SUMMARY & KEY RECOMMENDATIONS
Micro CHP represents a potentially disruptive force in the
evolving European power markets. It is set to have a considerable impact on the
technical and commercial shape of the emerging liberalised electricity market. The combined influence of economic and environmental drivers,
coinciding with technological maturity, has established a framework in which
micro CHP is likely to become a reality within two years. It will achieve a
significant impact within five years and market saturation within a 10-20 year
an equitable market framework, these drivers will be sufficient to achieve the
predicted long-term market penetration rates without artificial incentives. ‘Pump
priming’ support such as that offered by the EESoP/EEC programme would help
bring the technology to the market faster.
However, there are two key factors determining the growth of
micro CHP, which lie within the ambit of government agencies. These are,
firstly, the regulation of connection agreements (both from a technical and
commercial viewpoint), and the introduction of simplified metering, settlement
and trading procedures. Without the
imposition of equitable, transparent connection charges and technical standards,
it will be impossible to (legally) connect micro CHP systems without costly and
counterproductive components in the system. Without
simplified metering and settlement procedures, it will not be possible to obtain
the maximum value from micro CHP generation and thus extend the market and
economic viability of the technology.
A viable, cost effective energy efficiency measure
Applicable to a wide variety of properties
Applicable to properties that fall outside existing cost effective energy
Mechanism to promote market competition
Micro CHP potential
Within the UK, the potential for micro CHP may be summarised
- Ultimately micro CHP may provide an installed generating capacity of
- In the UK this capacity will be roughly equivalent to the existing nuclear
generating capacity, but the annual output will be somewhat lower as micro
CHP is peak following not baseload
- 13 million homes are suitable for existing micro CHP technologies.
- Ultimately micro CHP may contribute an annual reduction of 16 million
tonnes of carbon equivalent to UK mitigation targets.
- Within the context of the Kyoto timeframe, it is anticipated that 250,000
systems will be installed annually by 2010, representing an annual
additional saving of 1MtCe.
- Annual savings of up to 30% may be achieved on a typical domestic fuel
- Micro CHP and associated equipment represents a substantial manufacturing
opportunity, worth between £70 and £150 million per annum in the UK alone
by the end of the decade
Urgent government action is required if the target market
launch dates and subsequent growth and CO2 mitigation levels for
micro CHP are to be achieved. It is anticipated that the first Stirling engine
based micro CHP products will become available on a commercial basis during the
first half of 2002. These measures therefore need to be implemented during
2001/2002. Specific measures proposed are:
- Establish EU and national working groups to develop appropriate connection
standards and cost methodologies for connection of micro CHP units within
the home and to the network.
- Establish an industry-wide methodology for simplified metering and
settlement for micro CHP exports, including provision for profile settlement
or net metering with appropriate allocation of distribution network costs.
- Empower OFGEM to implement the standards developed by these groups.
- Targeted implementation of carbon tax exemptions or similar ‘externality’
measures and the application of EESoP/EEC funding to directly influence the
rate of growth of micro CHP in the UK.