Is CHP Economically Viable?
By Paul Homewood
I mentioned the new Biomass CHP project at Teeside in my previous post.
Costing £650m to build, this will burn wood pellets to provide 300MW, as well as supplying heating to local companies on the Teesport site.
Teeside was awarded a CfD in 2014, which gives a guaranteed, index linked price of £132.25/MWh (at current prices). However, at the same time Drax’s 3rd conversion biomass unit only received a rate of £105.87.
While there may be other intrinsic differences, this would seem to imply that it costs Teeside £26.38/MWh for Teeside to distribute its waste heat, over and above what it might receive from selling it.
If this is true, it makes the whole concept of Teeside CHP economically insane.