DEPARTMENT FOR
ENVIRONMENT, FOOD AND RURAL AFFAIRS News Release (News Release ref
:373/07) issued by The Government News Network on 19 October 2007
Increasing the
UK's capacity for Combined Heat and Power generation (CHP)
should yield considerable environmental and economic benefits, two
Government reports reveal today.
The reports, published as part of the requirements of the EC
Cogeneration Directive, predict that over 10% of the UK's
electricity will come from CHP generation by the end of 2010. It
goes on to state that the economic potential exists to provide 17%
of our total energy requirement from CHP.
The report on the UK's national potential for CHP examines
how the opportunity to capitalise on this energy source can be
harnessed and it outlines the taxation, market mechanisms and
policy framework in place to support the growth of Good Quality
CHP capacity.
Combined Heat and Power is a highly fuel-efficient process which
sees the simultaneous generation of heat and power in a single
process. This means it can produce greatly reduced levels of
carbon dioxide emissions compared to the separate generation of
heat and power e.g. via on-site boilers and fossil fuel power
stations. As CHP is a process that can be applied to a variety of
fuels and technologies, it will play a crucial role in the
UK's low carbon future.
Notes to editors:
1 The Government is committed to sustainable development as
reinforced in the Energy White Paper 2007 and the Energy Review
2006. CHP has an important role to play in achieving the White
Paper aims to move the UK towards a thriving, competitive,
low-carbon economy. As emphasised in the Pre-Budget Review, the
Government will aim to ensure that arrangements for future phases
of the EU ETS continue to recognise the carbon savings that CHP delivers.
2 A report illustrating the UK national potential for high
efficiency CHP, and a report on progress to meeting that
potential, have been published to meet the requirements of
European legislation (the Cogeneration Directive 8/2004). They can
be found on the Defra website:http://defraweb/environment/climatechange/uk/energy/chp/index.htm
3 The UK Progress Report shows that in 2005, using definitions in
the European legislation, there were 1,502 CHP units with a total
electrical capacity of 5,440 MWe, generating 27TWh of electricity
and 51TWh of heat in the UK. The latest energy projections for the
UK suggest that by the end of 2010, 36 TWh of the 350 TWh of
electricity supply that will be needed will come from Combined
Heat and Power. This projected contribution, of just over 10% of
total electricity, is from the expected development of
cogeneration. However, the report identifies that this projection
is not the total economic potential available in the UK, which
could be up to 61TWh of electricity or 17% of the total needed by
2010. This figure should be regarded as an upper limit that may
not be realised in practice.
4 The report on the UK national Potential for CHP details how the
Cogeneration Directive has been implemented and outlines existing
incentive schemes. . The report analyses barriers to Combined Heat
and Power, which include the relative prices of gas, and the
national policy framework.
5 The UK Government has set a target of at least 10 Gigawatts
(GWe) of installed Good Quality CHP capacity by the end of 2010.
'Good Quality' denotes those schemes that have met the
energy efficiency criteria laid down in the UK's CHP Quality
Assurance Programme (CHPQA). The energy efficiency criteria are
currently under review to bring them in line with the requirements
of the EU Cogeneration Directive (8/2004). Certification under
CHPQA entitles schemes to various financial benefits, more details
of which are available from http://www.chpqa.com. The
Government offers incentives for Good Quality CHP through:
Taxation:
- Exemption from the Climate Change Levy for all Good Quality CHP
fuel inputs and electricity outputs
- Eligibility for Enhanced Capital Allowances (ECAs) for Good
Quality CHP plant and machinery
- Business Rates exemption for CHP power generation plant and machinery
- A reduction in VAT on domestic micro-CHP
Market mechanisms:
- Eligibility for Renewable Obligation Certificates (ROCs) for
biomass-fuelled CHP and Energy-from-waste (EfW) CHP (the biomass
element of fuel utilised)
- Favourable allocations that reward the carbon saved by CHP
schemes under phase II of the EU Emissions Trading Scheme
Positive policy framework
- Encouraging the take-up of CHP through planning policy and
Building Regulations
- Updated guidance for power station developers to ensure full
consideration of CHP
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