The future of energy supply for your business

Guenther J. Schulz, director, 4 CleanTech.

In the past, energy was simply a fixed cost factor in the value chain of a company, but this has changed fundamentally in the last decade.

By using renewable energy sources, energy-intensive businesses, in particular, can not only reduce their carbon footprint but also secure decisive market advantages through cost reductions.

Decentralised energy generation with Combined Heat and Power (CHP) units will play an important part to reach this target.

What is a CHP?

In simple terms, a CHP unit consists of an internal combustion engine with an alternator to generate electricity and heat. It is an extremely efficient process to produce electricity and heat from only one source, normally natural gas. Unlike traditional power stations, CHP’s can be decentralised and located exactly where they are needed. From an environmental point of view, there are fewer carbon emissions with maximum energy savings.

The CHPQA Scheme

On average, a CHP’s efficiency ranges between 75%- 90% and is therefore up to 40% more efficient than a traditional power plant.

CHP power is considered as green electricity under the Green House Gas (GHG) protocol. In order to support these types of CHP’s the UK government has set up a CHP Quality Assurance (CHPQA) program. A successful CHPQA application grants eligibility to a range of benefits, including the Climate Change Levy (CCL) exemption for natural gas and electricity, enhanced capital allowances, and preferential business rates.

Future gas supply will be increasingly renewable

As the majority of CHP’s are running on natural gas there have recently been concerns that the reduction of carbon emissions could possibly no longer be sufficient enough. The reason for this is the ever-increasing percentage of renewable sources in the UK electricity grid. Also, although natural gas is considered as green gas under the GHG protocol and is a significantly cleaner fuel compared to coal or petrol, it is not a renewable energy source.

This is about to change, as the increased content of biomethane and hydrogen in the gas supply will improve the carbon footprint calculation effectively. After the Renewable heat incentive (RHI) program for the production of biomethane ended this year, the government is about to install the Green Gas Support Scheme (GGSS) to support the young biomethane industry in the UK.

It is already possible to obtain natural gas with a content of up to 10% biomethane from UK energy suppliers. In other countries like Denmark, the overall content of biomethane in the gas grids is around 7%. Denmark in particular is aiming for a 63% biomethane content in 2030.

Green hydrogen is a second pillar for renewable sources in the gas supply. As the government has made it clear in their Energy White Paper (www.gov.uk/government/publications/energy-white-paper-powering-our-net-zero-future

published 12.12.2020) investments in hydrogen technologies will be an important factor on the way to a net-zero future. Since the first developments in 2012, leading CHP suppliers are able to run with pure hydrogen and of course with hydrogen contents in natural gas. It is important to note here that existing CHP’s can be converted into 100% hydrogen fuel-powered CHP’s.

Making the right decision

Taking into consideration the energy policy of the future described in the Energy White Paper, the cost situation for the traditional purchase of electricity and gas will continue to increase in the coming year

CHPQA offers a very transitional solution for energy-intensive companies from a cost and environmental perspective. Since existing natural gas CHP’s can be converted into running with up to 100% hydrogen, companies can react to changing gas supply situations in the future.

Realisation without investment

With regard to the realisation of such projects, a Power Purchase Agreement (PPA) from the Kent-based company 4-CleanTech (4-CleanTech.com) is a welcome alternative to a direct purchase. A PPA enables the company to enjoy all the benefits of a CHP without having to invest by itself or having to pay for the maintenance and service of the machine.