BUSINESS INSIGHTS

The Future of Cogeneration in Europe

Growth opportunities and key drivers of success

Relative economics of
Combined Heat and Power vs. utility supply
Total cost*
Buy power from supplier,
generate heat only

Break-even
cost

Co-generate heat
and power

Slope = price of fuel

+ per-unit O&M cost

Variable cost
Upfront
capital cost

Slope = retail
price of power

Break-even
usage

Electricity
consumption

Note: * Net of excess electricity output exported to the grid

Source: The Future of Cogeneration in Europe

Discover new profitable opportunities for growth and

develop successful strategies for investment,
using the in-depth analysis in this report.

The Future of Cogeneration in Europe

Share of total electricity production (%)

Leading European Combined Heat and

Power markets, 2003
45
40

NL

35
AT

30

DK

FI
RO

25
20
TK

SK
15

HU

PT

10
BL
5

CZ

PL

ES
LT

SE

DE
IT

UK
FR

BE

0
0

4,000

8,000

12,000

16,000

Installed CHP capacity (MWe)

Source: The Future of Cogeneration in Europe

"The major European CHP markets can be categorized

in three groups. There is a small group of countries,
comprising Denmark, The Netherlands, Finland, Austria
and Romania, where cogeneration is a crucial part of
the generation portfolio, albeit for different
historical reasons..."

Cogeneration (simultaneous production of electricity and heat), offers

significantly higher fuel efficiency compared with conventional ways of
generating electricity from fossil fuel. Provided there is a ready market for
the heat output, this not only saves on fuel costs but also reduces CO2
emissions.
The Future of Cogeneration in Europe is a new management report
that analyzes the current state of the market offering an European
overview as well as detailed profiles for selected markets - such as
Germany, Italy, Denmark, The Netherlands, United Kingdom, Turkey
and Russia. This report assesses the future prospects and the position of
cogeneration technology within the overall power generation mix. It
evaluates the economics of cogeneration, the regulatory environment,
market structure and growth potential. It also offers actionable
recommendations based on independent, expert analysis of the critical
success factors.
Use the comprehensive analysis in this new report to assess current
and future profit opportunities and to anticipate potential market
threats.

Some key findings from this report...

Efficiency gain of CHP over separate power
and heat generation
CHP plant*
Primary fuel
Efficiency
Energy output
Grid losses
Heat-to-power ratio
Heat output
Power output

Boiler

Total separate

100
80%
80
n/a

Power plant*
65.9
52.5%
34.6
2.6

56.5
85%
48
n/a

122.4

1.5
48
32

n/a
n/a
32

n/a
48
n/a

n/a
48
32

Fuel saving
Fuel efficiency gain

82.6
2.6

Within the EU, national support regimes have very different efficacy in
encouraging high-efficiency Combined Heat and Power (CHP)
schemes. In a typical example, the UK system would provide a highefficiency plant only 25% more subsidy than a low-efficiency one. By
contrast, in the Flemish system the difference would be four-fold.
The expanded EU is now home to the worlds largest cogeneration
industry, with c.104 GWe installed capacity. This is more than Russia
and the US, with c.80 GWe each.

22.4
18%

Note: * Based on typically achievable efficiency from respective best in class technologies (CCGT)

Source: The Future of Cogeneration in Europe

"CHP technology is capable of delivering fuel efficiency

gains of up to 18% compared with separate generation
of power and heat, in all cases using the most efficient
currently available technology..."

Micro-CHP is set to be one of the high-growth areas in the next few

years. By contrast, biomass-fired CHP faces considerable hurdles and
is likely to remain a niche segment in most markets.
Cogenerators do not need a level playing field with power utilities,
as they rarely compete against them head-on. However, investors in
CHP require greater cash flow predictability to make their projects
viable.
In its current initial form, the EUs support framework for cogeneration
does not fully reflect the requirements of the CHP sector, in part
because of the top-down way in which it was drawn up.

This new report will provide you with...

Principal schematics of a Stirling engine
Combined Heat and Power plant

Analysis of the technical capabilities and principal applications of the

main established and emerging cogeneration technologies.
Illustration of the Net Present Value model of Combined Heat and
Power investment and of the principal risk factors involved.
Benchmarking of the technical characteristic and cost structures of
the main cogeneration technologies.
Assessment of the private and public costs and benefits of CHP vs.
conventional electricity generation.

