Small Scale Multi-residential CHP and Environmental Benefits to 2010
Juliette Smith
Energy Saving Trust
UK
Juliets@est.co.uk
This paper, which looks at the potential energy and carbon dioxide savings achievable from small scale combined heat and power (CHP) in multi-residential applications, is intended as a supplement to the paper published by the Trust last year, which gave some indication of the savings that could be achieved by individual energy efficiency measures in buildings, including lighting and the paper recently published which looks at savings from domestic appliances. Another paper is also being published which will look at the potential for new housing.

The format of this paper is similar to the previous two. It takes the market as it is today and builds up the market for CHP in multi-residential buildings, over time. (Multi- residential buildings suitable for CHP are defined as at least 25 dwellings in close proximity which are or could be served by a common heating system.) It is intended to show what could be achieved if the market were built up in a steady, sensible way to avoid overheating. Further papers and studies are addressing the policy costs of stimulating such growth in the market. This evaluation of CHP potential is restricted to existing housing only.

Background to CHP

CHP is the most efficient overall use of energy for electricity generation. This is achieved by recovering much of the heat which is normally lost in a power station. Figure one, below, compares the overall efficiency of CHP with conventional forms of electricity generation. It also shows that local electricity generation provides further advantages in avoiding the losses in transmission and distribution of electricity from power station to end users.
Figure 1 - Efficiency of different energy production technologies
Technology Energy Output Plant efficiencya
(%) 		Delivered efficiency b
(%)

Conventional steam power stations

Electricity

37

34

Combined cycle gas turbines

Electricity

50-55 c

46-50

Large scale CHP

Electricity and heat

75

75d

Small scale CHP

Electricity and heat

79

79d
Source:- Digest of UK Energy Statistics 1997 (except c below and small scale CHP – average efficiency of plant monitored under E’factor programme – see next section)
Notes: All figures expressed in terms of gross calorific value
a Overall efficiency at point of production
b Efficiency delivered to end users
c Figures received from electricity generators 1998
d Assumes electricity and heat used locally

It can be seen that, in primary energy terms, electricity produced by CHP is more than twice as efficient as that produced in conventional steam stations. Conventional steam stations currently account for around half of all electricity generated in the UK. Therefore the potential for reducing energy consumption in the UK through more widespread use of CHP is substantial. Significant environmental benefits, through reduced emissions, will also result. In recognition of the benefits of CHP, the previous Government had set a target of achieving a total installed CHP electrical capacity of 5,000 MW by the year 2000. The present Government has already indicated that it would be realistic to double this target to 10,000MW by 2010. This compares with a capacity of 2,900MW at the end of 1993, and 3,600MW in 1997.

CHP is only cost effective where there are significant and simultaneous demands for electricity and heat. Indeed, over 90% of uptake to date has been in energy intensive industries. A small but growing market now exists for small scale CHP (typically below 1MW) particularly in three main building sectors: hospitals, hotels and leisure centres. However this paper will not look at these, but will concentrate on the multi-residential sector. Nor will it look at domestic scale "micro-CHP", suitable for single-family homes, which is currently undergoing research in a number of countries.

Despite the technical suitability of CHP in this sector, uptake has been very limited. The principal barriers to uptake have been:

During our consultation period we found that this was one of the main areas of concern of respondents. We have therefore gone into more detail on these barriers in the Appendix.

The E’factor Residential CHP Programme

To help overcome the financial barrier, the Trust ran a four-year residential CHP programme over the period 1993-97, in conjunction with the CHPA. In addition to offering grants of up to 30% of capital costs, the latter part of the programme promoted successful installations and thus contributed to a wider understanding of the practicalities of installing and operating CHP in multi-residential premises. The programme was funded by British Gas tariff customers through the E’factor, approved by OFGAS, the gas regulator. A detailed report on this programme is available from the Trust.

As part of the programme, the Trust commissioned research among multi-residential landlords. This concluded that over half of all local authorities and one third of larger housing associations (i.e. those with more than 100 properties) have the potential for CHP. Once other residential properties, such as student accommodation, which have the potential for CHP are included, the market can be estimated at around 5,000 sites. This compares with some 90 sites to date inclusive of those supported by the E’factor, indicating that less than 2% of the potential for residential CHP has been tapped.

Figure 2 below shows the uptake of residential CHP and the effect on uptake of the E’factor programme, which accounts for 80% of installations in the period 1994-97. In terms of installed capacity and number of installations, this programme achieved a seven-fold increase compared to rates prior to the programme, demonstrating that a relatively small amount of grant money (£1.5 million) can have a dramatic impact on the number and pace of CHP installations in this underdeveloped market sector.

Figure 2


Note 1: Over half the installations and installed capacity between 1988 and 1993 inclusive were supported by Department of the Environment or European Commission Programmes.
Note 2: 80% of installations in the period 1994-97 were supported by the E’factor programme

The E’factor programme led to the inception of another initiative to support residential CHP, supported under the electricity Standards of Performance, whereby CHP-based communal heating systems replace old electric heating systems. This has supported around 10 installations since 1996. Apart from these two programmes, only 2 installations have proceeded since 1994 without financial support, indicating that the rate of installation stimulated by the programmes is not sustainable in the short term without support.

Following the opening up of the electricity market commencing later in 1998, local authorities, housing associations and other housing providers will be able to sell electricity directly to their tenants. This should greatly improve the economics of residential CHP – to date, most of the electricity generated has to be sold back to the grid, or to another site owned by the housing provider. In either case, the CHP operator does not get the full value of electricity generated.. However if they are to enter this new world of supplying energy they will need to have confidence, not just in the technology, but also in the financial, administrative and backup arrangements so that they feel able to function as "mini-generators". To achieve this it is likely to require some form of financial support to create the market stimulation needed.

2010 Projections

To investigate the range of possible energy and carbon savings, the Trust has considered three scenarios. In each scenario it is assumed that the heating system displaced is gas fired, with an average efficiency of 75%. This is a conservative assumption, as many older systems will be less efficient and will not be gas fired. The three scenarios are as follows:
  1. Assume the electricity displaced is the average generation mix predicted by DETR for the next decade (as has been used in the other papers in this series), and the CHP efficiency is the average of current technology.
  2. Assume the electricity displaced is marginal coal fired plant, and the CHP efficiency is the average of current technology.
  3. Assume the electricity displaced is the average generation mix predicted by DETR for the next decade (as Scenario 1) and the CHP efficiency is the best of current technology. This scenario acknowledges that, with a growing market, technological developments are likely to occur as competing companies seek to improve their products.

Figure 3 below shows the energy and carbon savings under the three scenarios.

Figure 3 - Annual savings per dwelling in 2010 under the three scenarios
 

Units

Scenario 1

Scenario 2

Scenario 3

primary energy

kWh/a

3,280

4,250

3,914

carbon dioxide

kg CO2/a

600

1,830

720

Comparing the three scenarios

It can be seen that there is a very wide range of energy and carbon savings per dwelling. If the uptake shown in table 2 (682,000 dwellings) could be achieved, this would give carbon dioxide savings in the range 619 million tonnes a year depending on the scenario used. Assuming an average CHP capacity of 0.5 kW electrical capacity per dwelling, as achieved under the E’factor programme, this would give a total installed capacity of 340 MWe (compared with 12 MWe installed to date).

In the following tables we have assumed the more advanced CHP technology displacing an average generation mix (i.e. Scenario 3). This is in line with our previous papers and, the Trust believes, the most likely scenario for 2010. Even taking the most conservative minimum savings available we can still see that impressive results can be achieved if the right circumstances are created which encourage the increased use of CHP.

