Power Generation

Combined Heat and Power

The potential for Combined Heat and Power (CHP) technologies to provide a cost effective means of decarbonising both power and heat, while also providing for security of supply, has long been recognised across Europe. However, the penetration of CHP varies across Europe which reflects the bespoke characteristics of CHP, the physical nature of local markets such as the proximity and density of both power and heat demand and also the fragmented nature of revenues for CHP.

The potential remains high, and in particular where the fuel source for CHP is renewable.  But a critical challenge for new CHP plant is structuring the commercial contracts and physical operation to maximise earnings across a multiplicity of potential revenues including direct power sales, direct heat, wholesale power sales, system services and potential subsidy regimes. There is frequently an inherent tension between asset owners retaining flexibility, whilst also delivering the required security of direct heat and power supplies.

CHP plant are bespoke and vary from micro-CHP through to very large heat and power generation assets. Baringa works with developers and operators of a wide range of assets across Europe that are supplying very different end-users. Recent projects include transaction advisory for large refineries in GB, analysis of offtake contracts for a chemical works in Poland, modelling district heating schemes in the Netherlands and regulatory advisory for a small industrial process in Ireland.

Our advisory is underpinned by a deep understanding of the domestic incentive arrangements and an ability to model in detail the complexities of the operation of CHP.

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