part 1: overview of cogeneration and its status in asia - Fire

Cogeneration experiences around the world 87
By 2005, district heating is expected to account for 60 per cent of the total heat demand (47
per cent in 1990) and 90 per cent of this demand (55 per cent in 1990) would be met by
cogeneration. This achievement is only possible with a very conducive policy framework set
by the national authorities, active involvement of the utilities and a combination of legislation,
grants and subsidies, tariffs and tax incentives. This could not have become a reality if left
purely to the market initiatives because of the major capital investments necessary for the
development of large cogeneration and district heating networks.
3.4 Cogeneration Development in France 2
The long-term energy policy adopted by France following the first oil shock has resulted in a
successful nuclear power generation programme to the extent that the generation capacity
exceeds the demand in France and the electricity prices are among the lowest in Europe. The
role of cogeneration has thus been marginal up to the 80s. In 1995, cogeneration represented
only around 1.4 per cent of the total power production in France. According to the study done
by Ceren in 1996 for the Ministry of Industry, the total installed cogeneration capacity at the
end of 1995 was 3,200 MW. The production for 1995 was around 9 TWh of electricity and 34
TWh of thermal energy. Steam turbines dominated with a share of 75 per cent, followed by
gas turbines (19 per cent) and internal combustion engines (6 per cent).
The Ministry of Industry had forecasted this figure to rise to 5 GW by the year 2005. However,
recent policy and tariff changes have favoured much rapid development of cogeneration,
proven by the fact that in 1997 alone, the installed capacity had doubled the figure of 1996,
attaining 500 MW. If a few of the planned big projects are actually implemented, the figure
could easily surpass 1,000 MW in 1998.
3.4.1 Cogeneration in the past and at present
By the French law of 1946 which nationalized the electricity sector, only small individual
producers were allowed to generate up to 8 MVA of power which the public power utility,
Electricité de France (EdF), was obliged to purchase. The key factor was the purchase price
of electricity, which was perceived by potential developers as too low to encourage
cogeneration projects, as the payback periods were too long. There were limited periods in
the year (during winter season) when the price of electricity was 10 to 20 times higher than
the off-peak periods. It was during this period that the industrial users found it attractive to set
up cogeneration facilities. However, cogeneration plants are economical if they are allowed to
operate for at least 4,000 hours per year, even in the industrial sector. Moreover, small-scale
plants were prone to periodic scheduled maintenance and unscheduled failures, during these
periods the user had to depend on EdF that applied high stand-by charges.
In 1993, in order to better control and encourage electricity production from cogeneration, EdF
established a buy-back rate linking a fixed bonus to the selling price of electricity. Electricity
generation then became lucrative and some enterprises installed power plants using
reciprocating engines. Their objective was to produce electricity up to the level of 8 MVA
during winter months when the purchase price of electricity is the highest. The low efficiency
of these power plants (35 per cent) resulted in the generation of electricity, which was
economically attractive but with poor performance and high pollution.
To deal with such a situation, the decree of December 1994 lifted the obligation imposed on
EdF to purchase all electricity produced in France (the decree of May 1955), except in cases
where electricity is obtained from renewables (solar, wind), incineration of industrial or urban
wastes, and from cogeneration systems having an efficiency above 65 per cent.
2 B. Mohanty, “French experience in cogeneration development”, Presented at Korea-French Seminar
on Advanced Technologies for Electricity Production, Seoul, 27-28 October 1998.