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nergy costs remain a big drain on the average running costs of UK companies, constituting around 20 to 25 per cent of overall plant operational budgets. When seen alongside the fact that the country’s manufacturing sector alone has experienced energy price rises of 37 per cent, it is clear this is a concern that continues to have an outsize effect. However, company capex constraints and the UK’s ageing asset base has given rise to a situationwhere even companies that are aware of this problemmay not have the tools available to fix it.
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A lack of obvious solutions has not resulted in a lack of action from businesses, yet despite taking steps to address this expensive problem, these actions fall short of the meaningful change required to make UK companiesmore globally competitive. Additionally, rising energy costs, combined with a stressed national grid that is increasingly unable tomeet business’s energy demands are providing an obstacle to potential growth.
Finding innovation
In such circumstances, decentralised energy technology may provide a solution. A future of on-site energy generation could diminish current overdependence on the national grid – something business is becoming ever
www.heatingandventilating.net CHP for hire?
Matt Watson, sector specialist for manufacturing at Aggreko, explores the viability of combined heat and power solutions and how the temporary adoption of this technology could remedy concerns surrounding energy costs and global competitiveness for British business
more aware of. In fact, a recent survey from Aggreko showed that 49 per cent of energy decisionmakers saw reduced energy costs as the primarymotivator behind implementing decentralised energy solutions.
As a result, an array of sizeable commercial, industrial and manufacturing companies are looking to this technology to provide an independent power source for their businesses.
This innovation could in turn result in reduced energy bills andmore sustainable operations,where carbon emissions can be reduced at the same time as competitiveness is improved.
But formany companies, this dreamscenario is exactly that – a
dream.Though decentralised energy technology has obvious benefits, the financial implications make investing in permanent solutions extremely difficult. This state of affairs is reflected in Aggreko’s survey findings, which highlighted that though 43 per cent of stakeholders had entertained the possibility of on-site electricity generation, 38 per cent had seen capex constraints frustrate their requests to invest in the previous five
years.Consequently,many companies find themselves in theworst of bothworlds – able to identify a problem, but unable to afford the steps to fix it.
Temporary CHP solutions
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There is a solution to this situation: combined heat and power (CHP) technology. Through CHP, companies can take steps to reduce their energy costs while also making the operational efficiency gains required to aid competitiveness. Otherwise known as cogeneration, CHP solutions utilise by- product heat that is usually wasted in conventional power plant electricity generation, harnessing it to produce hot water that can be deployed in other plant processing applications.
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The key appeal of a CHP solution is that it allows companies to re-use a usually wasted process by-product to improve overall efficiency. Furthermore, capturing by-product heat for use as a power source reduces reliance on ageing, at-capacity energy infrastructure such as the national grid, allowing companies to grow unshackled by rising energy costs. Adopting CHP can also help businesses meet increasingly onerous and far-reaching carbon emissions targets. This is because CHP provides heat and power from a sole source, meaning emissions can be lowered by as much as 30 per cent.
Bridging the gap
A permanent CHP installation can be expensive, but concerns over up-front costs can be avoided by hiring the equipment as a ‘bridging gap’ solution. Not only does long-term hire provide an off-balance sheet option with no requirement for depreciation of tangible assets, it also allows plant owners and operators to reap the benefits of CHP technology without having to wait years to see a return on their investment, which would be the case with outright purchase. Instead, companies implementing temporary CHP packages canmake savings of up to 40 per cent on their regular energy when compared to importing power from the national grid.
As a result, long-term hire can enhance market competitiveness, allowing companies to enjoy the benefits of the technology in the short-to-medium term while saving for a permanent solution. During this time, these business stakeholders can also take advantage of the maintenance capacity that comes with hired solutions, which ensures product optimisation and support should issues occur.
Opting for long-term hire over immediate purchase presents companies with the opportunity to increase competitivenesswithout being bound by capex constraints.
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