A very good writeup...Cutting energy bills through high...

A very good writeup...


Cutting energy bills through high efficiency micro-CHP at no up-front cost

CFCL offers a small-scale fuel cell based electricity generator (BlueGEN), which allows efficient on-site production of electricity as well as some heat from natural gas. A typical customer will see carbon savings of 3-4 tonnes each year and a 20 per cent saving on fuel bills, with a potential for these savings to rise, given DECC projections that the cost of electricity will rise faster than the price of gas.

CFCL claims that BlueGEN commands the highest electrical efficiency of any small scale generator, at up to 60 per cent electrical efficiency. Once heat recovery for hot water heating is factored in, the efficiency rises to a total of 85 per cent. The unit acts primarily as an electricity generator, producing only enough heat for a tank full of hot water a day, and as a result it is an add-on to an existing heat system. As well as this, it possesses the ability to export excess electricity to the grid.

Part of the reason why BlueGEN is so efficient is that it avoids the electricity losses associated with grid transmission and distribution infrastructure. Due to the cost of transmission and distribution as Thompson explained, the value of electricity varies with its location, with that from a high efficiency gas power plant valued at around £45/MWh, compared with the £140/MWh seen for CHP systems such as BlueGEN.

“The point about distributed generation is saying this is working at the bottom end of the network. Rather than saying that there are always economies of scale, it’s saying that in some cases there are diseconomies of scale. If you can respond to demand at the local level, then you can make the system much more efficient overall and that’s the ability we bring. The ability to respond to demand within the typical half hour periods you get on the market… we can respond to those pricing signals and modulate demand at still very high efficiency,” Thompson said.

In a recent case study, a hairdressing salon which fitted a BlueGEN unit was able to reduce its use of grid supplied electricity from 3,601KWh to 273kWh and feed 585kWh back into the grid. Due to a number of complementary measures such as waste water heat recovery and a new condensing boiler, gas consumption actually fell from 1450m3 to 1,083m3, despite the fact that the BlueGEN unit was generating all of its electricity and heat from on-grid gas.

According to Thompson, BlueGEN units are relatively straightforward to install in situations where the owner of the building does not pay for the electricity or heating. BlueGEN features an onboard power management system and inverter, which allows for its use in off-grid applications, with the switchover governed by a firmware change rather than changes to its hardware in the field.

Thompson said that CFCL is currently more interested in the commercial opportunities presented by large retail chains than single commercial applications. The key markets for the technology are therefore multi-site retail, social housing and new build, along with university accommodation. In the case of social housing, BlueGEN is supported by the National Grid Affordable Warmth Solutions programme.

In this situation, CFCL recently trialled the use of a BlueGEN unit together with a Ground Source Heat Pump (GSHP) and a pre-heat tank. This set-up achieved better than predicted heat recovery: 1.3p/KWh for space heating, rather than the 2p/KWh anticipated initially. As a result, CFCL is recommending the BlueGEN/GSHP system for all new build applications.

CFCL sells its BlueGEN units with a “full peace of mind” maintenance agreement at a cost of around 4p/KWh or £520/year under a 10 year contract, after which CFCL will seek to negotiate another 5-10 year contract, “hopefully” at a lower cost.

‘Free’ scheme for micro-CHP

Thompson said that the increase in the Feed-in Tariff back in March to 12.89p/KWh has acted as a vote of confidence in CHP technology and that the market is also benefiting from a €13,000 subsidy per CHP unit for businesses in the German state of North Rhine-Westphalia. According to CFCL’s latest annual report, Germany’s CHP law may lead to support from other German states. The state of Hessen also recently announced their support and further states are likely to follow lead soon.

These developments are important due to the way in which volume and economies of scale are working to reduce costs. Two years ago, the RRP of a BlueGEN unit was £30,000, now it’s around £19,000. According to current estimates, that results in a typical payback of 7-8 years for organisations purchasing a BlueGEN unit (IRRs of around 10 per cent), instead of opting for an alternative financial model. This payback is likely to be faster for businesses falling under the Carbon Reduction Commitment (CRC) Energy Efficiency scheme and for the many retail businesses currently using electric heating (the savings detailed earlier assume the heat from BlueGEN is displacing gas-based heating).

Since the increase in the FiT, it has become feasible for CFCL to finance the installation of BlueGEN units and for the right installation locations, CFCL has funders who will fully finance the installation and take the FiT income instead of normal repayments, like an Energy Performance Contract (EPC) or Energy Saving Company (ESCO) model. Under this scheme, the end user only has to pay for running costs and sees a saving on their energy bills.

“The key thing for the customer is that they have the space. Most of them have a plant room where we can put the BlueGEN. I spoke to one customer yesterday, whose demand is about 28,000kWh per year. We’ll take away 13,000 of that, effectively cutting his electricity bill in two, his gas bill will go up a bit, but he’ll also get some free hot water, so overall if he goes for the ‘FreeBlueGEN’ scheme, he’ll get something in the order of a 20 per cent saving in year one, which will, as prices of electricity rise faster than gas going forwards (which is what the government predicts), rise over the period to around 40 per cent savings in year 10.”

“Under ‘FreeBlueGEN’, what people are paying for, is the gas they consume and the maintenance contract and that’s it. They don’t have any liability on the capital side. Their only liability is to make sure they keep the unit running. They can’t intervene and turn it off or anything like that. It tends to be for the companies who are going to be there for at least 10 years,” Thompson said.