Table 1 - Potential for take-up of measures

Market research carried out for the Trust in 1995 showed that there were over 5,000 easily identifiable potential sites for CHP schemes. This showed that the market for residential CHP is principally in the social housing sector, comprising local authorities and housing associations. There are several other types of organisation with potential for residential CHP, including hostels, nursing homes and educational establishments (e.g. student halls of residence, residential training centres). In addition, there are other sites currently not served by communal heating systems, but where this could be installed as part of heating system upgrades, as is the case under the Standards of Performance programme. As a result, we can deduce that there are over a million dwellings with the potential for CHP.

The recent estimated rates shown on the table give the average uptake over the last few years, not including those schemes funded by the E’factor or other programmes. The market has mainly been driven by the E’factor programme, and it is misleading to include these installations in any base figures.

Table 1 - Potential for take-up of CHP
Dwellings suitable for supply of heat by community heating
(000s of households)
Measure Potential Recent estimated rates Average energy saved each year in each household

CHP

1,200

1

3,914

Table 2 - Market development

This table builds the market up gradually over time. It has been estimated by the Trust and ETSU that it would take ten years for the market to build to 100,000 dwelling installations a year, and the market has been built up on this basis.

Therefore this table shows that by 2010, nearly 700,000 dwellings could have benefited from CHP.

Table 2 - Number of Installations in the Year shown
(000s of households)
Measure Potential Recent Rate Rate pa 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Total carried out
CHP 1,200 1 2 5 9 14 20 30 44 58 72 86 100 114 128 682

Table 3 - Resultant primary energy and carbon dioxide saving

Quantifying the energy and carbon savings depends on a number of factors, including:

Using our assumptions outlined above on scenario three, we can see that annual primary energy savings of 2,670 GWh are achievable in 2010, leading to carbon dioxide savings of nearly 0.5 million tonnes per annum.

Table 3 - Annual Savings achievable by 2010
(000s of households)
Measure Total Potential Total carried out Energy Saved
kWh 		Primary Energy Saved
gWh 		Carbon saved
('000s tonnes) 		Carbon Dioxide Savings('000s tonnes)
CHP 1,200 682 2,669,359 2,669 133 489

Table 4 - Carbon savings compared with the status quo

To get a realistic picture of what could be achieved in addition to what is already happening we need to compare these results given here with what would is likely to happen without further support, by projecting the recent installation rates (excluding those supported by the E’factor and other programmes) over the whole period. This is shown on table 4. The same energy savings per measure and carbon rates are then applied to these measures. From this it is possible to see how little carbon dioxide savings will be achieved in the absence of any further support when compared with the realistic potential. The final column shows the additional lifetime savings achievable from a programme of support for residential CHP, amounting to over 7 million tonnes of carbon dioxide emissions. In the absence of a programme, lifetime carbon dioxide savings are likely to be just 140,000 tonnes.

Table 4 Annual savings achievable by 2010 Lifetime savings achievable by 2010
Measure Carbon Dioxide Savings
('000s tonnes) 		CO2 Savings if no actions taken
('000s tonnes) 		CO2 savings resulting from programme
('000s tonnes) 		Carbon Dioxide Savings
('000s tonnes) 		CO2 savings if no actions taken
('000s tonnes) 		CO2 savings resulting from programme
('000s tonnes)
CHP 489 9 480 7,341 140 7,201

The Whole Picture

Taking this paper and combining it with the other two in this series, we can calculate the savings in energy and carbon dioxide emissions that could be achieved by 2010, by building energy efficiency measures, lighting, appliances and CHP. The three papers show us that, compared with 1990, energy savings of over 21% in the domestic sector are achievable with carbon dioxide emission savings of 16%. This means that, given proper funding in the right policy context, these four sets of measures alone could make up a large part of the domestic sector’s contribution towards the Government stated aim of reducing carbon dioxide emissions by 20%, against 1990 levels, by 2010.

Appendix 1

Barriers to CHP investment

It is worth looking at this area once again, as during our consultation period, it was pointed out by a large number of organisations that a significant level of savings from small scale CHP would only be achieved if the considerable barriers to CHP were removed, or at least reduced. There are a number of specific areas which need addressing, which fall into four groups:

Any programme of support should seek to address all these barriers if the potential identified in this paper is to be realised.