Development of combined heat and power systems could cut the UK’s gas imports by 50%, says a new report from Finnish energy consultants Pöyry.

The report, commissioned by environmental campaign group Greenpeace, identifies the potential for up to 16 GW of new CHP capacity at just nine major industrial sites around the UK.

The Pöyry report, ‘Securing Power’ provides a best estimate for the technical potential for additional major CHP in UK industry of 13.9 GWe +/- 2.5 GWe and outlines industrial clusters where there is significant potential for CCGT CHP to meet local heat demand, as well as providing electrical capacity to the grid. The industrial clusters include Coryton, Ellesmere Port, Grangemouth, Immingham, Pembroke and two sites in Teesside, among others and the report finds that CHP on these sites could save up to 36 million tonnes of CO2 e each year whilst cutting energy costs.

Greenpeace is calling for policy makers to ensure that adequate incentives are in place to send clear positive long term investment signals to CHP developers, including extending the Climate Change Levy Exemption for good quality CHP until at least 2017.

The government must also endeavour to ensure that the Emissions Trading Scheme post 2012 does not unintentionally penalise CHP and use public financial arrangements to support the construction of heat networks for major district heating locations, including the major industrial sites identified in Pöyry’s report.
Companies at each of the nine sites should also be obligated to connect to the heat network, Greenpeace says.

Graham Meeks, director of the CHP Association, welcomed the report saying: ‘With industry and householders struggling with higher heating costs driven by rising gas prices, it makes no sense to perpetuate the waste of energy we see today in the power sector. And with natural gas taking an increasing share of the power generation market, the problem of gas dependency is only set to grow. If we take seriously the threats of energy security, fuel poverty and climate change, then we must redouble our efforts to recover and use the heat lost from power generation.’

However, Meeks added: ‘While the government has put measures in place, the most important of these expire in 2013 and so present few attractions for investors. Worse still, the EU Emissions Trading Scheme may even disadvantage CHP after 2012. In these uncertain conditions for CHP, is it any surprise that the power industry will resort to building alternatives that are lower cost and lower risk, but ultimately more wasteful and more polluting?’

In the wake of the report, Liberal Democrat leader Nick Clegg set out a policy framework designed to deliver investor confidence in combined heat and power.
The opposition party said such a scheme created the opportunity for the UK economy to cut energy costs, reduce gas dependency and deliver significant carbon savings. Saying ‘There can be no excuses not to act: CHP makes environmental and economic sense,’ Clegg said he also supported proposals to introduce a low-carbon heat obligation and made it clear that CHP should be eligible for any support under any feed-in tariff scheme.

Meeks commented: ‘The commitment to extend the exemption from the Climate Change Levy is a significant step.’

The development came just days after Conservative leader David Cameron set out his green agenda with a significant push on CHP. Calling for an environmental ‘revolution’, Cameron said that market development and creating commercial frameworks to give businesses the confidence to invest was high on the agenda, together with green ‘replacement taxes’, and energy efficiency. ‘A Conservative government will follow the Californian model, and implement an Emissions Performance Standard. This would mean the carbon emissions of all electricity generated in our country cannot be any higher than that generated in a modern gas plant,’ said Cameron, adding that the energy sector under a Tory government would based on small, local providers producing energy for their own use, ‘and getting paid for it.’ Cameron also said this model would be ‘based on cleaner – and cheaper – energy sources like combined heat and power, and solar.’

Pledging to introduce a new system of ‘feed-in tariffs’ and committing a Conservative government to making this wave and tidal research and development a priority for Britain, Cameron also signalled a push for domestic renewables.