More information on the scheme and an application form can be found here:

To be eligible for the scheme, a user needs to meet the following criteria:

• A minimum power demand of at least 20,000 kWh per year per installation site
• A minimum of 10 years left on the lease on your property or you own it freehold
• Payment of ongoing gas and maintenance costs
• A use for hot water
• Availability of mains gas to the property (not LPG)
• No more than one BlueGEN per ‘site' – site is defined either by your electricity meter or, if you are on a private wire network, by your postal address.

According to CFCL, schools can benefit from more than just savings on their energy bill, as BlueGEN can act as an effective educational resource. This is because fuel cells are part of the science curriculum. Having a fuel cell on site means that children and students can learn about them without the need to travel and they can also learn from online tools provided by CFCL, helping to satisfy some of the learning requirements within Key Stage 3 Science regarding energy, electricity and forces, along with those on renewable energy resources and emerging technologies. The data produced by the online tool can also be applied to both Maths and IT.

Future potential – integration with renewable energy storage, local grid management, uninterruptable power

“Another things happening in the UK is our partnership with E.ON. We announced recently that as part of the EU-funded project which we’ve been working on since 2011, with them and Ideal Boilers, we’re now in the second phase of the project for integrated units which will include a boiler as well. Those components are being delivered to E.ON already and they’ll be going out in the field next year.” Thompson expects that the integrated system will be the type of BlueGEN most used in the domestic market and added that the current work with E.ON is at the field-trial or demonstration stage.

Thompson sees some potential for using methane from renewable sources, including its production when there is excess energy on the grid due to high wind speeds.

“The Germans are already investing in power-to-gas, so converting that excess power, which is virtually free, to hydrogen and probably through methanation into renewable methane. Actually methane can be an energy-vector. It doesn’t have to be a fossil fuel and can be a way of storing excess electricity. Hydrogen is difficult until we have a full hydrogen economy, but methane is easy. You then capture CO2 and if you do that next to a CO2 producer, such as an anaerobic digestion plant, which produces a very pure stream of CO2, then you can methylate that quite easily.

"The processes are there although the scale isn’t yet… It’s really a storage technology, rather than anything else, but storing methane in the grid is probably 1,000 or 10,000 times more than you’d ever get through battery storage. It’s much more feasible and much more practical... The thing about methane is that you can use it for multiple purposes: CNG for vehicles, HGVs and so forth and stationary power applications,” Thompson said.

Given that the BlueGEN typically runs at an electrical output of 1.5kW but can go up to 2kW if required and is fully internet-connected, it offers some intriguing possibilities. For one thing, it means that many issues can be resolved without the need for an onsite visit, but it also means that clusters of BlueGENs operating as Virtual Power Plants could one day be used to help actively manage the grid at a local level. For example, a cluster of a 1,000 BlueGENs would equal around 1.5MW of capacity and produce 13GWh of electricity onsite, enough to have an impact on the grid. This approach would also make it easier to integrate electric vehicles onto the grid, as it would help to eliminate some of the constraints at the sub-station level and facilitate overnight ‘trickle-charging’, with benefits for battery life. “We’re looking at how best to recharge electric vehicles, as most of them will be recharged overnight,” Thompson said.

“If we go back to the reason why people aren’t building CCGT plants today, the reason is you can’t fund them and you can’t fund them because of wind. And this is one of the reasons why there’s a good chance of the lights going out in 2016. It’s because we could build CCGTs between now and then and take that risk away but we can’t fund them because we don’t know how much they’re going to run for 20 years and the likelihood is that they’re going to run less and less and it’s very difficult to fund new kit on that basis. However, if you take our kit on a VPP basis and you generate at the domestic end, you’re not pushed off the system by wind, it’s seen more as demand-side reduction and because they’re all internet-connected, it means you create the VPP.

“In the longer term, we expect to see a system where you might have a million of these in people’s homes generating a couple of GWs of power, which from a system point of view is substantial. Add on that you haven’t got the T&D losses so it’s effectively seven per cent more power and it can all be controlled remotely, in terms of power generation. So I can see a model where we have these things in people’s homes, they pay for a boiler, the utility pays for the generation side of it and the utility runs the electricity generation and the customer gets a very high spec heating system which is also providing power for them and their neighbours, but is all being handled by the utility who are just billing them on a normal basis, so it becomes easy for the end user,” said Thompson.

Thompson explained that while Air Source Heat Pumps (ASHPs) are an obvious choice when it comes to retrofitting buildings in urban settings such as London, the issue is complicated by the fact that they do not fall under the commercial Renewable Heat Incentive (RHI). He also said that in situations where it is installed in buildings with PV solar arrays, BlueGEN can be set so that its output drops during sunny days.

E2B asked if BlueGEN had the capability to increase its output at points in the day when the carbon intensity of generation is highest. Thompson replied by saying that while in the UK CO2 emissions and on-grid costs are generally in sync with each other, when they are not that results in some perverse interactions, requiring users to make a choice between carbon and costs. He believes that the link between on grid CO2 intensity and electricity costs will rise when more coal-fired power plants go offline due to the European Large Combustion Plant Directive (LCPD), which will come into force in 2016, as these generate electricity at the lowest price, while producing the most carbon on a per MWh basis.

“I think the LCPD is going to have a significant impact on the UK national grid and it will be very interesting to see come 2016, if the new government, whoever they are, would prefer to pay the fines and keep the coal plants running or not pay the fines, blame Brussels and watch the lights go out.

“One of the things we’re looking at between now and then is trying to develop a system where we could tie in with the uninterrupted power supply (UPS) approach, where you have a large battery for businesses which are mission-critical, such as e-commerce where you really don’t want it [the power supply] to go off,” Thompson said. He added that if there was sufficient demand, such a product could be available within the next 12 months. Thompson also said that he would be happy to talk to any UPS companies about possible collaboration.

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