CHP Finances |   |
The calculation of the economic payback of a CHP system is unfortunately not very simple as there are a number of site specific issues that need to be taken into account. The notes below therefore are intended to provide a flavour of how the payback is calculated along with potential sources of funding, but cannot be comprehensive. A full site survey and detailed feasibility study is needed to produce a more accurate payback assessment of your potential CHP system.
The illustrations below are based on the EC Power 17BD system operating at full power for 5,000 hours per year. The actual usage, costs and savings will depend upon your own situation.
For larger applications multiple CHP units may be connected in parallel for even greater savings.
Hours of Operation
The number of hours per year your system operates for is probably the most important criteria and you need to estimate how many hours this will be in order to determine if a CHP system could be appropriate for you.
You should start with identifying how many weeks per year, days per week and hours per day your property will be using at least the maximum heat generated by the CHP system. e.g. If you normal hours are from 7AM - 11PM, 7 days per week that is 112 hours per week or 5,824 per year.
If there are periods during the year however when your property is unused, or maybe in summer there is less need for heat, then you need to reduce the total hours.
If you shutdown for 2 weeks over Christmas and New Year, then you need to reduce the annual hours by 2 weeks, or in the example above, 224 hours.
If in summer you have need for hot water, but not heating, then you should reduce the expected number of hours the system will need to generate for. It might for example be appropriate to halve the expected number of hours during summer, say from June - September. In the example above therefore you would reduce the overall hours by 56 hours per week for say 12 weeks or 672.
Adjusting for both the Christmas shutdown and less demand in summer therefore, the expected number of hours in the above example would be; 5,824 - 224 - 672 = 4,928.
Clearly the actual numbers will depend upon your property, and your usage of it.
When you wish to make an enquiry with Segen regarding a CHP system it is very helpful if you can provide as much if this information as possible on the enquiry form, along with your existing heating and electricity costs.
Saving / Income
Electricity Saved
Any electricity generated by your CHP system and used within your premises will not need to be purchased from your power company, thereby saving the cost of purchase. The actual saving will of course depend upon the rate you pay for electricity. Assuming a rate of 8p per kWh then a 17kWe system running for 5,000 hours would generate 85,000kWh saving £6,800 per year of imported electricity costs.
Heating Costs Saved
Your CHP system will generate up to 26kWt of hot water and when running for 5,000 hours this is 130,000kWh per year. Typically this would also cost 8p per kWh using a gas boiler and therefore the potential saving is £10,400 per year.
Renewable Obligation Certificates
The electricity generated by your biodiesel CHP system should also fully qualify for ROCs (Renewable Obligation Certificates) and with an example installation generating 85MWh per year you may expect to get 85 ROCs with a value of approximately £40 each, so a possible total of £3,400 per year. It is expected that the new energy bill about to go through Parliament will increase this to 2 ROCs per MWh and therefore increasing the potential revenue to around £6,800 per year.
Summary Savings / Income
Based upon the assumptions above your biodiesel CHP system would generate the following savings / income;
- Electricity Saved £6,800.
- Heating Costs Saved £10,400.
- ROCs Earned £3,400.
Total £20,600 per year
CO2 Saving
One of the biggest benefits of a biodiesel CHP system is the CO2 savings from moving to a true renewable energy system. The actual amount of the CO2 saving will depend upon your existing heating system, but for the example described above you would expect it to be in the region of 50 tonnes per year of CO2, which is a very significant reduction for any property to achieve.
Costs
Capital Cost
The total installed cost of a CHP system will depend upon the site and the existing heating system. Typically costs will vary from £30,000 - £35,000 depending upon circumstances.
Running Costs
The systems supplied by Segen include a full service package for the first three years. Thereafter you should expect to pay £1,500 - £2,000 per year for annual maintenance.
Fuel Costs
The biodiesel fuel typically costs around £0.50 per litre excluding VAT at the standard rate of 17.5%. Typically the CHP system will use around 4.8l/hr of biodiesel so 24,000l per year at a total cost of £12,000.
See our Biodiesel Fuel page for more information on types and suppliers of fuel.
Funding
Carbon Trust Interest Free Loan
An SME may obtain an interest free loan repayable over up to 4 years, providing they meet the following eligibility criteria;
- Less than 250 employees.
- Less than €50m Turnover (approximately £35m) or Less than €43m assets (approximately £30m).
- No controlling interest more than 25% by a non-SME (i.e. it is part of a larger organisation).
- Not agricultural.
More information may be found on the Carbon Trust web site: http://www.carbontrust.co.uk/energy/takingaction/loans.htm
Enhanced Capital Allowances
Your CHP installation may qualify for enhanced capital allowances which will enable you to claim 100% first year capital allowances for the full cost of the system.
In order to qualify your system needs to be accepted into the CHP Quality Assurance scheme. Details of this scheme may be found at: http://www.chpqa.com/
Grants
There are many sources of grant support for charities, community projects and housing associations to install equipment that will reduce their CO2 footprint. Segen will be pleased to advise you on where to seek funding.
Enquiry
If you wish someone to contact you and to receive more information please enter your details into our CHP Enquiry Form.