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
timescale. Given an equitable market framework, these drivers will be
sufficient to achieve the predicted market penetration rates without artificial
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.
Within the EU15, the potential for micro CHP may be
summarised as follows:
- Ultimately micro CHP will provide an installed generating capacity in
excess of 60GW.
- In two key markets, UK and Germany, this capacity will be roughly
equivalent to the existing nuclear generating capacity.
- 40 million homes are suitable for micro CHP.
- Ultimately micro CHP will contribute an annual reduction of 200 million
tonnes CO2 to EU mitigation targets, somewhat greater than the
currently anticipated total for all CHP measures, which take no account of
- Within the context of the Kyoto timeframe, it is anticipated that 1
million systems will be installed annually by 2010, representing an annual
saving of 15 million tonnes of CO2.
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 completed prior to early
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 of micro CHP exports (this will also be required for other micro
embedded generation technologies such as PV). This may take the form of
profile settlement as currently used for domestic supply trading or net
metering with an appropriate allocation of distribution network costs.
- Empower national electricity industry regulators (where these exist) to
implement the standards developed by these groups.
In addition to these measures, the targeted implementation of carbon tax
exemptions or similar reflection of external cost mitigation may directly
influence the rate of growth of the micro CHP market and the consequent rate of