Brussels, February 13th 2014

The recent admission by the European Commission’s energy department that cogeneration is still susceptible to market failure across Europe is reinforced by recent statistics from the Netherlands* – where falling electricity output from industrial cogeneration is eroding previous energy efficiency gains –  and from Spain, where industry has announced that 25% of industrial cogeneration (1.5GW) has stopped since the middle of 2013. These losses of highly energy-efficient plants are a warning message to European and national decision-makers who are currently debating the EU’s 2030 climate and energy policy framework and changes in the electricity market.

Responding  this month to a parliamentary question from European Parliament Vice-President Alejo Vidal-Quadras, DG Energy acknowledged that “some industrial gas-fired CHPs” have recently been affected by “market failures”. Industrial CHP is in difficulty in several countries due to extreme fluctuations in electricity prices and overcapacity in much of the electricity market. This, combined with high gas prices, has made industrial CHPs particularly challenging to operate in the short term.These energy market developments come at a particularly crucial stage of the investment cycle, presenting many industrial plant operators with unbearable financial risks regarding reinvestment in these highly efficient plants.

In its response to the question posed by MEP Vidal-Quadras, DG Energy indicated its intention to take further steps: “The Commission regularly monitors market developments and is putting in place various initiatives aiming at further facilitating investment in CHP and providing long-term outlook.” The response also introduces “a dedicated platform on the implementation of the industry-related provisions of the Energy Efficiency Directive, in particular CHP and energy audits, to be set up in 2014”.

Drawing attention to the situation in Spain, Mr. Vidal-Quadras says “these are difficult times for industry in Spain. There is no doubt that the high efficiency of cogeneration supports Europe’s energy efficiency ambitions and industrial competitiveness. We must find ways to maintain the installed base of cogeneration through this turbulent period so that industry can emerge strongly from the crisis and profit in the long term”.

COGEN Europe's Annual Conference 2014, set to take place in Brussels on 3-4 April, will particularly focus on the role of cogeneration in boosting Europe’s economic recovery.  

* Statistics Netherlands (CBS) reports that CHP power production in the chemicals sector fell by 20% between 2011 and 2012.
 

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About cogeneration: 

Cogeneration (also known as CHP or Combined Heat and Power) involves the simultaneous production of heat and electricity from a single plant which results in massive savings to the economy of primary energy and consequential reductions of GHG emissions.

Today, a significant 11.2 % of Europe’s electricity is generated using a vast array of proven and cost effective techniques (cumulative capacity > 100 GWe). About half of the heat produced is used in district heating network while the remaining half serves industrial needs.

Cogeneration units can be found in various sectors and sizes: in industries, households and tertiary buildings and in capacities ranging from a kilowatt to hundreds of MegaWatts of electricity output. CHP plants can draw upon a wide range of energy sources, from traditional fossil fuels to renewable energies (combustion-based units with biomass, biogases or bioliquids, or steam-based plant connected to geothermal or concentrated solar panel installations) that make them ready for the future energy system.

Realising the identified economic potential for cogeneration in Europe – estimated at 110-120 GWe additional – will be instrumental to reaching the EU’s strategic climate and energy goals, while underpinning job creation and being an engine to industrial competitiveness.

About COGEN Europe:

COGEN Europe is Europe’s umbrella organisation representing the interests of the cogeneration industry, users of the technology and promoting its benefits in the EU and the wider Europe. The association is backed by the key players in the industry including gas and electricity companies, ESCOs, equipment suppliers, consultancies, national promotion organisations, financial and other service companies. More information on www.cogeneurope.eu