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Brussels, 13 November 2008

Combined Heat and Power generation (CHP)

Cogeneration takes the European Union closer to its energy related goals. It is a proven tool to increase energy efficiency and to achieve energy savings' targets. It contributes about 2% towards the 20% annual primary energy savings objective for 2020. It reinforces efforts to fight climate change by reducing CO2 emissions (100 Mt CO2 per year) and decreasing network losses. At the same time, it contributes to increasing competition in the electricity market. For these reasons, it is necessary to ensure and exploit the full potential of cogeneration throughout the European Union.

Cogeneration is a highly efficient and environment-friendly way of producing electricity and heat simultaneously. Cogeneration – or combined heat and power (CHP) – means using both the electricity and heat produced together, thus wasting less energy in production. These systems can also be installed close to users, reducing power transmission losses.

The unused heat from energy production - which is often released into the environment as an unavoidable by-product of traditional electricity production - is no longer wasted but used to provide heating locally, for example for greenhouses, shopping centres or district heating systems. Cogeneration is flexible. It can use many types of fuel, such as coal, natural gas and renewable energy sources as well.

The European Commission sees the CHP Directive[1] as a significant tool in contributing to Europe's answers to the energy challenges. The Member States and the Commission are closely working to promote cogeneration. To this end, after the adoption of the CHP Directive in 2004, important steps have been taken to ease its full implementation throughout the European Union (e.g. determination of reference values and elaboration of detailed guidelines for the calculation of the electricity from CHP). The Commission will continue to monitor the process and will present further proposals if appropriate to foster cogeneration in close cooperation with the Member States. The production of CHP electricity in EU27 amounted in 2006 to 366 TWh, i.e. 11% of the total electricity generation.

Increasing security of supply, promoting energy efficiency are the challenges of utmost importance for the European Union. Combined heat and power generation is an important tool to meet them, meanwhile offering many other direct and indirect advantages for the European citizens.

Cogeneration means also decreased burden to the environment: less wasted heat, less CO2 emissions, less waste in electricity networks. The benefits in terms of energy saving from cogeneration are today estimated to be around 35 Mtoe per annum in EU27, equivalent to Austria's gross inland consumption.

Cogeneration is often seen as an initiative for industry. Nevertheless, along with technology developments in the past years on the so-called micro-CHP, cogeneration implies higher level of security and flexibility on energy supply for households as well. For instance, producing electricity with micro-CHP installations in residential houses will result in lower energy bills.

Finally, a larger use of CHP technologies in industry and residential areas will increase competition in the electricity market and result in lower prices.

More information here.

[1] Directive 2004/8/EC of the European Parliament and of the Council of 11 February 2004, on the promotion of cogeneration based on a useful heat demand in the internal energy market and amending Directive 92/42/EEC

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