EU policy to have mixed effects on the CHP market
Policy developments are crucial for Combined Heat & Power(CHP) deployment in Europe, as spark spreads may not be attractive enough in some European countries to drive installations. There are currently two different sets of regulations that will affect CHP regulation in Europe: The Energy Efficiency Directive (EED) and new emission regulations. These developments, briefly discussed in this blog, will likely create new dynamics in the market, with certain market segments gaining advantage.
In 2017, the European Commission released an EU Winter Package roadmap and set some new rules (this follows on from the 2012 EED which established a set of binding measures to help the EU reach its 20% energy efficiency target). While a few elements are encouraging, others – for CHP – are not. The main highlights of the Winter Package were:
The long run impacts of these proposals on CHP deployment are likely to drive a shift to flexibility applications, and a potential levelling in traditional CHP applications in Europe. Where CHP can  operate flexibly to serve the market in a hybrid type application, for example alongside storage or demand response systems; or  out-compete diesel engines on emissions limits to participate in Capacity Markets – then this could well become a new market sweet-spot for the CHP industry in Europe.
NOx (Nitrogen Oxide) emission regulations are expected to have significant impact on different technology deployment in the future. Presently, Germany and London are examples of stricter emission limits. In Germany, the TA Luft (Technische Anleitung zur Reinhaltung der Luft), last revised in 2002, specifies maximum emission levels for a range of air pollutants, including NOx. At the same time, in London, UK, there is guidance that recommends a maximum NOx emission limit to the Boroughs of London.
However, legislation is likely to become stricter. There are currently plans to introduce a directive at a EU level, as well as plans to revise TA Luft. Both will possibly implement stricter NOx emission limits. As a result, this will improve the economic case for CHP prime movers such as fuel cells, which currently produce lower emission levels in comparison with gas engines or turbines. Other CHP prime movers will probably need to adapt by introducing NOx abatement measures – which in turn increase product costs.
Note: NOx emission limits are normally quoted together with an oxygen level (e.g. 5% O2 or 15% O2). It is important to be clear about the oxygen level – an emission limit is quoted at as this impacts on the overall emission limit itself. The European Commission tends to quote NOx emission limits at an oxygen level of 15%, whereas the German government tends to use an oxygen level of 5% within the TA Luft regulations
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Delta-ee endeavours to help clients navigate the transformation of the energy system, from “old” energy to “new” energy. And CHP, whether it uses renewable fuels or not, consistently shows up in applications of the “new” energy system.
With more than 20 years of experience among Delta-ee’s Distributed Power research team, CHP market dynamics has been a Delta-ee core focus of research since the company was founded – from spark spread analysis to policy landscape to macro-economic drivers. To find out more about Delta-ee's ongoing Distributed Power research, please send me an email or visit our service web page.