Combined heat and power: the route to 2050 - call for evidence

Overview

Clean Growth is one of the four grand challenges of the UK Government’s Industrial Strategy and energy efficiency and decarbonising heat are vital parts of the ambition. In June 2019, the UK committed in legislation to bring all greenhouse gas emissions to net zero by 2050.

Combined heat and power (CHP) is an efficient process that captures and utilises the heat that is produced in power generation, this is usually electrical but can in some instances be mechanical. By generating heat and power simultaneously from the same fuel, CHP can reduce carbon emissions by up to 30% compared to the separate generation of heat through a gas-fired boiler and an electricity power station. Where a demand for both heat and electricity exist in the same location, CHP can reduce energy costs whilst reducing carbon emissions and air pollution.

CHP schemes can encompass a range of different generation technologies and can be fuelled by fossil fuels or renewables e.g. biomass. CHP generators may export power not used on site. As dispatchable generation CHP can adjust its exported power output to provide flexibility services to the electricity network. CHP plants are used by a wide variety of sectors, in particular by chemicals, food and drink, paper and refining industries. Large buildings with high heat demands also employ CHP, such as hospitals, and CHP plants are a key technology for heat networks, which in high heat density areas are the most cost-efficient low-carbon infrastructure. 

Government provides support to improve the commercial case for investing in CHP because of its relatively long payback period, the environmental benefits of cogeneration and technical complexity. The CHP Quality Assurance Scheme (CHPQA), an annual assessment process, that ensures that all CHP plants that benefit from government support meet a minimum level of energy efficiency.

Since the introduction of the CHPQA scheme, the UK generation mix has changed considerably, with renewable and low carbon generation providing increasing proportions of the national electricity needs. As this has happened, the emission reductions delivered by CHP electricity generation are reduced. Previous modelling work on the impact of new natural gas CHP plant on the GB electricity market concluded that from 2032 new natural gas CHP capacity stop displacing generation by natural gas fired combined cycle gas turbine (CCGT) power stations and begin to displace an increasing proportion of low carbon generation, increasing carbon emissions.

Successful achievement of our Carbon Budget targets on the transition to net zero greenhouse gas emissions by 2050 will require virtually all heat and electricity demands to be decarbonised and significant action taken to help industrial processes to decarbonise. We are seeking views to support the Government as it considers what the role for CHP technologies may be in the transition to 2050. We intend to identify the possible opportunities and technological developments which may be combined with CHP technologies, along with appropriate incentives and support for deployment, to meet these goals.

Why your views matter

The Government is seeking initial views on the current benefits from Combined Heat and Power (CHP) and the future role of CHP generation of all types in the transition to achieving net zero greenhouse gas emissions by 2050, and in particular how the technology may support the decarbonisation of heat and industry.

We recognise the current challenges facing the economy and this consultation is not indicating the removal of support at this time but are seeking feedback from all CHP stakeholders to shape the future approach.

We invite your views and seek evidence in response to the questions. Responses will help inform future policy development.