Source: The Future of Cogeneration in Europe

"The efficiency of the Stirling engine is improved

considerably through the deployment of a
regenerator between the boiler-heat and the
cooler-heat exchangers. The regenerator is typically a
mass of metal wire, through which the working fluid
can move freely. It increases the speed of temperature
change within the working fluid by absorbing some of
its heat during the expansion movement, and releasing
it back during the contraction movement...

Evaluation of the cogeneration industry structure and growth

potential, both in the EU and elsewhere.
Discussion of the regulatory regime pertaining to Combined Heat
and Power with a focus on the EC Cogeneration Directive and its
implementation across the EU Member States.
Examination of what policy makers can do to improve the
economic case for investment in CHP and increase growth potential.

Some of your questions answered...

Output characteristics of the main
cogeneration technologies

How is the Combined Heat and Power industry organized and where
do I fit within that scheme?

High

What is the most cost-efficient cogeneration technology on offer?

Global efficiency

CCGT
Gas turbine Fuel cell

Kalina engine
Steam engine

Reciprocating engine

Medium
Steam turbine
ORC

Stirling engine

Peak capacity:

High
Medium
Low

Microturbine
Hot air turbine

What are the main growth segments and how can I benefit from that
growth?

Inverse gas turbine

Low

Medium

High

Power / heat ratio

Source: The Future of Cogeneration in Europe

"The CHP technologies currently available exhibit a

huge variation in their technical characteristics, such as
peak capacity range, electrical and overall efficiency.
The figure above present a summary of the key
capacity and efficiency metrics of the principal
established and alternative technologies..."

How helpful is the current regulatory environment to my CHP

investment strategy and what are the expected changes?

What are the main risk factors when investing in a CHP scheme and
how can they be mitigated?

What impact does government policy have on the cost-efficiency of

CHP vs. other options?

Some hot issues covered in this report...

Principal schematics of a fuel cell Combined
Heat and Power plant

EU ETS and the Kyoto process low-emissions technologies and

the integration of CHP within the EUs ETS and renewable power
frameworks.
Distributed generation cutting down on transmission and
distribution losses, reduction on the need for investing in the
centralized power grid and the improvement on grid stability.
Externalities costs and benefits of private economic agents
actions that accrue to society as a whole rather than to those specific
agents.

Source: The Future of Cogeneration in Europe

"There are several versions of the fuel cell technology,

depending principally on the electrolyte used. They
fall into two main categories: low-temperature fuel
cells (operating temperature between 80220C),
and high-temperature fuel cells (operating
temperature between 600-1,000C)..."

Fuel cells most promising emerging technology in CHP. The

association with transport applications and the potential to make
micro and small-scale CHP.
Subsidies the market-distorting and undesirable perception and
the EU Cogeneration Directives recognition of the need for some
kind of incentive to acknowledge CHPs social benefits and to
increase its role within the power market.

Top 5 reasons to order this new report today

Drivers and inhibitors of support for
Combined Heat and Power

Identify the advantages of established and emerging cogeneration

technologies and their suitability for specific user requirements.

Carbon emissions
vs. EU ETS target

are
Sp

id
gr

Increasing
support for
CHP

y
cit
pa
ca

le
ab nda
ur
vo ge
Fa cal a
liti
o
p

&
ble ns
wa tio
ne op
Re lear
c
nu

Utilisable heat
demand

Source: The Future of Cogeneration in Europe

"These considerations are schematically reflected in the

figure above and can be used for a prima facie
assessment of the likely investment case for Combined
Heat and Power in a given national market..."

Analyze the impact of the EC Cogeneration Directive on existing

schemes and future investment and its implementation across the
EU Member States.

Understand the economics of the CHP sector and the critical risk
factors involved.

Isolate the potential pitfalls and avoid them, when planning your
cogeneration investment strategy.

Anticipate the likely changes in the regulatory environment and

how they might affect your decisions.

