Micro-combined Heat and Power

Alan Whitehead Excerpts

Wednesday 1st February 2012 Westminster Hall

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I have been here before—who can forget my seminal Management of Energy in Buildings Bill, a private Member’s Bill in 2005, which, among other things, tried to promote deemed permission for domestic microgeneration, or my proposed new clauses to the 2008 and 2010 Energy Bills on plans for the development of micro-combined heat and power and passive flue gas recovery schemes? I am afraid that the blank looks of those present seem to answer that question, but I am here to have another go.

[Mr Andrew Smith (Oxford East) (Lab)]

I am grateful to my hon. Friend for giving way so early in his contribution and congratulate him on securing this important debate and commend his expertise. I assure him that he did not receive a blank look from me—he has been a path-breaker on this issue and is leading the way once again.

[Dr Whitehead]

I thank my right hon. Friend for ruining my opening statement about the incomprehensibility of my previous arguments, but I am grateful to him for his support and cognisance.

I am armed today with substantially better prospects than at any stage hitherto as far as micro-CHP is concerned. What is micro-CHP and why am I so exercised about it? Put simply, it is a rather prosaic technology which, while it will probably not induce conversation at dinner parties, is potentially important for all of us, because most of us possess something that looks remarkably like a micro-CHP unit—namely, a boiler. So this is about boilers.

Members will remember how a previous boiler revolution—in which I was pleased to have had a hand in developing revised building regulations—has probably been responsible for reducing more domestic CO₂ emissions than virtually any other measure of recent years. I am talking of the specification in building regulations that condensing boilers should be installed in homes. That measure was implemented in 2005 and changed the face of boiler installation in the UK. Within a year, more than 85% of new boilers installed were condensing. They were 20% more efficient than traditional boilers, saving about 15% of gas consumption as a result.

A micro-CHP boiler goes into a kitchen or on a wall in exactly the same way as a standard boiler. It also heats the house and provides hot water in the same way, but it is powered by a Stirling engine, a Rankine cycle or—this will be the case in the near future—a fuel cell boiler, all of which are efficient and produce electricity alongside their heating duties. A typical domestic installation produces, effortlessly and alongside the normal heating of the household, about 1 kW of electricity, so it might generate 10 kW of electricity over a winter’s day of heating, which is equivalent to the output of a 3 kW solar installation on a sunny day.

Micro-CHP boilers have been promising for some years. The Stirling engine was invented in 1815 and has been promising since then. Indeed, I first visited the site of the then EcoGen boiler plant in Peterborough in 2002 and was told that the product was about two years from market, but it was not, and nor were other micro-CHP plants, and I think that some people have lost a little faith in the products over the years. Now, however, very efficient micro-CHP boilers are on the market. They work well and are coming down in price with larger-scale production. I visited Ceres Power in Surrey during the autumn. It is developing an even more efficient fuel cell boiler and I am confident that it will come to market in the near future. The products are now there and, if we have the imagination, are set for the second boiler revolution.

The simplicity of such a revolution has already been demonstrated. People will have boilers in their homes for the long-term foreseeable future. What is more, about 1.5 million boilers break down or retire and are replaced every year, so it is not difficult to see that, if future building regulations favour micro-CHP boilers as replacements, that would happen not with a great deal of fuss or with many lifestyle magazine articles, but with a further leap forward for domestic energy sustainability, which we will have to work on urgently over the next few years, as the Minister of State, Department of Energy and Climate Change, the hon. Member for Bexhill and Battle (Gregory Barker), is well aware, with the emergence of the green deal and the energy company obligation.

The potential of 1 million boilers installed by 2020 is, on any reckoning, considerable. Not only would that level of installation generate about 20 GW of electricity on a typical winter’s day—which is about equivalent to what we import via interconnectors on any given day—but 1 million householders would save considerable sums on electricity through self-generation, for which there is considerable appetite, as suggested by the upsurge in solar photovoltaic installations. Micro-CHP-generated electricity is eminently compatible with solar PV, because we would generate far greater amounts of electricity at precisely those times of year when solar PV generates least.

The second boiler revolution could act just as dramatically in reducing emissions. Even if those 1 million boilers replace older condensing boilers, rather than non-condensing models, after a 10-year life, they would generate a saving of more than 2 million tonnes of CO₂, which is about half the total estimated CO₂ savings that the Committee on Climate Change has pencilled in by 2020 for the results of greater efficiency in household appliances. That would be a dramatic contribution to emissions abatement.

The heating and hot water taskforce produced the “Heating and Hot Water Pathways to 2020” report last year. It underlines the potential and relative straightforwardness of the revolutionary path:

“Since it is a boiler replacement the route to market is already well established. With over 1.5 million gas boilers installed in UK homes each year (most of which are replacements) the potential market is huge. Also as a direct boiler replacement there is likely to be less installer and consumer resistance compared with other low carbon technologies.

