Darren Bryant CEO of Heatcatcher comments ORC needs to piggyback on the success of the CHP market.
Over 2000 UK businesses have installed combined heat and power (CHP) systems with a total generating electrical generating capacity of 5.5 GW according to the Association of Decentralised Energy. The worldwide market for CHP gas engines is a multi-billion-pound market demonstrating how government incentives have helped to reduce capital costs per kW to below £1,000 per kW through manufacturing economies of scale.
Many of these CHP installations are reciprocating engines fuelled by biogas or natural gas, generating low carbon electricity, receiving government incentives for power and heat generation. The successful market growth incentivised by many government schemes, demonstrates how government support for an emerging technology is very effective. These schemes have ranged from the early days of Low exemptions from the Climate Change Levy (CCL), to Feed In Tariffs for Anaerobic Digestion plants to the latest Renewable Heat Incentive (RHI) scheme for use of the heat for space heating, cooling, drying or a cleaning process.
The Organic Rankine Cycle (ORC) market has been slower to develop in the absence of cost per kW generated incentives. In many cases ORC, can be fitted to the exhaust of a CHP engine to boost the electrical generating output when there is a low heat demand. Despite being a significant “Energy Efficiency Improvement Measure” piggybacking ORC onto the exhaust of a CHP does not receive the electrical tariff incentives enjoyed by the CHP electrical output, only the low export tariff.
Due to the project economics of ORC offering a lower return than CHP, ORC manufacturers are still producing bespoke units per project resulting in a higher capital cost per kW. Incentivising the electricity generated from an ORC as an “Energy Efficiency Improvement Measure”, to matching the returns enjoyed by the CHP market will lead to manufacturing economies of scale, reducing the cost per kW below the £1,000 per kW and creating a multi-million-pound market to follow in the footsteps of the CHP market success.