Combined Heat and Power

About Combined Heat and Power

CHP plant - photo courtesy of Conoco

Combined Heat and Power (CHP) is a highly efficient process that captures and utilises the heat that is a by-product of the electricity generation process.

By generating heat and power simultaneously, CHP can reduce carbon emissions by up to 30% compared to the separate means of conventional generation i.e. via a boiler and power station.


Latest News


Greg Barker provides a Q&A on CHP for the Combined Heat & Power Association Conference, 21 November 2011.

CHP Q&A. Transcript attached on the page.

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As well as reducing emissions, CHP lowers energy and fuel costs and improves security of supply. It is suitable for a wide range of application sizes from a replacement for a boiler in homes to meeting the energy requirements of a large industrial complex. CHP is also viable for a whole range of fuels, including gas, oil, biomass, waste and nuclear.

CHP requires that the useful heat is able to be utilised locally. The heat is either onsite in the majority of instances, exported direct to a adjacent heat customer or supplied to a number of users via a district heating network. The electricity generated is also used onsite, or exported to the grid.

Industries that are suited to CHP are those with a high demand for heat, including oil refineries, chemical plants, the paper industry, breweries, horticultural sites, etc.

Buildings that have proved particularly suited to CHP include hospitals, universities, hotels, leisure centres and residential homes.

Why is CHP beneficial?

Grid electricity has low efficiency and high carbon content due to the way in which it is generated. The remote location of most power stations make it difficult to utilise any heat that is generated as a by-product. The heat is instead discharged to atmosphere via the familiar cooling towers, leading to low efficiencies of 35 - 50% (in comparison, CHP schemes can achieve overall efficiencies of over 80%).

CHP effectively works as a mini power station developed close to points of electricity and heat demands, avoiding transmission and distribution losses and utilising the waste heat locally, leading to higher fuel efficiency and lower carbon emissions.

CHP Quality Assurance

Good Quality refers to CHP generation that is highly efficient in operation, meeting the standards set down in the EU CHP Cogeneration Directive. The CHP Quality Assurance programme (CHPQA) provides a practical way to assess all types and sizes of CHP scheme to make sure they meet the EU standards and are thus eligible for Government support.

Since 2001 a range of support measures have been introduced to increase Good Quality CHP capacity in the UK:

Fiscal incentives

  • Exemption from the Climate Change Levy for all Good Quality CHP fuel inputs and electricity outputs
  • Eligibility for Enhanced Capital Allowances (ECAs) for Good Quality CHP plant and machinery
  • Preferential treatment under the Business Rates for certain Good Quality CHP schemes
  • Enhanced eligibility for Renewables Obligation Certificates (ROCs) for renewable CHP schemes
  • Eligibility to ROCs for the biomass element of fuel used in energy from waste on CHP plants
  • A pilot scheme allowing eligibility to Feed-In Tariffs for 30,000 micro-CHP installations with a review to start when 12,000th installation is completed
  • Reduced VAT on the installation of micro-CHP


Regulatory framework

  • Favourable treatment under Phase II of the EU Emissions Trading Scheme (ETS)
  • Transposition of the EU Cogeneration Directive
  • Changes to the licensing regime, benefiting smaller generators
  • Ensuring fair and easy access to the grid for smaller generators
  • Emphasising CHP benefits when reviewing or introducing new guidance for planning or sustainable development projects
  • Revised guidance on power station consents applications, to ensure full consideration is given to CHP possibilities
  • Addressing the administrative burdens for smaller generators and offering advice/help for using distributed generation

CHP Focus

CHP Focus is a DECC initiative to support the development of Combined Heat and Power in the UK. The CHP Focus website contains comprehensive information on all aspects of cogeneration.

There is also free helpline support provided on 0845 365 5153, where experts can provide guidance.

Recent reports and consultations

DECC commissioned AEA Technology to compile the following studies, in line with the reporting requirements of the EU Cogeneration Directive:

Other reports commissioned by DECC focusing on CHP:

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