With liberalization of electricity markets, power companies are trying to be more flexible in how they respond to customer needs, and in an increasing number of instances what the customer seems to need is cogeneration (as well as trigeneration, the supply of electricity, heat and cooling). The cause of cogeneration is also being helped by governments who see the high efficiencies attainable (up to 80 per cent) as helpful in meeting their Kyoto commitments. The UK provides a good example, while the new German government is also likely to find the concept of decentralised cogeneration very much in line with its ecological and political aspirations. In addition technological developments are helping to make cogeneration viable at increasingly smaller scale – even down to the level of the individual household.

And it is not only the cogen lobby who see growth ahead. Recent research by Andersen Consulting concludes, among other things that: “The growth of cogeneration will change the structure of power generation. New technology will decrease the barriers to entering generation and enable large industry to partner with energy companies to meet its own power needs. Gas producers will respond to the increasing use of cogeneration by moving into power generation.”

The Andersen Consulting research, which is based on interviews with “industry executives, regulators and analysts across Europe”, forecasts that “The industry will be completely changed by 2015…Large, remote power stations will be increasingly replaced by smaller, cleaner forms of generation located closer to demand, in cities or individual factories, for example. These ‘demand hubs’ in turn will decrease the need for costly, long-distance transmission wires.” One consequence of this, Andersen Consulting argues, is that the gas and electricity industries will converge into a single European energy network, “where gas pipelines and reliability of gas supply actually become more important to providing electricity than high-voltage wires.” The Andersen Consulting research, which forecasts that by 2015 some 30-40 per cent of European power is likely to be generated using gas (compared with a 1992 figure of 7.5 per cent), suggests that qualities needed to be successful in these new market conditions will include, as well as a reliable supply of natural gas, new investment strategies, new skills like energy trading and of course flexibility.

Even Electricité de France, exemplar of the old style monolithic utility, with its 58 nuclear reactors supplying over three-quarters of French electricity, is in the process of transforming itself into a customer-focused organization more amenable to the idea of “multi-energy” packages, including cogeneration. In his recent strategy document, Towards the client, the new EDF president, Pierre Roussely, emphasises the forging of closer links with Gaz de France as a key objective (along with aggressive expansion into Europe, a policy we have recently seen dramatically implemented with the acquisition of London Electricity). A closer relationship with Gaz de France is viewed as a way of facilitating the move to the multi-energy future, and is very much in line with the trend being predicted by Andersen Consulting.

In fact EDF points out that it is already a significant player in the field, “committing itself to cogeneration in 1996 through its subsidiary Cogetherm” – which has been involved in a number of domestic cogen contracts, starting in February 1997 with a project for Michelin at Bassens (Gironde). EDF also operates the coal-based 1450 MWt/450MWe Cracow cogeneration plant in Poland. In addition, this summer saw the launching by EDF in partnership with Total and Texaco of a project to build France’s first IGCC (integrated gasification and combined cycle), a 365 MWe cogen plant, to be built near Total’s Normandy Refinery.

&#8220Even EDF is
transforming itself into a customer-
focused organization amenable to the idea of “multi-energy” packages, including cogeneration”

The past couple of years has indeed seen a boom in cogeneration projects in France. Over 300 proposals are believed to be currently under consideration. No-one quite seems to know the exact number, not even the Club Cogeneration, whose role is to promote the technology. These 300 projects are in addition to the 50 or so schemes already approved this year, and would raise the total cogen capacity to around 3000 MWe from the 1800 MWe operating or approved to date ( very small of course relative to French total installed capacity).

In particular there has been a recent marked upsurge in the number of large projects, notably for industrial applications: 13 such shemes (in the 25-100 MWe range) approved already this year and four in 1997, compared with none in the preceding six years. The reason for this boom is a special contract introduced by the French government a couple of years ago specifically to encourage cogen. The contract came into force in January 1997 and gives tax exemptions and favourable tariffs over a 12 year period – making cogen a very attractive investment.

This has proved extremely successful – too successful some at EDF believe. The utility has recently pointed out that every 100 MWe of cogen capacity operated under this favourable regime effectively amounts to a subsidy from it of some $100 million over the 12 year contract period. However the current cogen contract arrangements are due to end shortly and will not be available to projects approved after March next year – hence the current logjam of projects seeking approval.

What will happen after that remains unclear. France is currently moving surprisingly quickly to “transpose”, as they say in Brussels, the EU electricity directive into domestic law, formally bringing liberalization to the French electricity market. It remains to be seen how cogeneration will fare in this environment. The evidence is that French customers, as customers elsewhere, like cogen, as long as it is cost competitive of course. But it is also one of the most politically attractive of all energy technologies and the EU Electricity Directive specifically allows governments to give priority to cogenerated electricity if they so wish. This may offend the free market purists, but the likelihood is that most governments will elect to exercise this option and provide a little encouragement to cogen.


More Relevant


Sign up to the newsletter: In Brief

Your corporate email address *
First name *
Last name *
Company name *
Job title *
Vist our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

Thank you for subscribing

View all newsletters from across the Progressive Media network.