Manufacturing big savings from combines heat and power systems

Louise Smyth


Manufacturing is an energy-hungry industry, requiring huge quantities of both heat and electricity. Therefore it is ideally suited to take advantage of combined heat and power systems, says Nigel Thompson

The manufacturing sector is the UK’s biggest energy user, accounting for 16.5% of national demand. Every year plants and factories all over the country use the equivalent of 27.7m tonnes of oil, producing a varied range of goods.

As vital as the sector is, there will always be calls to reduce energy use for both environmental and financial reasons. Although there are substantial initiatives in place across the industry to help boost efficiency, it is also possible to reduce the financial and environmental costs of producing the energy in the first place. This can be difficult for companies that rely almost entirely on electrical power, but many products also require huge amounts of heat at various points in the manufacturing process.

Indeed, according to a report commissioned by the UK government, the industrial and manufacturing sector uses roughly the same amount of natural gas as it does electricity – most of which is used to produce process heat and steam.


As the name suggests, combined heat and power (CHP) – sometimes known as cogeneration – is a technology based around generating both electricity and heat from a single fuel source. This is such a valuable technology because producing heat and power at the same time is considerably more efficient than generating them separately. After all, conventional power stations produce their electricity by driving turbines with steam that is usually just released from a plant‘s chimney.

This seemingly extravagant waste is a natural consequence of the fact that electricity is so much easier to transport than heat. The heat lost in the form of steam clouds is more than balanced out by the economies of scale enjoyed by large power plants, making the excess energy expendable.

When it comes to manufacturing plants, however, many have a large enough demand for both heat and power, so installing a system capable of producing both on-site can generate significant savings, compared to simply buying power in and relying on a conventional boiler system.

Studies show that by taking advantage of the heat wasted in conventional power generation, CHP plants can reach efficiencies of more than 80%, while coal and gas fired plants struggle to achieve more than 40%. For users that see substantial portions of their budgets eaten up by energy bills, this increase in efficiency can generate significant savings. In a recent report, the Association for Decentralised Energy estimated that a properly sized CHP system could reduce an industrial user’s primary fuel use by up to 30%.


There are many benefits to installing a CHP system, but there are also a few barriers that need to be overcome before companies can start enjoying its benefits. The biggest of these is undoubtedly up-front expenditure, even though this will pale in comparison to the savings a system generates over its lifetime.

Even a mid-sized manufacturing plant will be considering an investment of several hundred thousand pounds, possibly edging into seven figures for bigger sites and more advanced technology.

However, if approached in the right way, securing finance need not be a barrier to installing CHP. By working with a supplier, such as Finning, it is possible to put together a firm business case that shows the benefits of CHP, and the cost savings that can be realised, and therefore makes it significantly easier to secure capital funding or debt financing.


Once a company decides to make an investment, it still pays to ensure that the operator maintains their commitment to quality. After all, when budgets are tight, it can be tempting to try and make savings wherever possible. This can potentially lead to companies trying to cut corners by getting a cheaper deal on support equipment or by opting out of an operation and maintenance (O&M) contract.

This, however, is not recommended. Assuming a standard 20-year lifespan for a system, the maintenance costs alone will likely be larger than the initial outlay, so the quality of the product plays a vital role in its financial performance.

Fuel costs will be an even larger component of the lifetime costs of a system, making up as much as 75% of the overall spend. Investing in a more efficient product can generate big savings in the long run.

Nigel Thompson is with Finning

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