Sample information from the report

Chapter 3: Economics of Cogeneration
Other social benefits
Other social benefits from cogeneration are less obvious,
and are perhaps more difficult to quantify. They derive

Capital Cost Requirements to Meet 20 Year Projected

Electricity Demand in Brazil and China, 2005-25

from its characteristic as a decentralized source of power,

Brazil

and include the following:

Reduced investment by the network operator in the
transmission and distribution infrastructure (which
lowers the T&D portion of energy bills of all the grid
users, and not just of the cogenerators);

China

Greater elasticity (responsiveness) of supply compared

with large centralized plants (due to the smaller scale
and the more flexible technologies typically involved,
and also to the different nature of the business
imperatives);
Increased competition in electricity supply, due to a
greater number of generators and a greater range of
alternatives to the incumbent or predominant supplier

Source: The Future of Cogeneration in Europe

in each area;
Improved power quality, due to the user being able to specify technical characteristics to its own
requirements and having greater control over outages or brownouts;
Improved security of supply and decreased vulnerability of the power infrastructure.
A less centralised generation structure implies improved security of supply, because a possible outage affects
only the site at which it has occurred, and not the other users or the power grid in general. There can be no
cascading effect where a fault in a relatively minor part of the central network may lead to a major
shut-down, as happened in northeastern US and eastern Canada in August 2003, and in Italy just over a
month later.
In sum, CHP in particular and distributed generation in general could yield considerable economic savings at
the macro level, based on calculations by the World Alliance for Decentralized Energy (WADE) illustrated in
the figure above.

Order this report today to find out more...

Table of Contents
CHAPTER 1: INTRODUCTION TO COGENERATION
CHAPTER 2: TECHNOLOGY OVERVIEW
Summary
Introduction
Established technologies
- Technical descriptions and application for:
- Steam turbine
- Gas turbine
- CCGT
- Microturbine
- Reciprocating engine
Alternative technologies
- Technical descriptions and application for:
- Fuel cell
- Stirling engine
- Inverse gas turbine
- Hot air turbine
- Steam engine
- ORC engine
- Kalina engine
Comparative overview of the main technologies
- Technical overview
- Cost overview
- Technology costs
- Fuel costs
- Overview of applications
CHAPTER 3: ECONOMICS OF COGENERATION
Summary
Introduction
General framework
- Net present value
- Risk factors
- Non-utility vs. utility cogenerators
CHP vs. utility supply
- Revenues and cost savings
- Costs
- Summary of free cash flow from CHP
CHP vs. stand-alone generation
- Direct fuel cost savings
- Fuel efficiency
- Achievable price of power

- Fuel spread
- Transmission and distribution savings
- Externalities
- Greenhouse gas reductions
- Other social benefits
The problem of scale
The need for support
CHAPTER 4: REGULATORY FRAMEWORK
Summary
Introduction
EU Cogeneration Directive
- Guarantees of Origin
- Quantification methodology
- Volume of electricity from cogeneration
- Efficiency of cogeneration
- Reference values
Implementation mechanisms
- Green tax relief: UK case example
- Feed-in tariffs and price support: Portugal case
example
- CHP obligations: Flanders case example
- Investment incentives
- Other support mechanisms
- Competitive tenders
- Direct targets
- Network assistance
- Summary of support mechanisms within member
states
- Support schemes outside of the EU
Kyoto mechanisms
CHAPTER 5: MARKET STRUCTURE AND
GROWTH POTENTIAL
Summary
Introduction
Industry organization
- Not a proper market
- Demand-side organization
- Supply-side organization
- Stand-alone plants
- Third-party intermediaries
- In-sourced solutions

Table of Contents (Contd.)

Current state of the market
- European overview
- Selected market profiles
- Germany
- Italy
- Denmark
- The Netherlands
- UK
- Turkey
- Russia
Future levels of support
Priority growth areas
- The case for micro-CHP
- Benefits and incentives
- Technology requirements and operating
regime
- Potential obstacles
- Addressable market
- The trouble with biomass
- Benefits and drawbacks
- Likely growth areas
Barriers to growth
- Difficult underlying economics
- Uneasy relationship with utilities
- Planning and permitting burden
- Support schemes interfering with market
mechanisms
CHAPTER 6: CONCLUSIONS
Summary
Introduction
Philosophy of CHP policy
- Top-down vs. bottom-up
- Focus of support
- Stable policy framework
Unfinished business
- Certification and direct support
- A level playing field?
FIGURES
Principal schematics of a:
- steam turbine CHP plant
- gas turbine CHP plant
- CCGT turbine CHP plant

- microturbine CHP plant

- reciprocating engine CHP plant
- fuel cell CHP plant
- Stirling engine CHP plant
- inverse gas turbine CHP plant
- hot air turbine CHP plant
- steam engine CHP plant
- ORC engine CHP plant
- Kalina engine CHP plant
Output characteristics of the main cogeneration
technologies
Relative economics of CHP vs. utility supply
Capital Cost Requirements to Meet 20 Year
Projected Electricity Demand in Brazil and China,
2005-25
Cumulative emissions reductions from CDMregistered cogeneration projects,
Sept 2005 Sept 06
Leading European CHP markets, 2003
Drivers and inhibitors of support for CHP

TABLES
Output characteristics of the main cogeneration
technologies
Cost characteristics of the main cogeneration
technologies
Fuel utilization of main cogeneration
technologies
Typical (or optimal) applications of main
cogeneration technologies
Efficiency gain of CHP over separate power and
heat generation
Support mechanisms for CHP within EU-15
CHP electricity in the EU and neighboring states,
2003
EC Cogeneration Directive efficiency reference
values for separate production of electricity,
December 2006
EC Cogeneration Directive efficiency reference
values for separate production of heat,
December 2006

About Business Insights

FAX BACK TO: +44 (0) 207 900 6688

Business Insights appreciate the importance of accurate, up-to-date incisive

market and company analysis and our aim therefore is to provide a single,
off-the-shelf, objective source of data, analysis and market insight.

or scan and e-mail to

marketing@globalbusinessinsights.com

www.globalbusinessinsights.com
I would like to order the following report(s)...

Company details

(Please use BLOCK CAPITALS)

Company name: ________________________________________________________

1.____________________________________________________

EU companies (except UK) must supply VAT / BTW / MOMS / MWST / IVA / FPA number:

2.____________________________________________________

_____________________________________________________________________________________________

3.____________________________________________________

Ordering Multiple reports:

Purchase Order Number (if required)_____________________________________

Payment method

Multiple report discounts

Enter total price below

1 report

___________________________

2 reports - save 15%

___________________________

3 reports - save 20%

___________________________

Please indicate your preferred currency:

Please fill out recipient derails below if you wish

to order a printed version of your report(s).
Add 50/75/$95per report
Please allow 28 days for delivery

Interactive Version
A new, innovative way to view our publications
Customize, search, translate, contrast,
manipulate and extract report content.
Add 50/75/$95per report

GB

EUR

US$

Total order value is ____________________________

I will forward a check payable to Business Insights Limited.
Please invoice my company (please complete invoice address below)

1. Price is for a Single User licence

2. Discount applied to sum of total list price. Cannot be used in conjunction with other offers.
3. Contact marketing@globalbusinessinsights.com for more information on regional/global licences

Hard Copy

I would like to pay by bank transfer (email address required)

Debit my credit/charge card:

Amex

Visa

Mastercard

Card No________________________________________________________________________
Expiry Date _________ / _________ Signature ______________________________

Communications Feedback

Payor details

Please let us know if any of the following factors influenced your purchase...
Email/Fax/Postal promotion

Trade Press

Brochure

My Account Manager

Table of Contents

Conference materials

Colleague Recommendation

Website/web search

Title: Mr/Mrs/Ms

(Please use BLOCK CAPITALS)

First Name:

Last Name:

Email
Job Title

Recipient details (If different from Payor)

Department
Title: Mr/Mrs/Ms

(Please use BLOCK CAPITALS)

First Name:

Last Name:

Address

Email
City

State/Province

Country

Post Code/ZIP

Job Title
Department
Tel
Address
Fax
City

State/Province

Country

Post Code/ZIP

Tel

Sign here to confirm your order:

Fax

ORDERS WITHOUT A SIGNATURE CANNOT BE PROCESSED