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 incentives.

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 micro CHP.
• 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:

1. 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.
2. 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.
3. 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 carbon mitigation.

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This site was last updated on 01 January 2015  © Jeremy Harrison