Cogeneration, or the simultaneous production of electricity and heat, is being promoted at EU level as a way of reducing greenhouse gas emissions from traditional power plants.
Milestones
- 22 June 2011 when the Energy Efficiency Directive 22 June 2011 when the Energy Efficiency Directive was presented.Nov. 2000: Commission Green Paper on security of energy supply.
- 26 Jan. 2004: EU Foreign Affairs ministers formally adopt cogeneration directive (EurActiv 05/02/04).
- 19 Oct. 2006: EU Action Plan for Energy Efficiency published.
- 6 Apr. 2009: EU Council of Ministers formally adopt energy and climate package (EurActiv 07/04/09).
- Early 2010: Revised EU Energy Saving Action Plan to be adopted.
- 21 Feb. 2011: Commission to review harmonised efficiency reference values for separate production of electricity and heat
- 22 June 2011: Energy Efficiency Directive presented.
Policy Summary
Cogeneration was first promoted at EU level in a Green Paper on security of energy supply published in November 2000. The paper argued that if the EU's share of cogeneration, which only accounted for 11% of total electricity production in the EU in 1998, were to be increased to 18% by 2010, the ensuing savings could amount to 3-4% of total gross consumption in the EU.
In February 2004, the EU adopted the CHP Directive to promote cogeneration in the EU by addressing several problems, including insufficient control of energy monopolies, inadequate support from local and regional authorities, incomplete market liberalisation, regulatory obstacles and a lack of European standards for network connection.
The directive established guarantees of origin based on common reference values for the efficiency of electricity produced from cogeneration, and requires member states to analyse their national cogeneration potentials.
The EU's 2006 Action Plan on 'Energy Efficiency for 2007-2012' proposed further measures to promote cogeneration in the future, acknowledging that it accounted for only 13% of EU electricity consumption in 2006 (see EurActiv LinksDossier).
The technology was once again put on the table on 13 November 2008, when the Commission launched its Second Strategic Energy Review. As the implementation of the Cogeneration Directive had progressed more slowly than expected, the EU executive asked member states to remove barriers and facilitate grid access via a common framework. It also set out detailed guidelines for calculating electricity from combined heat and power (EurActiv 22/01/09).
Issues
Cogeneration - or combined heat and power (CHP) - involves the simultaneous production of both electricity and useful heat or steam, either in large industrial plants and in micro-stations integrated into private houses.
The cogeneration process can draw upon a wide range of energy sources, from fossil fuels to renewable energies. In 2006, gas was the most commonly used in the EU by far, with a share of 38%, while renewables took up 12%.
The European Commission regards cogeneration as a "proven tool" for contributing to Europe's energy challenges, which include reducing dependence on imported energy with enhanced energy-efficiency and helping the bloc reach its climate goals by cutting emissions. 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.
By contrast, cogeneration plants convert up to 90% of their fuel into useful energy. This is made possible by combining electricity production with a heat recovery system. The heat generated from the process is then fed into cities' district heating systems or used to generate steam, which can be used in industrial processes. The heat can also be used to power cooling systems.
Moreover, cogeneration generally takes place in the vicinity of industrial users and city centres, minimising transmission and distribution losses.
Untapped potential
While the 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 Spain in particular have passed substantial cogeneration legislation, and have established favourable financial frameworks for the industry.
The share of final EU energy consumption produced by cogeneration has hovered around the 13% 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%. The countries with the highest shares generally make wide use of district heating, the slow uptake of which could be boosted by CHP, argues the Commission.
Grid access difficulties
In the past, CHP plants have found it difficult to access electricity grids due to discriminatory fees and administrative hurdles. Concerns have also been raised about the cost of upgrading the grids to accommodate CHP electricity. The cogeneration industry estimates that the EU's existing grids can handle small-scale energy input of up to 50%. But a more realistic figure would be 10%, according to traditional large-scale electricity producers.
Moreover, complex national legal frameworks and a considerable amount of red tape surrounding administrative procedures have served to slow the take-up of the technology, according to national reports. Decentralised energy projects are often delayed because they have to seek the permission of multiple bodies, including government agencies and utilities. Such paperwork can amount to filling in hundreds of pages of forms over several steps, and applicants are subsequently required to wait a long time before receiving a response.
However, the EU Renewables Directive agreed in December 2008 should boost the transparency of grid access by requesting member states to ensure that transmission and distribution system operators provide "either priority access or guaranteed access to the grid system of electricity produced from renewable energy sources". Renewable electricity has encountered similar problems with blocked grid access (see EurActiv LinksDossier on 'EU renewable energy policy').
Image and financing problems
The growth and visibility of the cogeneration market has been plagued by its poor image. Since the technology has been on the market for decades, the common perception is that cogeneration is archaic, particularly when compared to newer technologies, such as solar panels. Moreover, the use of fossil fuels in cogenerators is considered unattractive, and knowledge of the efficiency and potential uses of biomass is not widespread (EurActiv 10/05/07).
As a result of its relatively small market share, electricity produced by cogeneration is still more expensive than electricity produced by nuclear power plants. Major banks and lending institutions, meanwhile, have been reluctant to finance investment since most CHP facilities are quite small.
Responding to cities' climate woes
While CHP has long been employed successfully in industrial installations, technological advancements and lower costs have made it an increasingly attractive option for single households, reducing their energy bills.
This development goes hand in hand with efforts to build smart, self-sustainable cities. 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').
