23 Jan 2002 – Powergen, the UK gas and electricity group subject to an agreed bid by E.ON, has taken its £500m ($750m) combined heat and power business off the market, having failed to find a buyer in nine months.

The company said Tuesday that bids received failed to match the true value of the business.

Powergen said it would continue with plants under construction but would not initiate any new projects. Powergen operates 17 CHP plants across the UK and has four more under construction. The plants use the heat produced as a by-product of burning gas to sell to industry or for district heating.

The CHP business has been on the market since April 2001 – shortly after the introduction of the Neta electricity trading scheme, which has operated against CHP producers due to their unpredictable production patterns.

Powergen said that its CHP operation was no longer considered core to its generation and energy retail activities. Rival UK CHP producer Innogy has also put all new development on hold.

The government is considering measures to encourage CHP, which is more efficient and considered more environmentally friendly than conventional thermal power generation.

Analysts said that the effect on the group would be minimal and that it would not effect the E.ON bid.

There was good news for CHP this week when Conoco, the US energy company, announced it would be building a 730 MW CHP plant in Lincolnshire – a larger capacity than all Powergen’s 21 plants put together.