The UK’s Combined Heat & Power Association (CHPA) has demanded a government rethink on the unpopular Climate Change Levy, an energy tax due to come into force in April next year.
The CHPA warns that failure to exempt smaller distributed CHP power plants will hamper the UK in meeting its CO2 reduction targets under the Kyoto Protocol.
The government has set a target of 10 GW of CHP capacity by 2010, but a survey by Cambridge Econometrics on behalf of the CHPA suggests that the UK will achieve only 6.6 GW by that time. Of the 1423 MW of CHP capacity that has been granted planning approvals, a third is considered unviable and will not be built under the current economic climate.
The CHPA has called on the government to encourage the use of CHP through the climate levy exemption and, further, by mandating that electricity supply companies source a minimum of 10 per cent of their capacity from CHP. Falling wholesale electricity prices coupled with the increasing costs of oil and gas are seen as negative factors in the development of CHP, which under current rules would have to pay the climate levy on power exported to the grid. These figures would see a 3 million tonne shortfall in the greenhouse gas reduction targets set by the government. According to CHPA figures, by April this year CHP provided 15 per cent of the UK’s industrial energy needs and six per cent of the country’s electricity output. CHPA estimates a cost effective CHP capacity in the UK of 10–19 GW of electrical energy by 2010.
In other CHP news Finland’s Fortum Engineering has announced the purchase of Symonds Group’s Power & Energy Division, a UK-based CHP engineering consultant. Fortum sees Europe, and the UK in particular, as a good market for CHP. Fortum Engineering plans to concentrate on gas and biomass fuelled CHP projects. Paradoxically, the power generation arm of Fortum is currently disposing of its UK power plant assets.
