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Industrial Manufacturing

Industrial and Manufacturing CHP

Industrial and manufacturing companies are the biggest users of Combined Heat and Power (CHP) by capacity in the UK and Ireland. The uptake of CHP in industry has been driven primarily by the huge financial cost savings available to energy-intensive business sites.

The latest energy statistics show that oil and gas and chemicals, along with food manufacturing and ‘other’ industrial users, account for more than 68% of CHP capacity in the UK.

For industrial sites with a high heating or cooling demand, CHP is considered the most fuel-efficient process to deliver energy cost savings due to its exceptional high efficiency. CHP can provide a cleaner, more cost-effective solution to using boilers to generate steam - helping industry to decarbonise heat and improve site resilience.

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Benefits of CHP for Industrial Companies and Manufacturers

Cost savings on power, heating and cooling

Reduced carbon emissions compared to conventional power production and onsite boilers

Payback within 2-5 years

Greater operational resilience and security of power supply

High electrical and thermal efficiency of up to 90%

Cost savings can be reinvested and deployed in renewable energy technologies

Fuel flexibility - renewable, low carbon, and hydrogen ready

Recognised technology within the net-zero pathway

High Efficiency CHP for Industrial Users


Also known as cogeneration, CHP plants simultaneously generate electricity and useful heat from a single fuel source. In this way, CHP is nearly twice as efficient as using electricity from the electricity grid and gas for use in boilers and can reduce operational costs by up to 30%.

CHP plants are typically embedded close to the point of use and therefore help reduce transmission and distribution losses to the site, improving the energy efficiencies within the transmission and distribution networks.

Gas engines are fueled using various low carbon and renewable gases such as biogas, syngas, biomethane and future fuels such as hydrogen, to cogenerate a sustainable source of electricity and heat.

Should there be a requirement for cooling, Cogeneration technology can be configured to supply cool water for on-site process cooling, refrigeration, or air conditioning. This process is called Combined Cooling Heat and Power (CCHP) or Trigeneration.

For industrial users that require carbon dioxide, Quadgeneration recovers the carbon dioxide from the gas engine exhaust and is scrubbed to high standards to provide high grade CO2 for use within horticulture and food processing.

Reducing Costs with Industrial CHP

Reducing energy costs is the primary driver of CHP uptake in industry and manufacturing.

Because most industrial CHP applications use low carbon pipeline gas as a fuel and because there has been a good supply of natural gas from the North Sea, Europe and the Middle East to the UK in recent years, CHP fuel costs have remained very low.

One of the best ways to measure the cost benefit of CHP over grid-supplied power and heat is through the spark spread, which is the differential between the price of energy and the cost of fuel used to generate that energy. The price of gas has been consistently cheaper than electricity over the past decade, which shows signs of continuing. For example, purchasing power from the grid is currently around 4 times more expensive than wholesale gas prices. This results in an exceptional return on investment - with payback times as low as two or three years on CHP units with a 15-year lifespan.

CHP environmental impact

As well as generating costs savings, CHP can also reduce carbon emissions due to its high efficiency, particularly in recycling and reusing the heat that is wasted in conventional generation. Of course, when renewable fuels, such as biogas, syngas, biomethane and hydrogen are used for Cogeneration, the carbon savings are all the greater.

Due to its exceptional efficiency a low carbon natural gas CHP system can complement other low and zero carbon measures to help organisations work towards their net-zero ambitions. Some companies re-invest the cost savings from CHP into new renewable technologies as part of their ongoing sustainable commitments.

CHP resilience

CHP has very high uptime relative to other types of on-site power generation, with more than 97% availability in most cases.

Sites with a reliable gas supply can enjoy a stable supply of power, heat and, if necessary, steam to keep operations running smoothly.

Although most industrial CHP units operate in parallel to the grid, CHP systems can be configured for Island Mode operation to ensure crucial processes remain operational during a power failure. To further shore up resilience, a standby diesel power solution can provide mission critical power in the event of disruption.

Gaining from the grid

On-site CHP means that industry and manufacturers can self-generate a significant proportion of their energy requirements, only drawing on grid supplies where necessary.

For large energy users, this means they have the flexibility to avoid purchasing network power at peak times and avoid penalties such as Triad periods, when prices are vastly inflated.

Industrial businesses with installed CHP capacity could also benefit from other grid balancing mechanisms like the Capacity Market.

The Capacity Market started in 2018 and was subsequently relaunched in 2019 following a legal challenge brought under EU ‘state aid’ rules. It was introduced to ensure that there is enough electricity supply to meet demand and ensure grid balancing.

In the event of network stress events, the Capacity Market will pay a premium to a vast network of small but reliable generators to come online and start supplying power to the grid. In these circumstances, industrial businesses with CHP capacity could start to shut down non-essential processes and feed any excess power to the national network for a significant payoff.

Industrial and manufacturing sectors

Combined Heat and Power is suitable and has been successfully deployed within various industrial and manufacturing sectors, including:

Automotive Chemicals Food Processing Oil and Gas Rubber
Breweries Construction Glass Packaging Steel
Bricks Dairies Medical Equipment Paper Textiles
Ceramics Engineering Mining Pharmaceuticals  

 

CHP financial incentives

Energy-intensive businesses can achieve further savings if their CHP plant meets certain efficiency standards laid out under the Combined Heat and Power Quality Assessment (CHPQA) programme.

Any CHP schemes that qualify as ‘good quality’ under CHPQA can avoid paying Climate Change Levy (CCL),on the natural gas used to fuel the cogeneration system and power used on-site. CCL accounts for around 5% of a total energy bill, so this is a considerable saving. These savings will increase further in the coming years due to huge annual tariff rises on natural gas CCL rates through to 2023

CHPQA approved sites also qualify for other financial incentives, including preferential business rates and taxation benefits under the Annual Investment Allowance.

CHP flexible finance

Lack of capital is no barrier to installing CHP because flexible finance options are widely available. There are various options, including low-cost power purchase contracts and energy service agreements.

Finance can be tailored to meet specific project requirements and business objectives both short-term and long-term. This could mean zero capital investment with instantaneous energy savings, thus freeing up capital for other strategic projects.

Learn more about project finance

 

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This latest investment means the factory is now one of the five largest ice cream and lolly production facilities in the world. I am equally delighted that – despite achieving a significant increase in production – changes we have made to the energy supply and treatment of effluent mean the site’s carbon footprint has actually reduced slightly to 0.26 tCO2e/tonne compared to 0.27 tCO2e/tonne previously. We continue to focus on sustainability and are currently investigating installing photovoltaic cells on the factory roof.

Ryad Apasa, Head of UK Operations, R&R Ice Cream

Bausch + Lomb are extremely satisfied with the performance of the CHP unit to date and have exceeded the initial project payback and uptime periods. This has resulted in greater than expected financial and environmental savings for the site.

Derek O’Connor, Facilities Engineering and Structural Manager, Bausch + Lomb

Our Industral and Manufacturing CHP Case Studies

As a market-leader in the supply, installation and maintenance of CHP and emergency back-up power systems, Edina has completed over 40 energy saving projects across industrial and manufacturing facilities.

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Arla Foods

UK largest dairy uses CHP to achieve zero carbon strategy.

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R&R Ice Cream

Edina saves Ice Cream Manufacturer a mouth-watering £440,000 a year while ensuring security of power.

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Ballina Beverages

Edina delivers CHP at state-of-the-art concentrate production facility.

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