HANNOVER MESSE 2018, 23 - 27 April
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Integrated Energy

Industry not yet fully utilizing CHP potential

According to a Prognos study published by the German Federal Ministry for Economic Affairs and Energy (BMWi), total CHP production of 170 TWh to 240 TWh would be possible. In industry alone it could increase 50 percent to 43 TWh by 2030.

17 Feb. 2016

"The relatively good return on investment of the various CHP systems is very positive for the continued expansion of cogeneration in those sectors that have high growth potential," says the forecast. In vehicle and mechanical engineering and other "new" user branches, however, awareness of the advantages of CHP and CCHP is "not very widespread."

Most CHP plants currently still use fossil energy sources, particularly natural gas. However, the development of effective storage for electricity and heat increasingly makes CHP a viable participant in the use of renewable energy. Bundled renewable and/or cogeneration facilities could have a role to play in a successful energy transition. Wulf Binde, Managing Director of the German Cogeneration Association (B.KWK), views these virtual power plants (VPP) as key. “We can achieve electricity-focused operation of cogeneration facilities with VPP bundling,” says Binde. “When electricity is needed in the grid and heat from the cogeneration facilities can be used or stored, the plants can be jointly brought online for electricity generation.” When infeed is too high, the plants can be throttled back or shut down and heat can be supplied from storage.

According to Sabine Gores of Öko-Institut, sales of fossil CHP plants have been rising "continuously, but not explosively" for years. In part, the trend has slowed down due to the partial taxation of self-generated electricity since the 2014 amendment to the German renewable energy act (EEG). For plants supplying property and industry, profitability depends strongly on the proportion of self-produced electricity and electricity procurement costs, as Prognos makes clear. The cost of electricity for energy-intensive companies, often exempt from electricity and energy tax and the EEG assessment charge, is so low that investments in larger cogeneration facilities are hardly worth it.

Heinz Ullrich Brosziewski, Vice President of B.KWK, calls for a change of attitude in industry: "A two-year return on investment is practically impossible in this domain. As a rule you need four to seven years for conventional static amortization of a reasonably priced, highly efficient CHP plant."

A trend that is taking hold in industry, however, is the use of waste heat for power generation – Prognos estimates its potential at 0.7 TWh to 1.5 TWh annually. The advantage: the conversion of heat via steam turbines or with the help of ORC (Organic Rankine Cycle) technology reduces plant operators' dependence on energy prices. With high utilization ratios of around 90 percent – 60 percent for thermal, 30 percent for electrical – cogeneration saves fuel and reduces CO2 emissions. The German government has therefore formulated a clear goal in its coalition agreement: "We want to define the legal and financial conditions for environmentally friendly cogeneration such that the proportion of CHP is expanded to 25 percent by 2020."

Economic and energy policy spokespersons from all Bundestag parliamentary groups expressed support for the 25 percent goal at the B.KWK conference in Berlin. However, it will not be reached under current conditions. In the CHP study, Prognos predicted along with Fraunhofer IFAM, Fraunhofer IREES and BHKW Consult: "At current market conditions, CHP power generation by 2020 (...) will stagnate at today's levels." The goal of 25 percent CHP power would be "missed by a significant margin."

The bonus for infed electricity would need to double

Currently, at 96 TWh, CHP accounts for a 16.2 percent share of net electricity production in Germany. Fully half is derived from general supply plants, about one-third from industry. The remaining CHP electricity comes from biogenic CHP and small local plants. To reach 25 percent, annual CHP power generation would have to rise to 50 billion kWh by 2020. According to Prognos, this would necessitate significantly higher subsidies under the CHP Act – particularly for plants feeding into the grid. "The simple hypothesis requiring the addition of €0.04 to €0.06/kWh indicates a target subsidy increase of approximately €2 to €3 billion for 2020," say the consultants. The lowest subsidy for plants producing more than 2 MW is currently €0.021/kWh.

The results of the study should be included in the planned amendment to the CHP Act in 2015. First the BMWi wants to produce a Green Paper summarizing the results of the debate and various studies, says Uwe Beckmeyer. Concrete measures will then be proposed in a White Paper.

Interest groups are making their voices heard now. B.KWK President Berthold Müller-Urlaub calls for "an adequate increase in the CHP subsidy with particular attention to the volumes of electricity that are fed into the grid for general power supply." The market environment for these plants has deteriorated due to significantly higher infeed of subisidized electricity from renewable energy sources as well as low CO2 certificate prices.

"The efficiency of cogeneration facilities and the CO2 savings that result from cogeneration of electricity and heat are decisive advantages of CHP technology which justify its specific promotion by separate policy goals and financial measures," declares the Öko-Institut. The organization identifies CO2 savings of almost 40 million tons compared with non-CHP generation in 2012 in its latest expert report to the BMWi. Other organizations assess this savings as closer to 50 million tons.

CCHP makes cold from heat

Combined cooling, heat and power (CCHP) is also gaining ever more supporters, because connected refrigeration units solve an old CHP problem: where should the heat go in the summer? CCHP not only extends the operating time of cogeneration plants, it is also ideal for industrial processes that require both heat and cold. For example, data centers can recycle the heat they produce themselves to cool their servers.

Trend topics in Energy

Virtual power plants and storage units are among the trend topics at the Energy trade fair from 13 to 17 April. The leading global trade show for energy and environmental technologies at HANNOVER MESSE presents new products and services for converting energy systems. With more than 40 manufacturers of CHP and CCHP systems, as well as providers of efficiency services (contracting), the Decentralized Energy Supply joint stand is a highlight of Energy. Daily podium discussions spotlight the economic potential of decentralized energy supply and its current political framework. Key sponsors are the German Electrical and Electronics Industry Association (ZVEI) and the German Cogeneration Association (B.KWK).