CHP (Combined Heat & Power) Regulation by the EU for Facing the Liberalised Electricity Market

Aviel Verbruggen


Liberalisation of the EU electricity market has brought little salvation for independentCHP. Fair access to the market is not guaranteed and many projects suffer from the dismantling ofexisting support schemes. The EU Commission publishes in 1997 a strategy to promote CHP, and in2002 a proposal of CHP Directive. A good CHP regulation needs two issues to be solved: 1/ identifyprecisely what is CHP when a thermal power plant can be operated in the mixed state of partlycombined and partly condensing operation; (and after 1) 2/ qualify the results for assigning particularrights or duties. The proposed Directive neglects to identify CHP precisely. As a corollary there is nofirm basis for qualification. The 2002-proposal would have resulted in an obstruction of many CHPprojects, but the perverse incentives are remedied in the 2003-amended proposal by accepting avariety of separate benchmarks. By assigning a lot of decisions to the Member Sates and by theshortfall in guidelines for identifying CHP well, the Directive will not reach the own stated goals ofharmonisation.

However, there exists a scientific and workable methodology for identifying CHP precisely.It needs a few definitions and concepts such as production possibility set of a CHP process, designheat to power ratio, heat capacity factor. The well identified quantity of cogenerated electricity is asufficient ground for qualifying CHP activities. It is also the solid basis for the unbiased furtherqualification of the results by some internal or external benchmarking. Given the ?common positions?arrived at in September 2003 by the EU institutions, the perspective that the first best method willwin over the second-best approach is meagre.

Full Text: