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Combined solution to cutting costs

25 January 2013

CHP is almost twice as efficient as a conventional power station and can save some companies up to 50% of their electricity costs, yet some organisations are still not aware of the benefits. Marcus Dodsworth, manager of S

CHP is almost twice as efficient as a conventional power station and can save some companies up to 50% of their electricity costs, yet some organisations are still not aware of the benefits. Marcus Dodsworth, manager of Shentongroup technical service division, comments

We all want to do our bit for Climate Change, right? We accept it may sometimes mean spending money to give long term benefits. And we're happy to splash out on carbon reduction technologies even when it comes straight off the bottom line of the budget, right? Wrong! Why, I hear you say, should I spend cash on carbon reduction when my first priority is to meet performance targets and keep to my budget? We agree. Energy costs have risen more than a 100% recently and the UK is bracing itself for further electricity hikes and further legislation to cut the amount of CO2 we emit. This issue isn't going to go away.

However much we subscribe to the green agenda, and however much we want to act responsibly on climate change, the truth is we have to attend to our basic business profitability first.

The good news is that there are many carbon reduction technologies that will improve your environmental standing and pay for themselves.

A Combined Heat and Power system (CHP), for example, allows heat and electric power to be generated at the same time from a single packaged unit on site. A natural gas engine drives a generator and 'spare' heat from the engine, which normally would be wasted, is absorbed by water through a special heat exchanger. This hot water is connected to the building heating system and supplements the work of the boilers. Electricity generated is connected to the mains incoming power, and supplements or replaces power purchased from the grid. As a rule of thumb, producing 1kW of electricity creates 2kW of usable heat energy. CHP systems capture most of the waste engine heat and turn it into useful hot water, making it more than 84% efficient. It also significantly reduces CO2 emissions.

Conventional power stations waste almost all the heat energy produced. Furthermore, there is a significant drop in power through the grid network, called transmission losses.

In other words some of the electricity that the power station makes never gets to you. It is lost in the distribution system of the national grid. So, not only is conventional power generation inefficient, it produces large amounts of CO2 in the process. The power station is only about 30% efficient; a further 5% is lost in transmission to your site. From a carbon point of view, more than 0.5t of CO2 can be emitted for every 1MWh of power produced.

You pay for this. Your electricity bill shows no credits for heat wasted at the power station or lost in sending the power to you in the first place. And you pay a levy on the carbon emitted by the power station.

Suppose you could generate your own electricity? Surely this would eliminate these losses? Suppose you could save the heat from the process instead of sending it into the atmosphere? Consider then, CHP, an established technology that can provide a reliable and cost effective energy supply.

The cost saving potential is attractive: 84% efficient means less money spent on energy.

Located on site means no transmission losses - what you generate is yours to use.

The gas used can be exempt from the Climate Change Levy (CCL).

Reduce the use of your existing boilers.

Power-cut back up facility.

Manufacturing facilities, some hotels, leisure centres, etc, all have sufficient demand for space heating and hot water to use a CHP plant, such as Powertherm. Some manufacturers, such as Scorpion, can synchronise multiple units to create an efficient on-site power station that can substantially reduce electricity bills.

There are three important criteria to consider when contemplating CHP: The ability to use the heat for heating or hot water most of the year round; using a reasonable amount of electricity to start with; and the difference in electricity and gas prices. CHP burns gas to produce cheap electricity, so the ratio in these costs is key.

Here's a yardstick. If your annual costs for electricity are in excess of £200,000 and you have a constant need for hot water, a CHP system may be the answer. Savings and ROI are impressive. Some installations are saving £40,000+ per year. For example, a medium size hospital would be a classic case where medium size CHP is likely to be effective.

A CHP scheme such as a Powertherm can considerably reduce your carbon footprint.

The Carbon Trust has 0% loans available for up to 100% of the cost, to qualifying companies. The loan is re-paid out of the energy saving. CHP stabilises the risks associated with rising electricity prices and minimises the impact of the CCL. Good quality schemes can also qualify for the Government's Enhanced Capital Allowance.

Energy industry leaders and government ministers agree that CHP will play a more prominent role in the United Kingdom's transition to a low-carbon economy. It is an integral part of its target to set the UK on the path to achieving an 80% reduction in carbon dioxide emissions by 2050.