Development Of Heat Networks Brings Boost To The UK CHP Market
At first glance it may seem that the combined heat and power (CHP) market in the UK has ground to a halt. It is now growing at just 3% a year in terms of the number of installations, and has slowed significantly from a 12% annual growth between 2009 and 2011. So is there anything to get excited about in the seemingly very mature UK CHP market?
Whilst the overall uptake of CHP has slowed, a deeper analysis of the market shows there will continue to be some fast growing segments. We forecast CHP installations will be strong across the 0.5-2 MWe engine size, focused on sectors which have a high demand for heat and hot water such as leisure, hotels and health care. For example, David Lloyd Leisure has been continuing to add to its CHP fleet as there is a strong economic case, and now has 38 CHP units from ENER-G in operation. ENGIE recently announced a big deal to install three CHP energy centres for a Liverpool NHS Trust, citing financial savings of over £1.2 million per annum.
Another exciting part of the market has been the flurry of activity across heat networks, which are supportive of the CHP market. Heat networks are systems for distributing heat generated from a centralized location (often a CHP plant or an integrated energy centre) for space heating and water heating. These are often incorporated into large new commercial and residential developments because a centralized heating facility can lower operation and maintenance costs in the long term. In 2016, Vital Energi closed two separate deals to install CHP-powered heat networks into mixed-use developments and SSE announced project to develop a district heating network powered by CHP at a housing development in London.
So in a market that is growing slowly overall, Verdantix expects that market participants will all hone in on these growth segments. This means that multiple providers will target CHP installations across the hotels, hospitals and universities sectors. Major players in district heating, such as ENGIE, SSE and Vital Energi, will fight for some of the opportunities opening up through redevelopments across London and DECC’s £300 million of funding that will contribute to up to 200 heat networks.