Keywords: combined heat and power, CHP, cogeneration, incentive regulation, quality norm, production possibility sets, power-to-heat ratio, benchmarking, energy efficiency, condensing
Qualifying Combined Heat and Power (CHP) activity
The EU 2002 draft and 2004 final CHP Directives propose qualifying CHP activity with the quality norm. This norm benchmarks the energy efficiency of CHP plant outputs on external reference power and heat efficiencies. Because the quality norm amalgamates cogeneration and condensing activity its application entails particular perverse effects for high-quality and adapted scale investment in CHP capacities and for operating available units. Operators get incentives to part-load or shut down their capacities and to avoid condensing activity (lucrative at spiky price conditions in the power market). The formula of the quality norm is only useful when CHP activity (heat recovery, cogenerated electricity, fuel consumption for cogeneration) is first quantified reliably.