Improving the energy efficiency of the building sector is a particularly pressing issue, as buildings are responsible for over 40% of total EU energy consumption (see EurActiv LinksDossier on 'Green buildings').
Cogeneration can be used for microgeneration, which generally refers to an array of small and medium-sized generators of electricity, including solar, wind, hydro, biomass and waste (see EurActiv LinksDossier on 'Microgeneration'). A cogeneration station can be integrated into a building to convert some of the burnt fuel into electricity. This can then be used either in the building or sold back to the electricity grid, if its management and structure allow this.
However, cogeneration is more suitable for certain types of buildings that use a lot of energy and operate around the clock, such as hospitals and hotels.
According to the Commission, the best opportunities for energy efficiency investments lie in large urban areas. The EU executive promotes the uptake of large district heating systems, emphasising that cogeneration is particularly viable when these networks are surrounded by a large number of electricity end-users.
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.
District heating networks which use CHP are already offering significant energy savings in Scandinavian countries, for example. Indeed, some industrial plants are pumping their excess heat into district heating systems, which can then be used to heat whole towns and areas.
District heating is particularly widespread in the new member states of Central and Eastern Europe due to the continued use of Communist-era facilities. Since the enlargement of the EU in 2004, district heating has satisfied 10% of the EU's total heat demand.
There is considerable potential for using renewable energy sources, industrial waste and surplus industrial heat in district-heating facilities, which can provide heat for entire neighbourhoods or city sections. Increased use of combined heat and power (CHP) or cogeneration in district heating facilities also offers significant potential for reducing CO2 emissions (EurActiv 24/05/07).
Reducing landfill
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, leading to further environmental problems as cities grow.
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.
Positions
According to the European Commission, cogeneration takes the European Union "closer to its energy-related goals". "Increasing security of supply [and] promoting energy efficiency are challenges of utmost importance for the European Union. Combined heat and power generation is an important tool to meet them, meanwhile offering many other direct and indirect advantages for the European citizens," it argues, adding that CHP also reduces the burden on the environment.
Green MEP Claude Turmes (Luxembourg) promotes cogeneration alongside renewables and energy efficiency as a priority for Europe's technology investments. "The high efficiency of CHP makes it a key strategy to reach the EU's climate and energy goals," he said. Turmes is critical of the European Commission for failing to support CHP investments in the EU recovery plan, while "throwing billions" at the construction of carbon capture and storage (CCS) plants with higher CO2 emissions.
Many industries are increasingly turning to cogeneration as a way of reducing their emissions in a cost-effective manner.
According to the European Association for the Promotion of Cogeneration (Cogen Europe), cogeneration is the "single biggest solution to the Kyoto targets," and provides large cost savings and additional competitiveness for industrial and commercial users. "Cogeneration supports all of Europe's three energy targets for 2020: it saves primary fuel, reduces CO2 emissions and creates employment potential in Europe. This is an energy-saving technology that is being applied now and could respond to financial stimulus within the critical 2009-2010 economic recovery plan time scale," said Fiona Riddoch, managing director of COGEN Europe.
The European Chemical Industry Council (Cefic) argues that energy-efficiency gains have already been reached for many industrial processes, advocating cogeneration as a way of pushing back barriers.
Veolia, an environmental services company, believes the EU's potential to develop cogeneration is significant, despite the slow progress made so far. "The case of France provides a good illustration of this situation: while the actual potential for cogeneration is at least double of what is currently installed, the authorities foresee a reduction of installed power," it said.
Eurelectric, the European association of large electricity companies, welcomed the objective of the EU's Second Strategic Energy Review to speed up implementation of energy-efficiency policies. It said in a statement that CHP can provide "major efficiency benefits in the right applications" and welcomed the Commission's focus on high-efficiency CHP. "CHP is a mature technology which can often compete without subsidy and policy should therefore concentrate on the removal of any barriers to CHP investment," it stated.
Euroheat & Power, the European association for district heating, cooling and cogeneration companies, argues that renewable fuels and energies could replace fossil fuels in heating and cooling if energy production were centralised. "Centralised use of renewable fuels in heat production or CHP, solar heaters, geothermal sources or practically anything reduces the investment needs for production capacity and greatly improves the possibility for emissions control and reductions [for fuels]," it stated.
Oil firms such as ExxonMobil are using cogeneration to run equipment while producing steam for refining processes. "Cogeneration is a good example of how business needs and the market encourage investments to reduce costs, generate income and achieve significant environmental gains," said Tom Schiano, power projects manager for ExxonMobil Gas and Power Marketing.
Environmental NGOs have favoured the efficiency gains of cogeneration over traditional power installations.
Greenpeace UK argues that if the use of fossil fuel is to continue, then it must take place "as efficiently as possible to minimise CO2 emissions". The NGO claims that industrial, large-scale, gas-fired CHP can reduce UK fuel consumption and decrease supply concerns. "Most crucially of all, industrial CHP will reduce CO2 emissions while providing a solid stepping stone towards a more decentralised and increasingly renewable energy system," it stated.
WWF promotes cogeneration as a more sustainable and efficient means that nuclear power of achieving the emissions cuts required under EU climate legislation. "Nuclear energy only produces electricity, but modern societies need a significant share of their energy in the form of heat [and cold]," it said. "Nuclear power loses its greenhouse-gas emission advantage over highly efficient natural gas-fired cogeneration plants and has significantly higher emissions than renewable biomass cogeneration plants," it added.