MicroCHP has been said to have the greatest mass market potential of any emerging low carbon domestic microgeneration solution. Studies have shown that microCHP could displace as much as 90% of existing boiler sales.”

That is the ambition that we could set ourselves.

I have given the sunny uplands vision, which will be generated, possibly, by nothing more than a stroke of a pen on a building regulation during the next few years.

[Mr Andrew Smith]

Before my hon. Friend leaves the sunny uplands, is not another of their aspects the fact that a lot of the technology’s development has taken place in this country, so, as well as its environmental benefits, it has industrial and employment benefits? We do not want this to be another industry in which breakthrough developments happen in this country, only for the commercial exploitation to go abroad.

[Dr Whitehead]

I thank my right hon. Friend for that important point, although I am slightly worried that he may have broken into my office and looked at my speech, because I am about to address that precise, important point on this clutch of technologies and their developers.

After the sunny uplands, we have to look at the reality, which is somewhat different. The industry has, on few resources, determinedly placed itself in a position in which it can supply reliable boilers over the next few years to the quantity that I have sketched out, and in so doing substantially reduce the cost differential between micro-CHP and conventional boilers. As my right hon. Friend has mentioned, the UK industry is a world leader on the technologies.

[Caroline Nokes (Romsey and Southampton North) (Con)]

The UK is a world leader in all sorts of microgeneration. Is the hon. Gentleman aware that SEaB Energy on Southampton university’s science park is generating micro-power in shipping containers? That might not be on the domestic scale of boilers, but it is proof that in the UK we are world leaders at coming up with innovative ideas and working out how we can generate power on a small and sustainable scale.

[Dr Whitehead]

I thank the hon. Lady for making that point. Indeed, the Southampton university science park is the base for leadership of a number of innovations in microtechnology, renewables and wave and tidal power. I am familiar with a number of the developments that are taking place there. It is a good plus for both our constituencies that that science park is producing such good work in the area of microgeneration.

The wider deployment of micro-CHP could, as my right hon. Friend the Member for Oxford East (Mr Smith) said, be beneficial for UK jobs. My colleague and next-door parliamentary neighbour, the hon. Member for Romsey and Southampton North (Caroline Nokes), has alluded to the fact that micro-CHP is very good for development and technological advances. The problem with our world lead in these technologies is the fact that, in truth, not many boilers have been deployed yet. Indeed, the initial results of the inclusion of micro-CHP boilers with the feed-in tariff programme last year—a pilot of 30,000 micro-CHP boilers was reviewed after the first 12,000 installations—have been less than sweeping, with only about 200 FITs payments taking place so far within that pilot.

However, that has to be set against the background of the very modest FITs payments allowed for micro-CHP: only 10.5p, along with a 3.1p export tariff. The figure of 10.5p is close to the starting marginal cost element considered to be generic for all renewables of 9p. That is the equivalent of support for large wind resources and is way below the 5% or so return on investment that is considered to be the sort of level that will attract investment decisions among householders and small businesses.

Of course, although micro-CHP is energy and climate efficient, it does not qualify for the renewable heat incentive as far as heat production is concerned for the obvious reason that, all other things considered, it is not fuelled by renewable energy. However, of course, it could be supplied in the form of biogas on an off-grid basis. I am not sure whether the Department would, in those circumstances, accept that micro-CHP would qualify both for RHI and FITs, but I imagine that that is a debate for another day. The fact of the matter is that a technology and an industry that can do great things are now waiting. The sector needs the confidence and future intent to enable it to scale up to the levels needed to produce a large intervention in the UK’s boiler landscape at a price that will eventually be at or close to those of more established boiler installations.

In the meantime, the industry needs some assistance in kick-starting—for example, the 30,000 installation pilot limit could be removed, so that there can be investment in a mass rather than a niche future. The allocation of a feed-in tariff of perhaps 15p per kWh would, along with the export tariff, enable a return even on present prices of about 5% to be achieved. I am confident that that allocation would be short-lived, especially if the Minister were to use his powers of persuasion to convince his counterparts in the Department for Communities and Local Government that a revision of part L of the building regulations in a few years’ time is appropriate. At that point, I imagine that no feed-in tariff support would be needed or necessary.

I hope that the Minister will be able to provide me with some positive encouragement for these very modest proposals in respect of micro-CHP, not least because, if he is not able to do so, I will have to come back and say it all over again. He will therefore have the pleasure of going through all this again—by the way, that is not a threat.

I am concerned that, if no early support and encouragement is given to micro-CHP, someone else will take it off our hands and we will not have the presence, the technical imagination and the investment capacity of the hard-won position our industry is now in. That will have gone or withered and we will be playing catch up. We need that support to come now. We are talking about an extremely modest investment by the Government—perhaps 2% of the FITs budget up to 2015, or far less than that if there is some clever management of the FITs budget. That 2% or less would have a potentially enormous payback for householders and Great Britain plc alike.