Volvox Engineering Ltd

	Volvox (Engineering) Ltd The Economics of Domestic Combined Heat & Power
Home ---------- More info ---------- Domestic CHP Systems CHP Economics Case Studies Fuel, Supplies and Systems ---------- Products ---------- Slow Speed CHP Exhaust Gas Heat Exchangers ----------- Other ------------- Contact Us Our friends and other links Downloads More Info (Ts & Cs) Loading...	Are domestic CHP units financially feasible? From an electricity generation point of view, a domestic combined heat and power system is clearly viable if the cost of generating electricity is comparable to the cost of grid electricity. The Volvox Slow Speed CHP has a fuel to electricity efficiency of 22%. The amount of energy in one litre of waste vegetable oil is approximately 9 kWhrs, which means the machine can generate (9*22/100) 2 kWhrs per litre of WVO. This means that to equal the cost of grid electricity, the price of the WVO needs to be no greater than 20p per litre. It is still possible to get WVO for nearly free if you're willing to do the collection and filtering yourself, but the market price for collected, filtered and delivered WVO is closer to 30p per litre (see the links below for more 'up to date' pricing). So at 30p per litre of fuel, the economics don't look very encouraging. However, there are two significant factors that change this position and give the domestic CHP a pay-back period that can be far short than Solar PV, Solar collectors, and even double-glazing:- You get up to 6.6 kWhrs of heat per litre for free. You get paid 9p per kWhr generated , courtesy of Offgem's Renewable Obligations Certificates scheme. You can even get 6p per kWhr for electricity yo sell to the grid (on top of the 9p ROC value).
	So what's the pay-back period for investing in a domestic CHP system? As with all alternative energy technologies this is not an easy question to answer. It is even more complex with a CHP system because it can be used in so many different ways. Your consumption profile has a significant affect and fuel and energy prices vary significant from one location to another. However, the Return On Investment can be calculated once you have all the information to hand. As an example, we have taken average UK home data, and built a spreadsheet that calculates the payback period and shows all the associated costs and input data. The spreadsheet can be downloaded and all/any of the data input fields can be replaced with data specific to you, so you can calculate your own specific payback period. This spreadsheet demonstrates that a payback period of 5 years is achievable and how much more valuable the CHP system becomes as time goes on.
	The spreadsheet explained In this analysis, we are assuming that the CHP is grid-linked (i.e. electricity can be drawn from the grid when the CHP is not running and electricity can be sold back to the grid when it is running). This scenario also assumes that the CHP is used primarily for heating and the resulting excess electricity is sold back to the grid. Other scenarios may have the CHP being used primarily for electricity generation and the shortfall in heat generation being supplemented by a log-burning stove, heat pump, or boiler. Other scenarios may include the use of a battery bank and inverter, or in conjunction with solar water heating.
	Trends and events not included in the spreadsheet scenario Utility fuel costs will continue to rise. This increase has not be included in the analysis, but will ultimately reduce the time before the CHP will repay itself. In 2011 Ofgem will be introducing financial incentives for using the waste heat from microCHP systems. Currently the incentives are based on electricity production using the ROC mechanism. New heat recovery incentives (in addition to the existing ROCs) will be in place in less than 2 year time. This will reduce further the time before the CHP system pays for itself. The price you get for selling electricity to the grid will increase over time. There are companies that are already offering better prices than 6p per kWhr. This trend is due to:- 1) it will need to increase in step with general utility price increases, but more significantly 2) demand for electricity will soon exceed supply. This is because the UK has to close all the old coal power stations as a part of an EU directive, and there is no possibility that new stations can be built fast enough to replace the old ones. The analysis compares the costs of running a CHP system with grid electricity and natural gas for heating. Natural Gas is currently the cheapest fossil fuel available. Any other fuel used for heating will be significantly more expensive. Also, Natural Gas supplies are finite and we have had political events affecting its availability in the past and this could happen again. A new feed-in tariff specifically for microCHP will be announced by the Government this autumn (2009) which will significantly improve the return on investment for renewable domestic CHP systems. Grants of £2500 will be available for domestic CHP systems when the certification process for products and installers gets going. Volvox is working to get its CHP systems approved under the Microgeneration certification scheme.
	Useful Data Sources Average UK home energy usage data. Energy prices vary from supplier to supplier, and are also dependent on your geographical location. Get accurate pricing data from here. Although it is still possible to get waste vegetable oil at nearly-free prices, this link can be used to find the latest market prices for various vegetable oils, including waste vegetable. The latest fossil fuel prices can be found here. This link will help you understand and calculate your CO2 footprint. There's some unpleasant payback period data here and here. Photovoltaic payback period is discussed here, but they avoided stating the time period (11.5 years) and didn't mention the fact that the feed-in tariff erodes at 7% each year. This book will tell you the truth about renewable energy payback periods. This is where you find information on national grants.