Cogeneration - or combined heat and power (CHP) - involves the simultaneous production of electricity and heat. This unique technique is implemented through various technologies such as gas turbine, internal combustion engine, fuel cell etc, from micro-stations integrated into private houses up to large industrial plants.
In addition, the cogeneration process can draw upon a wide range of energy sources, from traditional fossil fuels to renewable energies (combustion-based units with biomass, biogases or bioliquids, or steam-based plant connected to geothermal or concentrated solar panel installations). In 2009, gas was the most commonly used in the EU by far, with a share of 39.4%, while renewables took up 11%.
The European Commission regards cogeneration as a "proven and cost effective tool" helping to achieve Europe's energy and climate goals, which include reducing dependence on imported energy. Moreover, it believes that the technology promotes European competitiveness and job creation, as well as increasing export opportunities.
Combined heat and power stations are considerably more efficient than conventional thermal power plants, which currently operate at the level of 40% electricity-generation efficiency in the EU due to the considerable amount of heat wasted.
By contrast, cogeneration plants convert up to 90% of their fuel into useful energy. CHP installations are either heat or electricity-led plant. In the case of heat-led plant, the heat stream could come from a process during which waste heat is generated or from a heat generator. Heat could be produced in the form of low grade heat – hot water - or high grade heat–steam. Heat could then feed into district heating systems or used in industrial processes. The heat can also be used to power cooling systems for cities or industries.
Moreover, cogeneration generally takes place in the vicinity of industrial users and city centres, minimising transmission and distribution losses.
The European Commission recognizes CHP as one of the sectors that can deliver up to 15-20 Mtoe/year of primary energy savings and 35-50Mt/year of CO2 emissions reductions, based on an additional economic potential of around 350 TWh electricity output from cogeneration. In the next 20 years, the Energy Roadmap 2050 Impact Assessment indicates that up to 22% of electricity production could be generated by CHP plants. A significant potential still lie in industrial, district heating, buildings and agricultural applications. Micro-CHP, biomass-fired CHP and new technologies, such as cooling, polygeneration and fuel cells are areas where important progresses have to be achieved.
It is important to note that less than half of the identified economic potential of CHP in Europe has been realized (as part of their obligation under the 2004 CHP Directive, Member States have assessed their CHP potential).
While the original EU's Cogeneration Directive has not been implemented as quickly or as widely as had initially been hoped for, some member states have put in place policy frameworks to promote the technology. Germany and Belgium in particular have passed substantial cogeneration legislation, establishing favourable financial incentives for the industry.
The share of total EU electricity produced by cogeneration has hovered around the 11% mark in recent years, without any sign of significant improvement to date. It currently contributes to approximately 2% of the Union's goal of 20% annual energy savings by 2020.
However, there are huge disparities between member states. Denmark and Finland produce over 40% of their energy via cogeneration, while Cyprus only achieves 0.3%.
Grid access difficulties
According to the national reports published in the framework of the implementation of the first, CHP investors and operators have difficulties to access electricity grids due to complex national legal frameworks, considerable amount of red tape surrounding administrative procedures and discriminatory fees. Those grid related difficulties often lead projects to be delayed or even cancelled. For instance, paperwork can amount to filling in hundreds of pages of forms over several steps, and applicants/investors are subsequently required to wait a long time before receiving a response.
Since the entry into force of the Energy Efficiency Directive 2012/27/EU, member states have now to ensure that transmission and distribution system operators "guarantee the transmission and distribution of electricity from high efficiency cogeneration" by providing guaranteed access to the grid and priority of dispatch of high efficiency CHP”. The legislation also clarifies that electricity from highly efficient CHP can be granted equivalent privileges compared to electricity from intermittent renewable energy sources. It is important to recall that renewable electricity sources encounter similar grid related problems and that the RED Directive 2009/28 introduced legislative provisions to improve the situation (see EurActiv LinksDossier on 'EU renewable energy policy').
Image and financing problems
The growth of the cogeneration market has been suffering from on the one hand a lack of awareness and on the other hand a misconstrued image (because the technology has been around for decades, some believes that it belongs to the “business as usual” array of solutions, in opposition to newer technologies, such as solar panels). Further to the above arguments, the current fuel portfolio of the European cogeneration fleet, relying mainly on fossil fuels, is considered by some stakeholders as not future proof. This obviously disregards the potential uses of biomass, biogas and so one in existing or upgraded installations (EurActiv 10/05/07).
Due to the higher upfront cost and higher operating cost of CHP plants, finding the right partners and securing the financing of such installation represent significant hurdles compared to building a power or heat only installation.
Responding to cities' climate woes
While CHP has long been employed successfully in large industrial installations, technological advancements have made it an increasingly attractive option for householders for reducing their energy bills.
Urban areas are home to 80% of EU citizens and 70% of greenhouse gases, meaning that the fight against climate change will eventually be won or lost in cities (see EurActiv LinksDossier on 'Cities and climate change'). in addition, as buildings are responsible for over 40% of total EU energy consumption (see EurActiv LinksDossier on 'Green buildings'), improving the energy efficiency of the building sector is therefore a particularly pressing issue.
Efforts to build smart, self-sustainable cities are now flourishing around Europe and decentralised means of energy generation are instrumental to build that future.
Cogeneration is usually considered more suitable for certain types of buildings that use a lot of energy and operate around the clock, such as hospitals and hotels. However, cogeneration units can now be integrated into existing buildings to convert some of the burnt fuel into electricity. This can then be used either in the building or fed back to the local electricity grid. Emerging micro-cogeneration technologies like fuel cell based are being launched into the market, offering both high fuel efficiencies and a higher power to heat ratio.
Potential in district heating and renewables
The new EU Renewable Energy Directive agreed in December 2008 represents the first European legislation covering heating and cooling from renewable sources. It promotes district heating and cooling as a way for member states to establish minimum levels for the use of energy from renewable sources in buildings.
According to the Commission, the best opportunities for energy efficiency investments lie in large urban areas. Therefore the EU executive promotes the uptake of district heating systems supplied by cogeneration plants.
District heating networks are already offering significant energy savings in Scandinavian countries most notably. In some those countries, some industrial plants are channeling their waste heat to district heating networks, which are serving towns and urban areas. District heating is also particularly widespread in Central and Eastern Europe due to the continued use of Communist-era facilities. It total, it satisfies 10% of the EU's total heat demand.
There remains a considerable potential for using renewable energy sources, industrial waste and surplus industrial heat in existing and new district-heating facilities.
CHP – a low-carbon solution for industry
A large share of the heat demand in industries cannot be supplied by electricity from the grid, no matter what the carbon footprint of that electricity is, as electrical appliances simply cannot do the job. Today, CHP is one of the best and only available solutions to generate low carbon heat. However, due to pressure from the wider power agenda developments, industrial CHP operators have difficulties to maintain high running hour and be competitive. It is estimated that industrial CHP already saves Europe 15 Mtoe per annum of fuel imports through its high efficiency.
Renewable energy-powered CHP can also help communities to reduce their landfill considerably. As waste-to-energy power plants are compatible with cogeneration, they offer significant benefits over landfilling, which is still the dominant method of municipal waste treatment.
Biogas produced from waste in landfills or sewage plants is an interesting fuel option for city-based cogeneration plants as they seek to promote renewable energies in an economic manner. Aalborg in northern Denmark, for example, has a biogas plant which uses a combination of manure, industrial waste and organic household waste. The end product then serves a nearby cogeneration unit.