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The real cost benefits of newer technologies

There is genuine enthusiasm about microgeneration, a group of emerging technologies that reduce energy consumption and environmental impact with the added benefit of saving the end-user money, which is especially welcome given recent unstop­pable energy price inflation.

The hype that greeted the arrival of these technologies has since waned, and has been replaced with a pragmatic recognition of the costs and benefits and appropriate applications of each of the technologies.

The real issue continues to be taking these technologies from prototype to commercial viability. For example, photovoltaic panels are prohibitively expensive and using small wind turbines on small estates is ineffective.

Added to this, the regulatory framework around feed-in tariffs has been unhelpful. But I believe the development of micro combined heat and power systems (mCHP) are a game-changer.

Conventional methods of electricity generation, such as coal-fired power stations, are inefficient, with up to two-thirds of energy produced being wasted through transmission losses and inefficiencies in the generation process.

CHP is an established method to simultaneously generate power and useful heat locally on a large scale and cut these energy losses.

During the past decade, mCHP has emerged as a complementary technology to CHP. It is based on the same concept of local co-generation of heat and electricity, but on a smaller scale.

It is suitable for use in commercial and domestic environments, where previously a conventional boiler system would have been installed.

Interest in mCHP technology has grown significantly in the past decade, and it is now a realistic option because of escalating energy prices and the introduction of legislation to lower carbon emissions and reward cleaner technologies.

The technology has the potential to provide significant carbon savings in both commercial and domestic environments, but the appropriate application is in the SME market, where intensive usage patterns can provide the best return.

It has been reported that mCHP may provide 20 per cent of the UK’s electricity generating capacity in the near future - more than is currently obtained from nuclear power.

As mCHP produces much less carbon dioxide than other ways of providing heat and power, if the level of CHP was increased to the government’s target of 10,000 MW, the UK could be one-third of the way to meeting its international commitments to reduce CO2 emissions.

The key benefits of mCHP over conventional systems, such as condensing boilers and grid-supplied electricity, are:

  • High efficiency of conversion;
  • Transmission losses reduced;
  • Reduced grid dependence;
  • Carbon savings of up to 20 per cent in a SME environment;
  • Long-term electric bill savings;
  •  Ability to receive renewable energy incentives such as feed-in tariffs or renewable obligation certificates;
  • Short payback period.

This technology has been a long time coming, but investors are finally seeing its huge potential as an efficient alternative to a conventional boiler.

John Gunn is director at Inspirit Energy