Combined heat and power (CHP): Business case

The typical payback period for a combined heat and power (CHP) system is between 4–10 years.

The CHP technology overview (PDF) gives an introduction to CHP, its design, selection, installation and operation.

	Introduction		Financing options
	Types of technology		Top 3 carbon saving measures
	Site suitability and feasibility		Publications and resources
	Business case

Business case

Benefits of CHP systems include:

Reduced energy costs

Combined heat and power (CHP) can be the single biggest way for you to cut your energy costs. CHP systems convert more than 70% of a fuel’s energy into electrical power and useful heat - conventional power generation only achieves around 30–45% energy efficiency.
Risk management

Your system can be configured to continue to supply power if the grid fails. Alternatively, the local electricity network can provide power when the system is out of operation.
Government support

Through the combined heat and power quality assurance (CHPQA) scheme, the Government has put in place incentives to encourage the take–up of 'good quality' systems:
Enhanced Capital Allowance (ECA)

You may be able to claim 100% first–year tax relief on the investment. This can save around 7–8% of the capital cost over the plant lifetime. More details on Enhanced Capital Allowance (ECA).
Climate Change Levy exemption

This can often reduce payback periods by 1–2 years.
Business rates exemption (for power generating plant and machinery).
Feed-in tariff

Micro-CHP may also qualify for feed-in tariffs which provide a financial incentive for businesses to make use of small-scale renewable technologies.