CHP
HOW TO MAXIMISE FINANCIAL INCENTIVES FROM CHP BY ACHIEVING ‘GOOD QUALITY’ ASSURANCE To maximise Combined Heat and Power (CHP) efficiency and gain access to attractive fiscal incentives, your cogeneration system must be certified as ‘Good Quality’ under the CHP Quality Assurance (CHPQA) programme. Luke Bannar-Martin of Centrica Business Solutions explains how to optimise operational efficiency to achieve certification. MAKE ENERGY EFFICIENCY SAVINGS WITH CHP CHP is recognised for its exceptional efficiency and economic benefits. From one single on-site process, cogeneration can supply a building with electricity and thermal energy for hot water, and space heating and/or cooling. With a typical efficiency in excess of 80%, a CHP plant is much more energy-efficient than sourcing electricity from the grid and producing heat in gas boilers. As such, it can reduce energy bills by as much as 40%.
ENJOY THE FINANCIAL BENEFITS OF ‘GOOD QUALITY’ CHP Achieving Good Quality CHP, certified under CHPQA, is financially rewarding as certification is linked to tax incentives and exemptions that reward efficient energy performance. These include: • Climate Change Levy (CCL) exemption. CCL is an environmental tax on the electricity, gas and solid fuels used by most non-domestic customers. ‘Good Quality’ CHP is exempt from paying CCL on gas used to generate electricity for on-site consumption. The financial benefits of exemption from the CCL tax can be considerable and have become even more attractive since increases
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in CCL tariffs on natural gas were introduced in 2019. • Annual Investment Allowance (AIA) eligibility. Annual Investment Allowances replaced Enhanced Capital Allowances in 2020. This scheme encourages investment in energy saving equipment, such as CHP, by providing tax relief. • Preferential business rates. Using ‘Good Quality’ CHP for on-site energy can deliver access to preferential business rates.
WHAT IS THE CHPQA STANDARD? The CHPQA programme is the Government’s method for assessing the quality of CHP schemes according to energy efficiency and environmental performance. As such, CHP is assessed on its power efficiency and by a Quality Index (QI), which is a measure of the overall energy efficiency and delivery of primary energy saving. The aim is to monitor, assess and improve the quality of CHP, bringing important environmental, economic and social benefits for users. CHPQA is a voluntary scheme but its financial incentives benefit the user, the environment, and help the government to reach emissions reduction targets.
ENERGY MANAGER MAGAZINE • APRIL 2021
Note that CHPQA certification is not a one-off. Reassessment is required annually.
SUCCEED WITH GOOD QUALITY CHP For a CHP system to qualify as ‘good quality’, evidence of energy efficiency must be provided. The project needs to be more efficient, in terms of heat and power, than alternative energy options. The CHPQA Standard is used to calculate if the proposed CHP scheme exceeds the required threshold criteria by providing the CHP with Quality Index (QI) and power efficiency ratings. Such ratings are achieved by examining data for fuel used, power generated, heat supplied and hours run. To be confirmed as Good Quality CHP: • Existing systems must achieve a QI of 100, and a power efficiency of 20%. • New systems must achieve a QI of 105.
