FEATURE HVAC


HOW CHP SOLUTIONS CAN LEAD TO BIG SAVINGS


By Nigel Thompson, sales manager – gas power solutions at Finning UK and Ireland


F


or plant owners and operators looking to make savings and improve energy


efficiencies, combined heat and power (CHP) can be an ideal solution. To fully realise the benefits of this technology, investors should consider the long-term benefits to whole life costs and be aware of the financial incentives available. Sometimes known as cogeneration,


CHP involves generating electricity while capturing the huge amount of heat that is wasted in conventional power plants. By using this waste heat, CHP plants can reach efficiencies of more than 80 per cent, in comparison to coal and gas-fired plants, which struggle to exceed 40 per cent. This efficiency can result in reduced energy costs, which can contribute significantly to a plant’s spending.


SAVINGS IN THE LONG RUN As even mid-sized CHP systems cost several hundred thousand pounds, it is vital that businesses identify solutions appropriate to their needs. Choosing a cheaper or ill-suited system can carry a costly penalty in the long run. Assuming a standard 20-year lifespan, a system’s maintenance costs alone will likely be larger than the initial outlay, while fuel represents as much as 75 per cent of the overall spend. So while an appropriate CHP system may be a substantial investment, owners and operators should note that over the course of its lifetime, it will pay for itself. By contrast, making up-front savings by purchasing with a cheaper, often lower-quality system can result in reduced reliability, leading to expensive maintenance and repairs costs.


8 SEPTEMBER 2017 | FACTORY EQUIPMENT


Furthermore, when factoring in varying


energy costs and the rising importance of environmental factors in generator performance, CHP is increasingly being identified as a reliable and sensible solution. Indeed, it is already being used at 383 industrial sites across the UK, generating a significant portion of the energy used in the sector.


GOVERNMENT INITIATIVES With energy usage and carbon emissions becoming a growing concern for many countries around the world, a number of support schemes have been set up. This includes the UK government, which has “committed to increasing the UK’s CHP capacity because of the considerable environmental, economic and social benefits it can bring together with its contribution to security of supply”. Consequently, a large array of offers,


initiatives and mechanisms are available that substantially diminish CHP-using companies’ financial obligations to the government. However, they only apply to systems that are certified as ‘Good Quality’ by the CHP Quality Assurance program (CHPQA). This certification is only applicable to CHP systems with an electrical efficiency of over 20 per cent, delivering significant savings compared with conventional energy generation. This exclusivity makes it even more


crucial to invest in a high-quality, reliable system that fulfils the CHPQA’s criteria. Schemes available to systems certified ‘Good Quality’ include the Carbon Price Support Tax Exemption, the Climate Change Levy Exemption, and


preferential business rates. The government’s Enhanced Capital Allowance scheme also allows businesses to write-off their investment in CHP systems against their taxable profits. Taking full advantage of these can boost


the cost effectiveness of investing in a system, further reducing its payback time and enhancing the savings it generates. As such, it is clear that purchasing a high- quality CHP unit can have a fundamental impact on financial performance in the long-term, and owners and operators should prioritise total cost of ownership over the initial purchase price.


For plant owners and operators looking to make savings and improve energy efficiencies, combined heat and power can be an ideal solution


FURTHER HELP AVAILABLE It is also advisable to purchase an operations and maintenance (O&M) contract at the same time as installation. Operators should seek a trusted partner with a strong track record of delivering CHP systems, who considers each site’s individual requirements. Finning not only offers expert advice


and guidance on the specification and installation of the correct CHP unit to meet individual requirements, but also provides an O&M contract to help ensure efficiencies are delivered as promised. To help plant owners and operators


learn more about the benefits of CHP and the low cost of ownership it can offer, Finning has produced a dedicated guide for the manufacturing industry. Entitled ‘Combined Heat and Power in the Manufacturing Industry – A Guide to Improving Cost of Ownership’, it can be downloaded for free from: www.finning.com/chp/manufacturing


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