Divided on combined heat and power

Is there anything else that is happening in Europe?” On the face of it, it seemed a vague question; met with an equally vague, almost blank response. The delegate asking the question at this year’s Power-Gen Europe conference in Dusseldorf seemed slightly irritated that a plenary session on “Fuel options for future generation in Europe” quickly turned into a discussion on emissions and strategies for achieving climate change goals.

Discussions can be guided but will ultimately run their natural course. Yet on reflection, it was interesting that such a discussion did not raise more questions about the combined heat and power option. There was a mention that more investment was needed to develop renewables and distributed generation technologies such as fuel cells but there was nothing on the specific role for cogeneration. In his opening keynote address, Harry Roels, Chairman of the executive board, RWE had noted: “As climate protection activity picks up, distributed power generation using combined heat and power … will gain importance… and a directive for the promotion of combined heat and power generation Is in the pipeline.”

It may have been that we simply did not get around to discussing CHP or it may have been that what is “in the pipeline” may stay in the pipeline for some time yet. On May 14, European Energy Ministers reached a unanimous draft agreement on the EU Cogeneration Directive.

Loyola de Palacio, representing the European Commission at the Council of Ministers said: “The agreement on cogeneration is a very important step toward a sustainable energy policy. This new legislation is an ideal addition to the legislation proposed on renewable energy sources…” This draft from the Ministers, however, came just 24 hours after the European Parliament approved a radically different version of the law.

Energy ministers seem to be adopting a more light-handed approach to the directive proposed by the Commission. In their draft, ministers agreed that member states should not be bound by compulsory targets (see page 11). Minister also say that member states should have the option of giving cogenerated power priority access to the grid.

The European Parliament, however, has taken a much stronger and more definitive stance. Its approved version stipulates a mandatory EU-level and national cogeneration goals. It is also calling for CHP plants to be guaranteed right first of dispatch, with free access for power from micro CHP.

With the Parliament and Council sharing responsibility for the development and adoption of the Directive under what is called a ‘Co-decision procedure’, the next step is to focus on how the differences between the two proposals can be resolved.

Following the Parliamentary proposal, Eurelectric (the Union of the Electricity Industry) and Euro Heat & Power issued a statement. Eurelectric believed it would be fundamentally wrong to ask member states to require transmission and distribution operators to bear the cost of CHP plants. The statement also stressed that the basis for any CHP policy must be energy savings compared to separate production of electricity and heat and that CHP should not be target in itself. It went on to say that market forces should be the most important driving force behind the development of CHP.

In truth, it is this last statement which is the crux of the dilemma facing CHP, renewables and the EU’s efforts to meet Kyoto targets in an open competitive environment. In recent years we have seen the demise of cogeneration as such plants have struggled to dispatch against larger gas fired combined cycle plants in a market which has seen plummeting wholesale power prices. Without incentives and subsidies, the same would happen to renewables.

If the EU has committed its member states to meeting its Kyoto targets ” in the agreed time frames ” then maybe it is time to lay down laws which do not necessarily make economic sense, go against national political decisions and also fly in the face of competition. Nuclear provides a case in point and Bernhard Fischer, senior vice president of Energy Business Optimization, E.ON Energie summed it up when he said: “You can phase out nuclear and you can meet meet Kyoto targets but you cannot do both.” One way or another, meeting the Kyoto targets will cost and rules will have to be bent. Who pays and how we bend the rules is what has to be decided.

In truth, when discussing generating options for the future, it is hardly surprising that all roads eventually seem to come back to the same thing: environment and climate change. I managed to speak with the delegate later who wondered whether his question had been understood. I said I was not sure, maybe it hadn’t. But in short I think the answer to your original question is: “No”.

Junior Isles, Managing Editor & Associate Publisher

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