As energy prices continue to rise and the UK’s ambition to reach net zero emissions by 2050 intensifies, many businesses are seeking innovative ways to reduce costs and improve efficiency. One promising solution is Combined Heat and Power (CHP) systems, which enable businesses to generate electricity and heat from a single fuel source, offering enhanced energy efficiency and sustainability. The UK Government’s Clean Growth initiative emphasises the importance of energy efficiency and the decarbonisation of heat, making technologies like CHP a vital component in the journey toward a sustainable future.
What is Combined Heat and Power (CHP)?
Combined Heat and Power (CHP) refers to the simultaneous cogeneration of electricity and heat from the same fuel source. This highly efficient process captures and utilises the heat produced during power generation, which is typically electrical but can sometimes be mechanical. By generating heat and power simultaneously, CHP can reduce carbon emissions by up to 30% compared to separate generation methods, such as using a gas-fired boiler for heat and a conventional power station for electricity. This dual capability allows businesses to meet demands for both heat and electricity in the same location, resulting in lower energy costs and reduced carbon emissions while also decreasing air pollution.
The versatility of CHP systems makes them technically feasible for a variety of thermal generating stations, including energy-from-waste, biomass with Carbon Capture Utilisation and Storage (CCUS), hydrogen, and nuclear energy. However, a significant majority of CHP plants in the UK are currently fuelled by natural gas. CHP systems can also export any unused power generated on-site, providing flexibility to the electricity network and acting as dispatchable generation. This capability helps to stabilise the grid and can lead to further savings for businesses.
The Business Benefits of CHP
Cost Savings
One of the primary advantages of CHP is its potential for cost savings. By producing electricity on-site, businesses can significantly cut their reliance on the grid and lower energy bills. CHP typically achieves an efficiency of over 80%, meaning that a significant amount of the heat that would otherwise be wasted during power generation is recovered for additional uses. For many organisations, CHP represents the most significant single opportunity to reduce energy costs, with existing users typically saving around 20% on their energy bills. The initial investment in a CHP system can be substantial; however, many systems can pay for themselves in as little as one to three years. Furthermore, the UK Government provides support to enhance the commercial case for investing in CHP, making it a more attractive option for businesses seeking to improve their energy efficiency.
Increased Energy Resilience
On-site power generation through CHP systems provides crucial security against grid outages, ensuring an uninterrupted power supply. This resilience is especially valuable in industries where energy downtime can lead to costly interruptions. Additionally, CHP systems are designed with advanced controls, such as island mode, which allows them to operate independently of the grid during failures. This capability debunks the myth that CHP systems are difficult to manage or risky, showcasing their reliability as a power source for businesses.
Environmental Impact
As the UK continues to phase out fossil fuels and increase the share of renewable energy in its electricity generation mix—currently over 40%—CHP systems play a crucial role in the decarbonisation of heat. They not only provide cost-efficient energy but also contribute to significant reductions in greenhouse gas emissions. By utilising both heat and power generation from the same fuel source, CHP systems achieve up to 90% efficiency, minimising waste and improving overall energy use. Renewable CHP systems further enhance sustainability by utilising carbon-neutral fuels, thus supporting the UK’s commitment to achieving net zero emissions. By reducing reliance on grid electricity, CHP can also decrease transmission and distribution losses, contributing to a more efficient energy system overall.
Sustainability and CSR Goals
With the UK's net zero target firmly in place, businesses face increasing pressure to reduce their carbon emissions and enhance sustainability. CHP systems enable companies to meet their Corporate Social Responsibility (CSR) and Environmental, Social, and Governance (ESG) goals by significantly lowering emissions and improving energy efficiency. Furthermore, CHP plants are widely used across various sectors, including chemicals, food and drink, paper, refining, and healthcare, particularly in large buildings with high heat demands, such as hospitals. These systems are integral to cost-effective low-carbon infrastructure in high heat density areas, making them a versatile and essential solution for multiple industries.
Flexibility and Network Support
CHP systems can adjust their exported power output to provide flexibility services to the electricity network, which is essential for maintaining stability as the energy landscape evolves. As more renewable energy sources are integrated into the grid, the ability of CHP systems to respond to fluctuating demands can help ensure a reliable power supply. This feature enhances the overall resilience of the energy system, allowing businesses to contribute positively to the grid while benefiting from lower energy costs.
CHP systems offer businesses a smart, efficient solution to rising energy costs and the challenges of decarbonisation. As the UK moves toward net zero by 2050, with interim milestones such as a 68% reduction in emissions by 2030, businesses must adopt technologies that support these national goals. Far from being outdated or difficult to manage, CHP systems are modern, highly efficient options that can help businesses cut costs, improve energy resilience, and meet their sustainability objectives.
To learn more about how CHP could benefit your business or to explore a tailored energy strategy, visit ecbs.co.uk or contact our team of experts for a consultation.