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Baker Homes Blog

CHPs – how can we get the most out of them?

Posted by Richard Lupo on 08-Dec-2022 07:30:00

Combined Heat and Power plants (CHPs), are often used to supply blocks of flats. In theory, the beauty of CHPs is that they produce heat and electricity at the same time. This means, typically around 20% lower carbon dioxide and nitrogen oxide emissions per unit of useful electricity and heat generated. Occupiers move into new homes with Code for Baker Homes certificates and EPCs showing they should expect lower energy bills.

For many years now planning policy in London has promoted the inclusion of combined heat and power plants (CHP) in new developments. These machines produce heat and, in doing so, produce electricity as a by product. This policy has resulted in a huge uptake in the specification of CHP, although questions arise: How much of what is installed is actually operating?  Are the predicted carbon savings actually being realised?

In practice there seem to be barriers. CHP suppliers are clear that CHP installations should be electrical led, so that the CHP generates a constant supply of low carbon electricity to meet the demand of the site (this can result in heat dumping).

London Plan policy requires that CHP design is heat led. This means that they are sized to produce an amount of hot water that meets the baseload space heating and hot water required by the homes that they supply. If they produced more, then this excess heat would be wasted (unless a use can be found for it). The electricity is then essentially a by-product of heat generation. Heat led CHP specification often results in production of low carbon electricity in excess of the sites electrical demand.

Electricity cannot be sold directly to residents as current regulations prevent this, however it can be sold back to grid. A good idea in theory.

But here’s the problem. The District Network Operators (DNOs) who run local electricity grids are not really interested in having lots of agreements with lots of small producers and as a result pay a low price for the electricity generated, often leaving the CHP management/operator generating electricity at a higher cost than they can sell it, leaving them vulnerable to fluctuations in gas process and as a result, many CHP schemes are not financially viable. In addition, CHP operators find it difficult to connect to the grid due to the process and the reluctance of DNOs to make an agreement with them.

There is a growing anecdotal evidence that there are a number of CHP installations where the management companies of these new developments are struggling to run their CHP installations economically, or CHPs are simply not being used, with the backup gas boilers being used in their place because that is the most cost effective option for the management company.   

There is also evidence that occupants of buildings connected to CHP perceive their bills are too high (as the occupants are paying more for their heat per kWh than they would for mains gas if they had their own combi boiler) and this increases defaults and debt problems.  In reality costs maybe lower once boiler efficiencies, the cost of maintenance/replacement of boilers and insurance is considered. 

An energy expert who asked to be kept anonymous, said, "Heat led CHP is often specified when buildings are being designed as it is a useful measure for meeting policy targets and helping to achieve Code or energy efficiency targets in new build homes.  The technology does work and will result in reduced carbon emissions. However, when it comes to operating CHP installations, and it may not be the most economic solution and when I visit sites it is rare that I see them switched on post construction. I am aware that the CHP plant is often not used and the backup boilers are used as the main heat supply. The result higher carbon emissions than designed and buildings that don’t perform in line with the Code certificate and EPC that comes with them”.

Sustainable homes have also seen these issues. So what should be done to overcome this problem?

It is possible to correct these issues. Here are some ideas of actions that could help. Building management companies operating CHP plants and struggling with these problems could form an alliance to share experience and ideas that they believe would work for them, for the resident and as a group work with policy makers and DNOs.  DNOs need to be obligated to make the contractual aspect of connection easier and simpler and pay a reasonable rate for electricity generated from smaller CHP installations. Finally, policy makers must ensure that their requirements for CHPs align with industry best practice and ensure that the policies result in appropriate, energy efficient and financially viable design and operation.


We are working with various organisations in the sector to improve the environmental performance of housing in the UK. To learn more about our work, have a look at our short and fun video below.

Topics: Heating, Electricity

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