Cambridge Consultants says: ‘With over five million domestic boilers sold every year throughout Europe, domestic CHP is a mass-volume business opportunity that simply cannot be ignored’.
Halliday-Pegg adds: ‘It is clear that domestic CHP will shake up the home energy market, but there are still fundamental questions which need to be addressed, and much development and cost reduction is required to transform promising technology into viable products and services for the mass market. Market penetration will only be possible when the systems are at a cost the market can bear’.
Domestic CHP technologies could enable consumers to play a more active role in energy service provision
The UK Government has set ambitious targets for increasing the amount of electricity provided by renewable energy and CHP. It has been widely agreed that this can only be achieved through large-scale use of distributed generation, such as domestic CHP. By using technologies such as photovoltaics and fuel cells, it is thought that domestic CHP can help not only meet the Government’s objectives on climate change and energy security, but could also help to reduce fuel poverty.
The 2003 UK Energy White Paper envisages that the energy system will include substantial amounts of domestic CHP by 2020. It has been predicted that 4 million domestic CHP units will be operating in the UK by 2010. To achieve this, the Government has launched a number of initiatives, including:
The very existence of old, one-way, radial electricity networks is an obstacle to the development of more efficient, distributed generation. Existing networks need to be reconfigured quite radically in order to unlock the many benefits of decentralized energy – an alternative place to start is in countries without a ‘legacy’ electricity network. In both cases, it is up to governments and regulators to encourage the growth of distributed generation, argues Walt Patterson.
What is so special about decentralized energy? Nature isn’t centralized. Natural energy is everywhere, in sunlight, wind, water, plants and animals. It runs the planet. We take all that decentralized energy pretty much for granted. What we notice is the centralized energy we ourselves distribute. We extract coal, oil and natural gas from concentrated central sources – coal seams, oilfields and gasfields. We then move it from place to place – distribute it – in mobile transport such as ships, trains and trucks, and in infrastructure networks such as pipelines. We use energy from fuel where and when we wish, converting it into more useful forms such as heat, light, sound, and kinetic energy of movement. We likewise gather, convert and distribute some natural energy flows, notably those of water, wind and sunlight. To distribute both fuel and natural energy flows we also convert them into one particularly versatile form of energy: electricity.
We can generate electricity anywhere, over a vast range of scales, from watch batteries to turbo-alternators, in almost any quantity from imperceptible to overwhelming
Like natural gas, electricity requires an infrastructure network. Unlike natural gas, however, electricity is not a physical substance, not a fuel nor a commodity. Electricity is different. It is a process, happening simultaneously throughout the whole system infrastructure – generators, network and loads. Indeed without the infrastructure electricity does not even exist. We don’t actually want electricity itself. But we can convert it in turn into all the forms of useful energy, easily, cleanly and conveniently. Furthermore, we can generate electricity anywhere, over a vast range of scales, from watch batteries to turbo-alternators, in almost any quantity from imperceptible to overwhelming; and we do.